Judge Rules United Behavioral Health Guidelines Led to Denial of Claims Violations
BY Christopher A. Parrella, J.D., CHC, CPC, CPCO
A California federal judge has issued a landmark ruling that could impact the way insurance companies cover mental health and substance use treatment.
Chief Magistrate Judge Joseph Spero of the District Court for the Northern District of California ruled that United Behavioral Health (UBH) used “flawed” internal guidelines resulting in the unlawful denial of mental health and substance use treatment for those it insured across the country, all in an effort to save money. UBH, which is owned by UnitedHealth, serves more than 60 million members.
The case grew out of two consolidated class-action lawsuits (Wit, et. al. v. UnitedHealthcare et. al. and Alexander, et al. v. United Behavioral Health), filed in 2014 and heard by Judge Spero in 2017 during a 10-day bench trial.
Plaintiffs alleged they were denied coverage by self-insured and fully insured employer health plans for residential and outpatient treatment between 2011 and 2017. The suit asserted claims under the Employee Retirement Income Security Act of 1974 (ERISA) alleging plaintiffs were improperly denied benefits for treatment because UBH’s guidelines do not comply with the terms of their insurance plans and/or state law.
Two claims were asserted: Breach of fiduciary duty and arbitrary and capricious denial of benefits.
According to the first claim: UBH breached these duties by: 1) developing guidelines for making coverage determinations that are far more restrictive than those that are generally accepted even though plaintiffs’ health insurance plans provide for coverage of treatment that is consistent with generally accepted standards of care; and 2) prioritizing cost savings over members’ interests.
The second claim was based on the theory that UBH improperly adjudicated and denied plaintiffs’ requests for coverage by using its overly restrictive Guidelines Case to make coverage determinations.
Plaintiffs alleged that UBH’s guidelines inappropriately limited their coverage once their symptoms subsided instead of covering the care they continued to require to treat chronic conditions requiring long-term care.
UBH argued that it had received accreditation for its Level of Care Guidelines (LOCG’s) from both the NCQA and URAC – the two leading organizations that accredit utilization management processes for major health plans and for freestanding health utilization management organizations. However, despite a consensus among all of UBH’s addiction psychiatrists that the company should adopt American Society of Addiction Medicine (ASAM) standards, the company failed to do so.
Notably, the court wrote: “Perhaps the most telling example of the emphasis UBH placed on financial considerations in its decision making with respect to the guidelines relates to UBH’s decision not to adopt the ASAM Criteria for making substance use disorder coverage determinations.”
He went on to add: “The only reason UBH declined to adopt the ASAM Criteria was that its Finance Department wouldn’t sign off on the change,” Judge Spero wrote.
Although the passage of the Mental Health Parity and Addiction Equity Act of 2008 was supposed to prevent health insurers from imposing less favorable benefit limitations on mental health or substance abuse treatment than they do on medical/surgical benefits, patients have long complained that hasn’t always happened.
UBH isn’t the only insurer to become embroiled in the debate over how health insurance companies cover mental health and substance abuse disorders. Other insurers are facing similar litigation.