This is an exclusive BHB+ story

A health insurance industry group has sued the Trump administration with the hope of undoing the latest parity-enforcement rule.

Filed Jan. 17., the suit argues that the Biden administration’s rule oversteps what current parity law actually allows, violates health plans’ due process rights and runs afoul of federal rulemaking procedures. The ERISA Industry Committee, better known as ERIC, filed the suit in the U.S. District Court for the District of Columbia.

The move does not come as a surprise. Several sources have previously told Behavioral Health Business they anticipated a court challenge. ERIC and several other health plan advocates have long decried rules meant to implement parity laws as vague, burdensome and likely to drive health plans and plan sponsors to cut back on behavioral health benefits. ERIC makes many similar contentions.

“The new regulations issued by the Biden Administration exceed the Tri-Departments’ statutory authority under the laws that Congress passed and threaten the ability of employers to offer high-quality, affordable coverage for the mental health and substance use disorder needs of employees and their families,” Tom Christina, executive director of the ERIC Legal Center, said in a statement announcing the lawsuit.

The Tri-Departments are the U.S. Departments of Health and Human Services (HHS), Labor, and Treasury. Each has a role in the oversight of health plans, specifically over parity law.

Former U.S. Secretary of Labor Eugene Scalia — the son of the late Supreme Court Justice Antonin Scalia — and other attorneys at Gibson, Dunn & Crutcher LLP represent ERIC.

Parts of the rule, finalized by the Biden administration in September, went into effect at the beginning of the year, while other aspects will become effective at the start of next year.

Advocates in the behavioral health space say the lawsuit risks undoing years of progress on the concept of parity between behavioral health and physical health benefits. Some go even further.

The National Association for Behavioral Healthcare (NABH), a coalition of some of the nation’s largest behavioral health providers, argue that the lawsuit diminishes parity law to mean that plans are only meant to offer plans that are comparable on paper and not in practice. The association points to this selection in the suit: “All that is required is parity in particular plan terms and their application, not parity in access to MH/SUD benefits, much less provision of particular benefits.”

“In this way,” NABH said in a statement, “ERIC is challenging even the parity comparative analysis intended to promote transparency and compliance. Essentially, ERIC is arguing that parity should exist in name only and need not result in real-world access to care or equitable outcomes. This is perverse, and NABH strongly objects to this interpretation.”

What the lawsuit argues 

The ERIC lawsuit and its various arguments come back to the allegation that the final rule exceeds the authority given to the executive branch by the law. While the suit doesn’t refer to this specifically, the U.S. Supreme Court in June ruled that judges no longer have to give federal agencies deference in the agency’s interpretation of law when developing rules to execute the law. The elimination of this 40-year-old legal doctrine opens up “an uncertainty era” for health policy.

“I think that is what they’re (ERIC) are hoping will be the outcome here — that the court would say that the agencies didn’t have the authority to make some of the decisions that they did,” Deborah Steinberg, senior health policy attorney for the Legal Action Center, told BHB.

Another legal hook is alleged violations of the Administrative Procedures Act, which sets the ground rules for developing federal policy and the grounds for challenging them in court. The act articulates the notice-comment processes that are a hallmark of industry oversight. Also allows the court to strike down provisions of rules that are deemed to be “arbitrary and capricious.”

The new rule requires health plans to generate reports comparing how they treat behavioral health benefits compared to physical health benefits. It also requires that plans deliver those reports to state and federal regulators, while directing plans to take action if there are manifest disparities between the benefit type.

Most significantly, the rule established a handful of new parameters for assessing parity and parity violations. The two top include the “meaningful benefits” requirement and the “material difference in access” standard.

The meaningful benefit requirement states that health plans must cover core treatments for behavioral health conditions in a comparable way to physical health conditions, according to third-party “generally recognized independent standards of current medical practice.” The material difference in access standard requires health insurance companies to assess and act if plan details prevent access to services in ways that aren’t attributable to fraud and waste prevention. These rules are effective at the start of 2026. The lawsuit argues that these are arbitrary and capricious.

The suit also states that the comparative analysis of non-quantitative treatment limitation (NQTLs) requirements, the fiduciary certification requirement and the Jan. 1, 2025 effective date for certain parts of the rule are all arbitrary and capricious.

“In these new regulations … the Departments lost sight of what’s best for a workable mental health care system, and of the constraints on their authority under the Constitution and the laws they purported to implement,” Scalia said in ERIC’s announcement of the lawsuit.

What’s next for parity?

The federal government typically has 60 days to respond to a civil lawsuit. As of the writing of this article, no other entries in the public court record exist beyond those related to the filing of the suit. 

ERIC did not file for a restraining order, Bragg Hemme, a shareholder and attorney at the health care law firm Polsinelli, pointed out. This means that the rule is still in effect pending further action by the court.

While a response by the federal government is required, neither Hemme nor Steinberg said it was clear how the case would play out. Much of that depends on how the Trump administration will respond to the suit.

Hemme speculates that the timing of the suit may have something to do with the transition of administration.

“Under the Biden administration, we would have expected them to defend the rule vigorously,” Hemme said. “With all of the different things that the Trump administration is focused on, government overreach is one of them: This lawsuit goes straight to that pillar of their administration — that the government shouldn’t be overreaching statutory authority or overreaching into the private business world at all.”

It’s possible that the administration effectively doesn’t defend the rule and the judge defaults in favor of ERIC, invalidating the rule. The Trump administration could fight for some parts of the rule and not others. It could argue that it has the intent to rework the rule and tell the courts the lawsuit is moot.

“There are 100 different things that could happen. It’s still early enough on in this administration that I don’t really have a good sense of what they’re going to be focusing on yet,” Steinberg said.

Theoretically, other organizations could intervene in the suit, such as private organizations or state government entities, Steinberg added. This could happen on both sides of the case.