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  • 1. UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIACOALITION FOR PARITY, INC.,Plaintiff,v.Civil Action No. 10-527 (CKK)KATHLEEN SEBELIUS in her officialcapacity as Secretary, United StatesDepartment of Health and Human Services,et al.,Defendants. MEMORANDUM OPINION (June 21, 2010) Plaintiff Coalition for Parity, Inc. (Plaintiff or the Coalition) has filed this actionagainst the Secretaries of Health and Human Services, Labor, and Treasury (the Secretaries),along with their respective Departments (collectively, Defendants), seeking to enjoinimplementation of regulations promulgated to enforce the provisions of the Paul Wellstone andPete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), Pub. L.No. 110-343, Div. C 511-12, 122 Stat. 3861, 3881 (codified in scattered sections UnitedStates Code titles 26, 29, and 42). Pursuant to the MHPAEA, Defendants are required to issueregulations to implement the Acts substantive provisions. Defendants did so on February 2,2010, publishing Interim Final Rules (IFR) in the Federal Register. The Interim Final Rulesbecame effective on April 5, 2010, and are generally applicable to group health plans and grouphealth insurance issuers for plan years beginning on or after July 1, 2010. Plaintiff claims thatDefendants promulgation of the Interim Final Rules violates the notice and comment

2. requirements of the Administrative Procedure Act (APA), 5 U.S.C. 553. Plaintiff filed the Complaint on April 1, 2010, together with an [2] Application forTemporary Restraining Order (TRO) and a [3] Motion for Preliminary Injunction. The Courtheld a hearing on the request for temporary relief and issued a [5] Memorandum Opinion denyingthe application for a TRO because the Court found that the Interim Final Rules do not havesubstantive effect until July 1, 2010. In light of this upcoming deadline, the parties agreed thatthe Court should proceed directly to the merits of the case after an expedited briefing schedule.Pursuant to that schedule, on April 14, 2010, Plaintiff filed a [12] Motion for SummaryJudgment, and on May 3, 2010, Defendants filed a [23] Motion to Dismiss or, in the Alternative,for Summary Judgment. The motions are now fully briefed and are ripe for decision. For thereasons expressed below, the Court shall DENY Plaintiffs Motion for Summary Judgment andGRANT Defendants Motion to Dismiss or, in the Alternative, for Summary Judgment. I. BACKGROUND A.Notice and Comment Procedures Under the Administrative Procedure Act The APA requires that federal agencies, prior to the promulgation of any regulation,publish in the Federal Register a general notice of proposed rulemaking that includes: (1) astatement of the time, place, and nature of public rulemaking proceedings; (2) reference to thelegal authority under which the rule is proposed; and (3) either the terms or substance of theproposed rule or a description of the subjects and issues involved. 5 U.S.C. 553(b). Thisrequirement does not apply to interpretive rules, general statements of policy, or rules of agencyorganization, procedure, or practice. Id. More importantly for this case, the APAs noticerequirement also does not apply when the agency for good cause finds (and incorporates the2 3. finding and a brief statement of reasons therefor in the rules issued) that notice and publicprocedure thereon are impracticable, unnecessary, or contrary to the public interest. Id. Aftersuch notice is published, the agency shall give interested persons an opportunity to participate inthe rule making through submission of written data, views, or arguments with or withoutopportunity for oral presentation. Id. 553(c). Agencies must consider the commentspresented and provide a concise general statement of the basis and purpose for the final rules.Id. The notice requirements of 553 are designed (1) to ensure that agency regulations aretested via exposure to diverse public comment, (2) to ensure fairness to affected parties, and (3)to give affected parties an opportunity to develop evidence in the record to support theirobjections to the rule and thereby enhance the quality of judicial review. Intl Union, UnitedMine Workers of Am. v. Mine Safety & Health Admin., 407 F.3d 1250, 1259 (D.C. Cir. 2005). B.The Mental Health Parity and Addiction Equity Act On October 3, 2008, Congress enacted the Paul Wellstone and Pete Domenici MentalHealth Parity and Addiction Equity Act of 2008 (MHPAEA), as sections 511 and 512 of theTax Extenders and Alternative Minimum Tax Relief Act of 2008. See Pub. L. No. 110-343, Div.C 511-12, 122 Stat. 3861, 3881 (Oct. 3, 2008). The MHPAEA amends the EmployeeRetirement Income Security Act of 1974 (ERISA), the Public Health Service Act, and theInternal Revenue Code, with parallel provisions. See 29 U.S.C. 1185a; 42 U.S.C. 300gg-5;26 U.S.C. 9812. The MHPAEA expands the scope of prior legislation, the Mental HealthParity Act of 1996 (MHPA), Pub. L. No. 104-204, 701-02, 110 Stat. 