The guidelines insurance companies use to evaluate coverage and claims for mental health care and substance use treatments have come under fresh, intense scrutiny in a 5-year class-action lawsuit involving more than 50,000 plaintiffs.
The case, resolved with a favorable verdict for the plaintiff in February 2019, came to an end in November 2020 when Judge Joseph Spero of the U.S. District Court of Northern California issued various remedies and injunctive reliefs.
Now, UBH is reprocessing more than 60,000 plaintiff claims, as ordered by the Court. While this and the many other remedies are far-reaching, many expect the ruling to have far greater impacts on how insurance companies craft, align, and interpret their guidelines with respect to generally accepted standards of care. There is also belief that this decision will be a milestone in mental health parity.
Background on the Case
The class-action suit at the center of this ruling included two separate lawsuits that had been consolidated, Wit, et al. v. United Behavioral Health (Case No. 3:14-cv-02346-JCS) and Alexander, et al. v. United Behavioral Health (Case No. 3:14-cv-05337-JCS). The plaintiffs were beneficiaries of Employee Retirement Income Security Act (ERISA) plans administered by UBH.
United Behavioral Health is the mental health subsidiary of the Minnetonka-based health care insurance giant UnitedHealth.
UBH Coverage Guidelines
The guidelines UBH relied on to evaluate coverage are known as the “Level of Care Guidelines and Coverage Determination Guidelines” (Guidelines). Developed in 2010, the Guidelines were crafted in response to the 2008 Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA), a federal law aimed at leveling the coverages for mental health and substance use treatment when compared to that for physical injuries. Prior to MHPAEA, mental health and substance use treatment were often covered at much lower levels.
The Guidelines became the standard by which administrators determined coverage when claims were submitted for various mental health, behavioral health, and substance use treatments.
The Allegations
The plaintiffs alleged that UBH relied on Guidelines that did not align with generally accepted standards of care for mental health and substance use treatments. As a result, they allege UBH wrongfully denied coverage for mental health or substance use claims filed by the plaintiffs or their loved ones. Plaintiffs specifically alleged the “arbitrary and capricious” denials of claims, which had been filed between 2011 and 2016 for treatments in residential and outpatient settings, did not reflect the “coverage consistent with generally accepted standards of care” that had been detailed in plaintiffs’ plans.
Additionally, the plaintiffs argued that UBH breached its fiduciary duty with claim denials by:
- Failing to administer the ERISA health plans “solely in the interest of the participants and beneficiaries”
- Developing exceptionally restrictive Guidelines, when compared to those that are generally accepted, which directly conflicted with the coverage detailed in plaintiffs’ ERISA plans
- Prioritizing cost savings over beneficiaries’ interests
In practice, plaintiffs claimed that UBH would commonly deny care as soon as beneficiaries were designated as “stable” by a provider, despite the fact that many had conditions requiring long-term care.
Rather than seeking a determination on whether individual class members were entitled to benefits, the plaintiffs asserted a challenge to UBH’s Guidelines.
The Defense
UBH denied the plaintiffs’ allegations, arguing that plan administrators had followed proper procedure by relying on the Guidelines to evaluate claims. UBH denied any breach of fiduciary duty and asserted that their Guidelines were in line with generally accepted standards of care. Countering plaintiffs’ experts, the defense brought their own medical professionals to testify that the Guidelines met generally accepted standards of care.
The Verdict
Following a 10-day trial, on February 28, 2019, Judge Spero ruled in favor of the plaintiffs, agreeing that the Guidelines were “fundamentally flawed” as a direct result of “UBH’s financial interests.” Finding UBH liable for the wrongful denial of the plaintiffs’ claims, Judge Spero issued a 106-page Findings of Fact and Conclusions of Law, stating that the UBH’s Guidelines and decisions on claims were “based as much or more on its own bottom line as on the interests of the plan members, to whom it owed a fiduciary duty.”
Additionally, Spero ruled that UBH’s Guidelines violated various state statutes concerning the criteria for approving or denying coverage for substance use treatments.
Elaborating on the court’s decision, Spero explained that:
The Court finds, by a preponderance of the evidence, that UBH has breached its fiduciary duty by violating its duty of loyalty, its duty of due care, and its duty to comply with plan terms by adopting Guidelines that are unreasonable and do not reflect generally accepted standards of care… the harm that Plaintiffs allege resulted from UBH’s breach of fiduciary duty is the denial of their right to fair adjudication of their claims for coverage based on Guidelines that were developed solely for their benefit.
On March 5, 2019, the ruling was entered into public record. UBH did not appeal the verdict.
The Remedies
More than a year after the verdict was handed down, on November 2, 2020, Judge Spero issued a ruling on the remedies for the plaintiffs. These included (and were not limited to):
- A permanent injunction against the Guidelines that were at dispute in the case
- Various injunctive reliefs, including a 10-year injunction pertaining to UBH’s ERISA plan administration and an order that UBH staff undergo training on their ERISA obligations and accepted standards of behavioral health care
- A court-appointed a special master to oversee UBH’s compliance with both reprocessing and prospective injunctive relief
- A mandate that UBH reprocess more than 60,000 mental health and substance use treatment claims that had been wrongfully denied, using court-provided procedures for processing claims and distributing reimbursements (with interest) to the beneficiaries whose claims are approved
- An order to notify class members of the remedies and reliefs handed down by the court
Greater Impacts of the Verdict
Although it’s unclear whether beneficiaries’ claims will fare better when UBH reprocesses them, what is clear is that generally accepted standards of care are the basis by which insurance coverage guidelines should be crafted and interpreted, according to the courts. It is also evident that understanding what “generally accepted standards of care” are, how they apply to mental health, and how they play a role in insurance coverage guidelines and interpretations can require the expertise of licensed medical professionals.
