‘I Don’t Think This Is Over’: Reactions to the Latest in Wit v. United Behavioral Health

The latest ruling in the Wit v. United Behavioral Health case disappointed many behavioral health parity advocates.

On Jan. 26, the 9th U.S. Circuit Court of Appeals released a ruling that essentially undid a favorable and sweeping 2019 district court decision on how payers may handle behavioral health claims. It also ordered United Behavioral Health to reprocess nearly 70,000 claims.

The initial 2014 class-action lawsuit alleged that United Behavioral Health improperly ignored generally accepted medical standards when it developed its rules for determining the medical necessity of behavioral health services.

This most recent ruling came after the appellate court in March 2022 issued a remarkably brief unpublished decision that seemed to grant United Behavioral Health’s appeal.

Still, the case lives on since it was remanded to the district court for further consideration. This leaves some chance for an outcome favorable to behavioral health parity advocates. The decision, as it stands, is highly favorable to health insurers because it further enables them to adjudicate claims according to their self-prescribed standards.

Legal experts in the space say the appellate court largely ignored the facts at hand, applying a high-level legal critique of the case rather than assessing the merits of the case. Some behavioral health advocates see the potential fallout of the appellate court as problematic, fearing that left unchanged the ruling would have wide-ranging implications for any cases brought under the Employee Retirement Income Security Act (ERISA).

“The [appellate court] essentially held that individuals denied mental health and addiction coverage have no right to the processing of their claims which is deeply problematic and will severely damage Americans’ rights to not only mental health and addiction coverage but also any health coverage, retirement or other benefits under ERISA,” David Lloyd, senior policy advisor for the Kennedy Forum, told Behavioral Health Business. 

‘The most important health insurance decision of the last 25 years’

The sweeping approach the district court took to this ERISA case stuck in the craw of the appellate court, leading it to rule that the district court judge, Magistrate Judge Joseph Spero, overstepped their bounds.

In ERISA cases, the precedent is for courts to apply one of two legal standards as a test to assess how to handle specific plaintiff claims: the abuse of discretion standard or the de novo standard.

The district court applied a de novo and substituted its own understanding of United Behavioral Health’s health plan. The appellate court found that this was a mistake and that the district court should have assessed the case under the abuse of discretion standard.

If it holds, one specific ruling out of the appellate court decision is that ERISA health plan members must exhaust all internal appeals for reprocessing before seeking relief in the courts, which has proven difficult for the few people of their rights to appeal coverage decisions, Lloyd said.

“The court left them in a difficult situation but not an impossible one,” Mark DeBofsky, shareholder at the Chicago-based law firm DeBofsky Law Ltd., told BHB. “I think that, hopefully, they’ll be able to come up with something that will really turn the case back into a winner.”

DeBofsky, who wrote an amicus brief in this case on behalf of several health care advocacy groups, including the National Association for Behavioral Healthcare and the National Council for Mental Wellbeing, described the dramatic stakes of the original district court ruling in Wit v. United Behavioral Health.

“Somebody described the case to me as the Brown v. Board of Education of health insurance cases,” DeBofsky said. “That’s not really hyperbole; I’ve described it as easily the most important health insurance decision of the last 25 years.”

Other key findings

Another key specific finding of the appellate court is that United Behavioral Health’s medical necessity criteria might not have been in keeping with generally accepted standards of care (GASC) but was also “infected” by their financial self-interest.

“It is a positive decision to say that insurers cannot make medical necessity criteria based just on their financial self-interest; that’s an important holding,” Lloyd said. “However, there’s no requirement according to the court, that medical necessity criteria be consistent with GASC. … We think it’s a pretty fundamental principle that if you’re deciding whether something is medically necessary that you should make that decision consistent with [GASC.]”

The appellate court also affirmed the district court’s ruling that United Behavioral Health’s medical necessity criteria violated the laws of four states — Connecticut, Illinois, Rhode Island and Texas. These states require medical determination decisions to be in keeping with GASC.

“The state mandate part was the only part that was really clear,” DeBofsky said.

What’s next for Wit v. United Behavioral Health?

David Thornton, a member of the law firm Bass, Berry & Sims PLC and long-time ERISA attorney, also told BHB that he doesn’t think Wit v. United Behavioral Health is at an end.

While not involved in the case, Thornton guessed that the plaintiffs’ attorneys would seek an en banc hearing or a hearing with all 9th U.S. Circuit Court of Appeals judges. Lloyd and DeBofsky made similar suppositions. The plaintiffs’ lead firm, Zuckerman Spaeder LLP, has yet to respond to BHB’s requests for comment.

“As it was with the original 9th circuit panel [decision], I was surprised that there wasn’t more reliance on the facts in the opinion that was provided on the case,” Thornton said. “This case has so many factual attributes that really were never part of the opinion; it was more legal analysis as opposed to what the underlying facts really show. … I don’t think this is over.”

One key fact is how both the district court and the original appellate court ruling deal with issues of parity. While Wit v. United Behavioral Health isn’t about the federal parity laws, the district court addressed parity issues.

“The lower court did raise a number of mental health parity issues that the Court of Appeals just completely failed to address,” DeBofsky said, adding that it was “shocking” that the court didn’t address these issues. “For the population who has to deal with behavioral health issues, it was insulting to them because the court decision made it harder for them to get the care that they need to get better — not just stabilize a crisis but actually get better.

“I don’t think that that element was taken into consideration by the Court of Appeals; I don’t think that they really thought through the human element that Judge Spero did.”