A federal judge ruled Tuesday that United Behavioral Health breached its fiduciary duty to patients by using unreasonable and overly restrictive guidelines to make coverage decisions for tens of thousands of mental health and substance abuse patients.
The decision, if upheld on appeal, could have wide ramifications of what insurers must cover in the fast-growing behavioral healthcare sector.
The case stems from two consolidated class-action lawsuits filed in 2014 against UnitedHealth Group's United Behavioral Health, the nation's largest behavioral health insurer. It went to trial in October 2017 before U.S. Chief Magistrate Judge Joseph Spero in San Francisco.
The case involved United members, including children, denied coverage by self-insured and fully insured employer health plans for residential and outpatient treatment from 2011 to 2017.
The plaintiffs claimed United breached its fiduciary duty to its members under the federal Employee Retirement Income Security Act by adopting an unreasonable interpretation of plan rules. Those rules required coverage for treatment that was consistent with generally accepted standards of care.
Experts say different insurers use widely different criteria for covering behavioral care, even though medical experts have sought to standardize those guidelines. Many states require providers and carriers to use criteria developed by the American Society of Addiction Medicine, or ASAM, for addiction-treatment coverage. Those are the criteria the plaintiffs want United to adopt.
In his decision in the consolidated cases, Wit v. United Behavioral Health and Alexander v. United Behavioral Health, Spero found that United had a structural conflict of interest in applying its own restrictive coverage rules because it felt pressure to keep benefit expenses down so it could offer competitive rates to employers.
The judge said United included administrators from its finance and affordability departments on the committees that approved the guidelines and that committee members received detailed financial information about whether utilization targets set by United were being met.
"UBH's refusal to adopt the ASAM criteria was not based on any clinical justification," Spero wrote. "Indeed, all of its clinicians recommended that the ASAM criteria be adopted. The only reason UBH declined to adopt the ASAM criteria was that its finance department wouldn't sign off on the change."
D. Brian Hufford of Zuckerman Spaeder, the co-lead attorney for the plan members, called the ruling "a monumental win for mental health patients, who face widespread discrimination in attempting to get the coverage they were promised and that the law requires."
In a written statement, UnitedHealthcare said "we look forward to demonstrating in the next phase of this case how our members received appropriate care. We remain committed to providing our members with access to the right care for the treatment of mental health conditions and substance use disorders."
The company did not indicate whether it planned to appeal, though Hufford said he expected that to happen after the remedy phase of the case is completed and a final judgment is issued.
Now the parties will present arguments to the court about the appropriate remedy. The members want United to change its coverage guidelines going forward and reconsider prior coverage decisions. They may request an independent monitor oversee that process.
A major issue in the case was the adequacy of United's coverage of behavioral and substance use disorders as chronic rather than acute conditions. The plaintiffs said United's guidelines inappropriately limited coverage once patients' symptoms subsided, rather than covering the range of services needed to maintain patient's stable health conditions over a longer term.
Judge Spero wrote that "one of the most troubling aspects of UBH's guidelines is their failure to address in any meaningful way the different standards that apply to children and adolescents with respect to the treatment of mental health and substance abuse disorders."
A few lawsuits against large carriers such as Health Care Service Corp. resulted in settlements in which the insurers agreed to revise their coverage policies on residential treatment and other behavioral healthcare services. In addition, there are other pending suits alleging unlawful coverage and reimbursement policies for behavioral healthcare against United, Blue Shield of California, Aetna and Cigna.
Many providers and patients say that despite federal and state laws requiring insurers to cover behavioral care on parity with care for physical conditions, they often have significant problems getting carriers to pay for needed treatment. Those problems also exist under self-insured employer health plans, which are governed by ERISA rather than federal and state parity statutes and which cover tens of millions of Americans.