Opinion

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

M.F., individually and on behalf of Z.F.,

Plaintiff

No. 25 CV 15549

v.

Judge Jeremy C. Daniel

Blue Cross Blue Shield of Illinois,

Defendant

ORDER

The defendant’s motion to dismiss [14] is granted in part and denied in part. The

defendant shall answer on or before August 21, 2026.

STATEMENT

Background and Legal Standard

The following description of events underlying these claims is drawn from the

complaint and presumed true for the purpose of resolving this motion. Virnich v.

Vorwald, 664 F.3d 206, 212 (7th Cir. 2011). Plaintiff Z.F., a minor at all times relevant

to this case, was a beneficiary of their parent, M.F.’s, participation in the New Menu

2500 PPO Plan (the “Plan”) provided by Defendant Blue Cross Blue Shield of Illinois

(“Blue Cross”). (R. 1 ¶¶ 4–7.)1 The Plan is an employee welfare benefit plan under the

Employee Retirement Income Security Act of 1974 (ERISA). See 29 U.S.C. § 1001, et

seq.; (Id. ¶ 9.) Z.F. was treated at Innerchange Chrysalis (“Chrysalis”), an outdoor

behavioral health program, from February 12, 2021, to December 22, 2021, related to

previous diagnoses of depressive, anxiety and disruptive behavioral disorders,

attention deficit-hyperactivity disorder, and a substance abuse disorder. (Id. at 1, ¶¶

27–28.) Chrysalis is licensed by the State of Montana as a “Private Alternative

Adolescent Residential or Outdoor Program” and provides mental health treatments

at an intermediate, subacute level. (Id. ¶¶ 29, 31.) Z.F. benefitted from the treatment

at Chrysalis and improved in all diagnosed conditions. (Id. ¶ 33.)

Chrysalis charged about $113,500 for these services, and the charges were submitted

to Blue Cross. (Id. ¶ 34.) Blue Cross accepted the claim for Chrysalis’ services

disbursed in July 2021, totaling $10,850, and reimbursed the plaintiff for $1,675. (Id.

1 For ECF filings, the Court cites to the page number(s) in the document’s ECF header

unless citing to a particular paragraph or other page designation is more appropriate.

¶ 35.) Blue Cross denied all other claims during the treatment period, citing either

lack of eligibility or requiring further information (which Z.F. provided). (Id. ¶¶ 36–

38.) In March 2022, M.F. submitted an appeal, which Blue Cross denied in June 2022.

(Id. ¶¶ 39–40.) In its denial, Blue Cross referenced their exclusion of “Behavioral

health services provided at behavior modification facilities, boot camps, emotional

group academies, military schools, therapeutic boarding schools, wilderness

programs, halfway houses, and group homes, except for Covered Services provide by

appropriate Providers as defined in this Certificate,” as well as references to the

Plan’s definitions of a “Residential Treatment Center.” (Id. ¶¶ 41, 43.) The letter

ended by informing M.F. that there was only one internal appeal available, so all

appeal rights had been exhausted. (Id. ¶ 44.) As a result, M.F. incurred around

$111,000 in expenses for Z.F.’s treatment. (Id. ¶ 45.) M.F. brought suit against Blue

Cross for denial of benefits under ERISA, 29 U.S.C. § 1132(a)(1)(B) (Count I), and the

Mental Health Parity and Addiction Equity Act (MHPAEA or the “Parity Act”), 29

U.S.C. § 1185a(a)(3)(A)(ii) (Count II). (Id. ¶¶ 51–69.) Blue Cross moves to dismiss

pursuant to Federal Rule of Civil Procedure 12(b)(6). (See generally R. 14.)

A Rule 12(b)(6) motion tests whether the plaintiff has provided “enough factual

information to state a claim to relief that is plausible on its face” and has raised a

right to relief above the speculative level.” Haywood v. Massage Envy Franchising,

LLC, 887 F.3d 329, 333 (7th Cir. 2018) (citing Camasta v. Jos. A. Bank Clothiers, Inc.,

761 F.3d 732, 736 (7th Cir. 2014)). In deciding a Rule 12(b)(6) motion, the Court

accepts as true all well-pleaded factual allegations and draws all reasonable

inferences in favor of the non-moving party. Lax v. Mayorkas, 20 F.4th 1178, 1181

(7th Cir. 2021). Dismissal is proper where “the allegations . . . , however true, could

not raise a claim of entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

558 (2007).