2874, 2944 (Sept. 26,1996). The MHPA and the MHPAEA are designed to end discrimination in the provision ofcoverage for mental health and substance use disorders as compared to medical and surgical3 4. conditions in employer-sponsored group health plans and health insurance coverage offered inconnection with group health plans. The MHPA requires parity in aggregate lifetime and annualdollar limits for mental health benefits and medical and surgical benefits. The MHPAEA goesfurther than the MHPA and requires employer-sponsored group health plans to cover mentalillness and substance abuse on the same basis as physical conditions. The MHPAEA does notrequire employers to provide benefits for mental health or substance use disorders, but grouphealth plans with 50 or more employees that choose to provide mental health and substance usedisorder benefits must do so in parity with medical and surgical benefits. Specifically, theMHPAEA requires group health plans (or insurers) to ensure that the financial requirementsand treatment limitations that are applicable to mental health or substance use disorder benefitsare no more restrictive than the predominant financial requirements or treatment limitationsapplied to substantially all medical and surgical benefits covered by the plan (or coverage). See29 U.S.C. 1185a(a)(3); 42 U.S.C. 300gg-5(a)(3); 26 U.S.C. 9812(a)(3). The MHPAEAdefines financial requirements as including deductibles, copayments, coinsurance, and out-of-pocket expenses and defines treatment limitations as including limits on the frequency oftreatment, number of visits, days of coverage, or other similar limits on the scope or duration oftreatment. Id. The MHPAEA went into effect one year after its enactment and is generally effective on arolling plan year basis for insurance plan years beginning after October 3, 2009. Because mostgroup health insurance plan years begin on either January 1 or July 1, the MHPAEAssubstantive provisions affect most group health plans beginning on either January 1, 2010, orJuly 1, 2010. In 512(d) of the MHPAEA, Congress called on Defendants to promulgate4 5. regulations to implement the statutes substantive provisions: Not later than 1 year after the date of enactment of this Act, the Secretaries of Labor,Health and Human Services, and the Treasury shall issue regulations to carry out theamendments made by subsections (a), (b), and (c), respectively.MHPAEA 512(d). Although the deadline for the promulgation of regulations is the same asthe effective date of the statute, Congress explicitly provided that the statutes provisions go intoeffect regardless of whether regulations have been issued to carry out the MHPAEA. Id. 512(e).1 C.Defendants Regulatory Process Shortly after the MHPAEA was enacted in October 2008, officials at the Departments ofHealth and Human Services, Labor, and Treasury began to discuss the promulgation ofregulations to implement the statute. See Defs. Mot., Decl. of James A. Mayhew (MayhewDecl.) 1-3. Due to the novel and complex issues raised by the MHPAEA, Defendantsdecided that they did not have sufficient information to develop a proposed regulation, and theydetermined to seek public input by issuing a request for information (RFI) on the specificissues presented by the MHPAEA and its economic impact. Id. 3-4. Based on theirexperience with prior jointly-issued regulations, Defendants believed that it would takesignificantly longer than one year to issue an RFI with a comment period, review the comments,draft and issue a proposed rule with a comment period, and then draft and issue a final rule afterreviewing comments on the proposed rule. Id. 4. Accordingly, Defendants chose to proceedwith a practice used on several other jointly-issued regulations: issue an RFI followed by an1 The MHPAEA has a different effective date for collectively-bargained plans that was subsequently amended by Congress. See Pub. L. No. 110-460, 122 Stat. 5123 (2008) (providing for an effective date of January 1, 2010).5 6. interim final rule. Id. 3.Although the drafting of the RFI was largely completed by the end of 2008, theDepartments were not able to issue the RFI until April 28, 2009. See Mayhew Decl. 6. Theapproval and issuance of the RFI was delayed by the change in presidential administrations asnew political appointees needed time to review and approve the proposed RFI. Id. The issuanceof the RFI was also delayed by major legislative enactments that required the Departmentsattention in early 2009. Id. 7. The RFI was published on April 28, 2009 in the FederalRegister. See Request for Information Regarding the Paul Wellstone and Pete Domenici MentalHealth Parity and Addiction Equity Act of 2008, 74 Fed. Reg. 19155 (Apr. 28, 2009). Amongother things, the RFI sought information from commenters about the types of financialrequirements and treatment limitations currently applied to medical and surgical benefits andmental health and sub


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