Schmitt v. Kaiser Foundation Health Plan of Washington

Opinion

4 UNITED STATES DISTRICT COURT 5 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 6 7 ANDREA SCHMITT, et al., Cause No. C17-1611RSL 8 Plaintiffs, ORDER DENYING 9 v. DEFENDANTS’ MOTION 10 TO DISMISS THE FOURTH KAISER FOUNDATION HEALTH PLAN AMENDED COMPLAINT 11 OF WASHINGTON, et al., 12 Defendants. 13

14 This matter comes before the Court on “Defendants’ 12(b)(6) Motion to Dismiss Fourth 15 Amended Complaint.” Dkt. # 72. Having reviewed the memoranda submitted by the parties1 and 16 17 construing the Fourth Amended Complaint in the light most favorable to plaintiffs, the Court 18 finds as follows: 19 (1) Plaintiffs have plausibly alleged that hearing loss is a viable proxy for hearing 20 21 disability, such that defendants’ hearing loss exclusion raises an inference of discrimination 22 against the protected group under Section 1557 of the Affordable Care Act, 42 U.S.C. § 18116. 23 24 25 26 1 This matter can be resolved on the papers submitted. Defendants’ request for oral argument is 27 DENIED. 28 ORDER DENYING DEFENDANTS’ MOTION 1 (2) Plaintiffs’ “Breach of Contract and Violation of RCW 48.43.0128” claim is also 2 plausible. Plaintiffs do not assert a cause of action directly under RCW 48.43.0128, but rather 3 allege that the statute voids and makes unenforceable the hearing loss exclusion. O.S.T. ex rel. 4 5 G.T. v. BlueShield, 181 Wn.2d 691, 707 (2014) (a blanket exclusion of neurodevelopmental 6 therapies that violates the mental health parity act “is void and invalid as a matter of Washington 7 law.”); Brown v. Snohomish Cnty. Physicians Corp., 120 Wn.2d 747, 753 (1993) (“[L]imitations 8 9 in insurance contracts which are contrary to public policy and statute will not be enforced . . . 10 .”); RCW 48.18.200(2) (“Any such condition, stipulation, or agreement in violation of this 11 section shall be void . . . .”); RCW 48.18.510 (“Any insurance policy, rider, or endorsement 12 13 hereafter issued and otherwise valid, which contains any condition or provision not in 14 compliance with the requirements of this code, shall not be rendered invalid thereby, but shall be 15 construed and applied in accordance with such conditions and provisions as would have applied 16 17 had such policy, rider, or endorsement been in full compliance with this code.”). While most 18 such disputes are resolved in the context of a declaratory judgment action, a denial of coverage 19 based on a void and unenforceable exclusion could arguably be a breach of contract under 20 21 Washington law. See O.S.T. ex rel. G.T., 181 Wn.2d at 695 (acknowledging breach of contract 22 claim asserted against insurer which denied coverage based on a contractual term that was 23 invalid, void, and unenforceable). Because plaintiffs have alleged a plausible claim of disability 24 25 26 27 28 ORDER DENYING DEFENDANTS’ MOTION 1 discrimination in the design and/or implementation of its hearing-related benefits, this claim 2 may proceed.2 3

4 5 For all of the foregoing reasons, defendants’ motion to dismiss (Dkt. # 72) is DENIED. 6

7 Dated this 4th day of August, 2022. 8 9

10 Robert S. Lasnik 11 United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 2 Defendants have not shown how a regulation, such as WAC 284-43-5642, could trump a statute 27 under Washington law. 28 ORDER DENYING DEFENDANTS’ MOTION