The fight for behavioral health parity has momentum heading into 2024 following three major decisions at the appellate level. And the battle may extend to the U.S. Supreme Court following an appeal by United Behavioral Health.
Three cases in this slice of the appeals court address how health plans governed by the Employee Retirement Income Security Act (ERISA) handle benefit denials and internal appeals. In sum, the rulings impact how plans communicate decisions in denial letters, assess the expert opinions of member’s clinicians, and set specific standards for bringing a parity case to a federal court.
ERISA is the federal law that governs most voluntary private retirement and health plans. Its amendments include the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which calls for health plans to treat behavioral health benefits as equal to physical health benefits.
Parity is a long-running fight in the behavioral health industry. Providers and their advocates point to underpayment and inequitable treatment of claims as the root causes of several issues in behavioral health, such as challenges keeping up with wage inflation and employee retention. Despite the popularity of the concept, the health insurance industry is eager to dispute the benefits of parity.
Several industry insiders predict that parity will be a defining issue in 2024. The Biden Administration is set to institute new rules, beefing up provisions around how plans demonstrate their compliance with parity laws.
“This is just a rampant rip-off of the American public: that they pay all this money for health insurance premiums and they incur claims based on their doctor’s treatment recommendations and the insurance companies won’t pay,” Attorney Mark DeBofsky, founder of Chicago-based DeBofsky Law, told Behavioral Health Business. “Unfortunately, you have a child who has psychiatric issues and needs a more intensive level of care, and they don’t want to pay for that. And that’s the case in these cases.”
Salt Lake City-based law firm Brian S. King PC represents the plaintiffs in all three cases. Brian King, the firm’s founder, and another attorney at the firm involved in these cases did not respond to a request for comment.
A new test for parity claims
On Nov. 25, The court articulated for the first time at the appellate level a standard to judge whether or not a plaintiff has appropriately brought a legal claim under MHPAEA.
In this case, E.W., et al v. Health Net Life Insurance Co., the 10th U.S. Circuit Court of Appeals established four criteria to use once a parity claim has been filed and a health plan moves to dismiss the case. Plaintiffs must:
— Plausibly allege the health plan is subject to MHPAEA
— Identify the limitation placed on the behavioral health benefit
— Find comparable physical health care benefits
— Plausibly allege disparity in limitations between the two services
District courts have assessed their own standards. The ruling in this case pulls from pieces of them and other cases.
DeBofsky said time will tell whether or not this will become a standard in other court circuits. The 10th U.S. Circuit Court of Appeals encompasses Utah, Wyoming, New Mexico, Colorado, Kansas and Oklahoma. However, the decision and new standard set a precedent for the district courts in those states.
“The opinion is going to be influential as far as how other courts will look at it,” DeBofsky said. “They’re not precedentially bound by the EW case. But they will undoubtedly consider it persuasive authority that may help them sort out whether a plaintiff has stated a claim for a mental health parity violation.”
In this case, the plaintiffs argued that Health Net did not have comparable limitations on the behavioral health benefits sought in sub-acute inpatient care or other skilled nursing settings. The circuit court found these care settings were “relevant” analogs to the care sought by the plaintiffs.
Still, the larger underlying ERISA issues remain unresolved, and other courts may well disregard the standard that the 10th U.S. Circuit Court of Appeals established, Joanne Roskey, an attorney at Miller & Chevalier, told BHB. She works in the firm’s ERISA and employee benefits practice. She is also the former chief of the division of health investigations for the U.S. Employee Benefits Security Administration.
Some argue that ERISA and MHPAEA do not articulate a way for people to sue plans for benefits. But historically, those arguments have largely failed, and courts have assumed that people were allowed to bring lawsuits without much analysis on the matter, Roskey said.
“Because it’s the first case to set forth criteria for stating a MHPAEA violation,” Roskey said, “you would think now that a lot of other individuals and attorneys that are bringing these lawsuits will look to this case when they prepare their complaint.”
The new standard, even if widely accepted, will have a moderate impact, according to Roskey and DeBofsky, since it only applies to assessing cases at the stage of a motion to dismiss. Still, it helps plaintiffs and their attorneys “better understand what they need to put on paper in order to get past the starting gate so that they can have their case heard,” DeBofsky said.
The circuit court affirmed the district court’s summary judgment on the other contentions for claims denials.
United Behavioral Health appeals to Supreme Court
In May, the circuit court upheld a district court decision that awarded benefits to the plaintiffs in a case against United Behavioral Health Care. The health plan filed its writ of certiorari with the Supreme Court on Nov. 29.
The case, D.K. v. United Behavioral Health, came down to questions about how the health plan communicated its decision to deny benefits in denial letters and its apparent disregard for the medical opinions and other evidence the plaintiff’s clinicians provided during the appeals process.
The circuit court said the district court was correct in only assessing the denial letters and similar correspondence in its assessment of how United Behavioral Health handled the claims and appeals.
“United again argues that the district court erred in not considering plan administrators’ notes, which it claims adequately cite to the medical record,” the circuit court wrote. “We reiterate our conclusion that ERISA regulations require denial letters themselves to be comprehensive … in order to form a ‘meaningful dialogue’ for a full and fair review.”
United Behavioral Health pointed to case law, Black & Decker Disability Plan v. Nord, that says health plans are not obligated to explain why they disagree with member’s clinicians when they deny claims. The appeals court similarly pointed to other cases that state that a health plan “cannot shut their eyes to readily available information” that shows entitlement to benefits.
“Therefore, if United arbitrarily refused to credit and effectively ‘shut their eyes’ to the medical opinions of [the patient’s] treating physicians, it acted arbitrarily and capriciously,” the appeals court wrote.
United Behavioral Health leads its appeal to the Supreme Court with the same citation that says health plans don’t have to dialogue with clinicians about denials. It also pushes back against the assertion that denial letters include comprehensive explanations as well as the role of denial letters in assessing denials in court.
“This narrow view of the scope of review for benefits decisions is a clear break from the precedent of most circuits,” United Behavioral Health wrote in its appeal to the Supreme Court. “And it undermines Congress’s intent that benefits decisions be simply explained in understandable terms.”
UnitedHealth Group Inc. (NYSE: UNH) and UnitedHealthcare, the parent organizations of United Behavioral Health, have not responded to a request for comment.
Considering mental health and addiction treatment as separate issues
On Dec. 5, the circuit court reversed a district court’s ruling against UnitedHealthcare, finding that the plaintiff did not receive a “full and fair review” of his claims.
In Ian C. v. UnitedHealthcare Insurance Co., parents sought residential and inpatient treatment for their son’s mental health and substance abuse issues. UnitedHealthcare initially approved and covered the care for the plaintiff’s child but later denied and stopped covering the treatment. The parent unsuccessfully appealed within the plan and then sued.
They alleged — and the circuit court agreed — that United Behavioral Health did not consider the patient’s mental health and addiction treatment needs as separate “independent grounds for coverage.” Rather, UnitedHealthcare and other entities involved in reviewing the internal appeals only address the patient’s mental health treatment needs.
“From a policy perspective, we emphasized that administrators, as fiduciaries, have a ‘duty to see that those entitled to benefits receive them,'” the circuit court wrote. “This process requires a ‘meaningful dialogue’ between both parties to unearth all the relevant evidence surrounding the participant’s claim and to guarantee that benefits are distributed according to the plan.
“Finding the administrator’s cooperation in those efforts lacking, we reversed the district court’s decision that the administrator’s denial wasn’t arbitrary and capricious.”