A class action lawsuit challenging health insurance companies’ refusal to cover the costs of medical cannabis has been moved to federal court, for now.
The lawsuit, filed earlier this year by a group of medical cannabis patients and one cannabis production company, originally asked a state district court judge to order New Mexico healthcare insurance companies to cover the costs of medical cannabis for members. The seven insurance providers in turn refiled the case in federal court, arguing that it is the appropriate venue because the plaintiffs’ claims are inherently tied to federal law.
In June, six New Mexico medical cannabis patients and cannabis producer Ultra Health filed the class action suit, arguing that the recent enaction of a state law requiring insurance providers to cover the costs of behavioral health services should also include medical cannabis. In turn, last week, lawyers for the insurance companies moved the case to federal court, arguing that the federal Employee Retirement Income Security Act, which sets standards for many health insurance plans, “preempts” the plaintiffs’ claims. Lawyers for the insurance providers also justified moving the case to federal court because the lawsuit “necessarily raises disputed and substantial issues of federal law,” specifically whether the federal Controlled Substances Act allows a state to mandate coverage of a substance that is still federally illegal. The final claim justifying the move to federal court argues that the type of class action lawsuit the defendants filed should be in federal court.
The lawsuit came just months after the enactment of a state law that prohibits cost-sharing for behavioral health services. After signing the enacting legislation, Gov. Michelle Lujan Grisham praised the bill in a press release.
“We can make a real, meaningful difference by reducing the costs for those with insurance who seek help by eliminating the copays for behavioral health services – and I’m so proud and grateful to sign this priority measure,” Lujan Grisham said.
The state agency tasked with regulating insurance has maintained that the department, which is one of the governor’s cabinets, does not have the authority to force insurance providers to cover cannabis.
One of the plaintiffs is Albuquerque-based attorney and New Mexico state Sen. Jacob Candelaria.
The New Mexico Legislature last year approved a bill aimed at eliminating out-of-pocket costs for behavioral health. When Gov. Michelle Lujan Grisham signed the measure into law, she said in a press release that the bill could “make a real, meaningful difference” by eliminating copays for behavioral health services.
Now, a class action lawsuit filed last week is challenging New Mexico medical insurance providers for not covering medical cannabis expenses. New Mexico cannabis producer Ultra Health, along with six medical cannabis patients, filed the suit against seven New Mexico medical insurance providers and are seeking unspecified damages, reimbursement for their respective cannabis purchases going back to January of this year and for medical cannabis to be covered by medical insurance providers going forward. The case seems to be the first of its kind in the nation.
The cannabis company and medical cannabis patients are being represented by Christopher Saucedo, who is also a New Mexico State University regent and served last year on the state’s redistricting committee. Ultra Health has established a reputation for filing numerous suits against state departments on various cannabis issues like increasing medical cannabis production limits and overturning medical cannabis rules and regulations.
The state settled with five more behavioral health providers who had sued after the state froze their access to Medicaid funding in 2013. At the time, the state said it had found credible allegations of fraud by the providers. The new settlements totaled $10 million and are the last of the ten lawsuits filed by providers over the funding freeze. These latest settlements were paid to Santa Maria El Mirador, the provider formerly known as Easter Seals El Mirador; Border Area Mental Health Services; Southwest Counseling Center, Inc.; Southern New Mexico Human Development, Inc.; and Families and Youth, Inc.
The state’s Attorney General cleared all providers that the Susana Martinez administration accused of fraud. The suspension caused a behavioral health crisis in New Mexico.
Even in his final days of battling leukemia in early 2016, Jose Frietze was fighting for the youth services agency he founded in 1977. The state Human Services Department had accused the organization — Las Cruces-based Families and Youth Inc. — of potential Medicaid fraud and overbilling by $856,745 in 2013. A stop payment of $1.5 million in Medicaid funding for services already provided crimped FYI’s cash flow, leading to layoffs. And because of the accusations, FYI was forced to hand off part of its business to an Arizona company brought in by Gov. Susana Martinez’s administration. Frietze’s daughters Victoria and Marisa remember how tough the allegations were on Frietze and their family.
The federal government will take a look into New Mexico’s behavioral health services, according to the four Democratic members of the state’s congressional delegation. In a letter last month to Sens. Tom Udall and Martin Heinrich and Reps. Michelle Lujan Grisham and Ben Ray Luján, the federal Department of Health and Human Services Inspector General Daniel Levinson confirmed the upcoming review. “OIG will review the extent to which behavioral health providers are included in the States’ managed care plans and the types of care offered by these providers,” Levinson wrote in the June 28 letter.
There’s no getting around it. Four years after Gov. Susana Martinez’s administration charged 15 behavioral health organizations with potentially defrauding the state’s Medicaid program, its case has experienced a slow-motion unraveling. No Medicaid fraud was ever found. And those eye-popping estimates that added up to $36 million the organizations had overbilled Medicaid? In the summer of 2017, the Human Services Department (HSD) is seeking drastically lower reimbursements for overbilling the public health insurance program for low-income residents, a review of public records and state court documents has found.
Years after the state cut off Medicaid funding to 15 behavioral health providers, citing “credible allegations of fraud,” the Attorney General cleared all providers of the alleged fraud. AG Hector Balderas made finishing the investigation into the providers a key goal when he entered office in 2015. Previously: Top ten stories of 2016: 10-6; #5: NM Dems buck national trend, retake House; #4: Demesia Padilla resigns
In April, Balderas announced the investigation was complete, with no evidence of fraud in the final two companies. Balderas previously cleared ten providers in February, and had already cleared two others in 2015. The allegations of fraud came from a 2013 audit for the state Human Services Department by Boston-based Public Consulting Group.
Another of the behavioral health providers brought in from Arizona to fill the gap made after the state Human Services Department cut off funding to 15 organizations is leaving the state. Valle del Sol is the fourth of five organizations from Arizona that were brought into the state in 2013 to take over behavioral health services to leave the state. The Santa Fe New Mexican reported that an executive with Valle del Sol said the company is working with HSD on the transition to aid patients. A spokesman for HSD said the same thing to the northern New Mexico paper. Valle del Sol had seven locations throughout the state.
New Mexico legislators want the Department of Justice to look into the behavioral health shakeup from 2013 after the state Attorney General found no fraud. Senate President Pro Tem Mary Kay Papen of Las Cruces, Senate Majority Leader Michael Sanchez of Belen, House Minority Leader Brian Egolf of Albuquerque, all Democrats, sent the letter. The three received letters from providers who had Medicaid funding cut by the state, and forwarded these letters to the three members of the U.S. House and two members of the U.S. Senate from New Mexico. “The contents of these letters greatly concern us,” the three legislative leaders wrote. “We have also been contacted by constituents, requesting our assistance with accessing behavioral health services over the past two years.”
All 15 of the behavioral health providers that the state Human Services Department cut Medicaid funding from in a controversial action three years ago have now been cleared of allegations of fraud. Attorney General Hector Balderas told legislators Tuesday his investigation into the final two providers found no allegations of fraud. These final two providers are Pathways and TeamBuilders. HSD cut off Medicaid funding to the state’s 15 behavioral providers in 2013, citing “credible allegations of fraud” after the state department contracted an audit with Boston-based Public Consulting Group. Some of the providers shut their doors after the state halted their federal Medicaid funding, causing a shakeup in the behavioral health system around New Mexico.