The Ninth Circuit Court of Appeals recently reversed the Northern District of California’s landmark decision against UnitedHealth Group Inc.’s behavioral health unit, United Behavioral Health (“UBH”), which ordered UBH to reprocess dozens of thousands of behavioral health claims. . Under the 9th Circuit’s decision, the insurance giant avoids significant liability in the class action case.
The case reached the Ninth Circuit on appeal from a consolidated class action lawsuit, David Witt, et al. v. united behavioral health and Gary Alejandro, et al. v. united behavioral health, filed against the UBH. In these lawsuits, patients and providers of substance abuse-related health care services alleged that UBH breached its duties and standards of care by developing guidelines that restrict coverage and prioritize UBH’s cost savings over member interests. . The district court held that the preponderance of the evidence showed that the only reason UBH refused to adopt coverage criteria following generally accepted standards of care, despite a clear consensus among UBH addiction specialists that those criteria of generally accepted standards of care were preferable to the UBH Guidelines, he had a financial motivation: the UBH Finance Department would not approve the change. The judge held that UBH violated the Employee Retirement Income Security Act (“ERISA”) by creating and adopting coverage criteria for residential treatment of mental illness or substance use disorders that were more restrictive than the standards of care and inconsistent with the terms of the class members’ insurance plans.
In November 2020, the district court ordered UBH to adopt and use guidelines consistent with generally accepted standards of care and to reprocess 67,000 behavioral health claims using the revised guidelines and ordered UBH to adopt protocols to train its employees and officers about the new guidelines and UBH rules. duties under ERISA. The judge appointed a special expert to supervise and verify compliance by the UBH with the precautionary and declaratory measures ordered.
On appeal, the Ninth Circuit held that the plaintiffs had standing, but reversed the lower court’s decision and found that UBH did not act inconsistently with its duties under ERISA. The majority held that while the district court identified the appropriate “abuse of discretion” standard for reviewing UBH’s decisions, it later “misapplied this standard by substituting its interpretation of the Plans for that of UBH.” The court held that UBH’s interpretation, that plans do not require consistency with generally accepted standards of care, “was not unreasonable.” In her partial agreement, Judge Forrest also went a step further, stating that the “district court abused its discretion in accepting that retrial is a remedy that justifies class action.”
The Ninth Circuit’s decision means that UBH no longer has to reprocess the tens of thousands of claims; however, prior to ruling, the special master had already confirmed that UBH completed ERISA clinical guidelines training and fiduciary duty training in accordance with declaratory and injunctions previously ordered by the district court. UBH was still adjusting its criteria and guidelines at the time of the Ninth Circuit’s decision. It’s unclear whether UBS will now “roll back” its revised criteria to make it harder for members to get behavioral health treatment coverage.
This decision means a great deal of leeway for plan administrators and appears to mark a departure from a broad national movement toward enforcing mental health parity laws, as evidenced by the $15.6 million settlements paid by UnitedHealth in New York in August. of 2021 to resolve similar allegations from the New York Attorney General, the US Department of Labor, and patients, which received support from the Biden administration, Congress, and other state governments.
