Patient Wins Appeal Bringing Back Parity Lawsuit Against UnitedHealthcare

A federal appeals court revived a lawsuit alleging UnitedHealthcare violated federal behavioral health parity and insurance fiduciary laws.

On April 11, the appeals court remanded parity and fiduciary claims to a California district court. The 9th U.S. Circuit Court of Appeals said the lower court erred in dismissing those claims but affirmed a separate question specific to the plaintiff’s health plan.

The ruling adds to a string of recent rulings where health plans have tried and failed to escape scrutiny following allegations of improperly handling behavioral health claims. It also presents another example of how courts assess the standards required to bring and plead parity cases, a perceived failing of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

“We are extremely pleased with the 9th Circuit’s decision on behalf of our client … and others in California whose access to substance use disorder treatment has been thwarted by UnitedHealthcare’s unfair practices,” Elizabeth Hopkins, a plaintiff’s attorney in the case and partner at the firm Kantor & Kantor, LLP, told BHB.

In 2019, a plaintiff going by the name of Ryan S. sued UnitedHealthcare and other divisions of the industry giant UnitedHealth Group Inc. (NYSE: UNH). He alleged UnitedHealthcare had a more stringent process in assessing his out-of-network, outpatient substance use disorder treatment claims than comparable physical health claims.

The suit stems from two rounds of treatment between 2017 and 2019 where, after frequent denials, Ryan S. was saddled with hundreds of thousands of dollars in charges.

The case will now move to discovery. The plaintiff is seeking a putative class action certification.

UntiedHealthcare has not responded to a request for comment.

“At the end of the day, we want United to be ordered to fairly evaluate substance use disorder claims, pay any that were improperly denied or never decided, including all of Ryan’s claims, and correct its discriminatory and unfair practices going forward,” Hopkins said.

This is the second time the 9th U.S. Circuit Court of Appeals has looked at this case. In March 2022, the circuit court reversed half of the lower court’s reasons for dismissing the case on the grounds of standing.

Much of this ruling grapples with how plaintiffs must plead cases about alleged violations of MHPAEA. The law itself does not specify this standard. The appeals court acknowledges the “ambiguity regarding its application” and that guidance from circuit courts is limited.

The 9th Circuit came to three conclusions about how plaintiffs specifically alleging parity law violations that involve an improper internal process on the part of the health plan can approach their pleas:

— They do not need to allege a “‘categorical’ practice or the uniform denial of his benefits.”

— They don’t need to identify the comparable physical health benefits being treated better than behavioral health benefits “with precision.”

— They do not need to specify the different processes allegedly being used in assessing physical health claims

“Simply alleging the denial of a plaintiff’s claims for behavioral health benefits is unlikely by itself to support a plausible inference that a defendant employed policies in violation of the Parity Act,” the appeals court wrote. “In this case, Ryan S. pleads something more.”

That “something more” is presenting his specific experience with UnitedHealthcare’s treatment of his claims as well as citing the findings of a 2018 California state government report. That report found that UnitedHealthcare’s California-based entities used processes for behavioral health claims that were more stringent than processes for physical health care claims. 

The circuit court also found that the district court erred in dismissing Ryan S.’s breach of fiduciary duty claims for similar reasons as the parity claims: they were properly pleaded in the circuit court’s assessment.

A separate case also addressed the ambiguity in pursuing parity law violations. In November 2023, the 10th U.S. Circuit Court of Appeals established a four-part test for assessing parity suits. The case is E.W., et al v. Health Net Life Insurance Co.

UnitedHealthcare and its subsidiaries are involved in several newsworthy legal cases. In August 2023, a panel of judges, in the 9th Circuit, ordered the well-known case Wit v. United Behavioral Health to go back to the district court level to assess fiduciary duty and claim appeals process questions. Judges in the 10th U.S. Circuit Court of Appeals found that United Behavioral Health did not assess mental health and substance use disorders as separate grounds for coverage. 

In February, the Supreme Court did not take up the United Behavioral Health appeal in a case from the 10th U.S. Circuit Court of Appeals. That case involved questions about United’s process of interacting with and assessing the medical opinions of beneficiaries’ health care providers and how denials are communicated.