Analysis

ERISA Benefits Claim

Blue Cross first argues that Count I fails because Chrysalis does not provide covered

services under the Plan’s terms. (R. 14 at 6–7.) The Court incorporates the Plan

booklet by reference. See Fed. R. Civ. P. 12(d)2; (R. 14-1, Ex. 1.) The Plan booklet

states that for mental illness and substance use disorder services, inpatient benefits

will be provided for treatment in a “Residential Treatment Center” (RTC). (R 14-1 at

63–64.) The Plan booklet defines an RTC as:

2 “[A] court may consider documents [not in the complaint] that are (1) referenced in the

plaintiff’s complaint, (2) concededly authentic, and (3) central to the plaintiff’s claim.” Fin.

Fiduciaries, LLC v. Gannett Co., 46 F.4th 654, 663 (7th Cir. 2022) (citing Gen. Elec. Cap.

Corp. v. Lease Resol. Corp., 128 F.3d 1074, 1080 (7th Cir. 1997)).

[A] facility setting offering a defined course of therapeutic

intervention and special programming in a controlled

environment which also offers a degree of security,

supervision, structure and is licensed by the appropriate

state and local authority to provide such service. It does not

include half-way houses, supervised living, group homes,

wilderness programs, boarding houses or other facilities

that provide primarily a supportive environment and

address long term social needs, even if counseling is

provided in such facilities. Patients are medically

monitored with 24 hour medical availability and 24 hour

onsite nursing service for patients with Mental Illness

and/or Substance Use Disorders. Blue Cross and Blue

Shield of Illinois requires that any Mental Illness and/or

Substance Use Disorder Residential Treatment Center

must be licensed in the state where it is located, or

accredited by a national organization that is recognized by

Blue Cross and Blue Shield of Illinois as set forth in its

current credentialing policy, and otherwise meets all other

credentialing requirements set forth in such policy.

(Id. at 157–58.) Blue Cross may ultimately be correct that the plaintiff cannot

establish that the facility qualifies as an RTC under the Plan’s definition. But at the

pleadings stage, the Court is not prepared to hold that the plaintiff was required to

specifically allege satisfaction of each definitional component of the Plan’s coverage

provisions. Whether Chrysalis in fact met those criteria, and whether Blue Cross may

rely on that basis for denying benefits, are questions more appropriately addressed

after the administrative record is before the Court at the merits stage. The Court

accordingly denies Blue Cross’s motion to dismiss as to Count I.

Parity Act Claim

Blue Cross next argues that the plaintiff fails to state a claim under the Parity Act.

(R. 14 at 9–16.) “The Parity Act requires, as a general matter, that health insurers

place coverage for mental conditions on an equal footing with coverage for physical

conditions.” Midthun-Hensen ex rel. K.H. v. Grp. Health Coop. of S. Cent. Wis., Inc.,

110 F.4th 984, 986 (7th Cir. 2024). Specifically, the statute requires that “treatment

limitations [in ERISA plans] applicable to ... mental health or substance use disorder

benefits are no more restrictive than ... treatment limitations applied to substantially

all medical and surgical benefits covered by the plan[.]” 29 U.S.C. § 1185a(a)(3)(A)(ii).

The plaintiff’s allegations as to a disparity between the requirements tied to mental

health treatment and other general medical treatments in the Plan are conclusory at

best. (See R. 1 ¶¶ 58–69.) The only specific violation identified is that Blue Cross did

not address the Parity Act in its appeal denial. (Id. ¶ 67.) But this is not a requirement

of the statute. In the absence of allegations tied to specific requirements for mental

health treatment that exceed requirements for general medical treatment, the Court

finds that the plaintiff has not adequately pled a claim under the Parity Act. Blue

Cross’ motion to dismiss is granted as to Count II.

Date: July 31, 2026

JEREMY C. DANIEL

United States District Judge