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Court Orders Expansive Remedies In Class Actions Challenging Insurer’s Processing of Mental Health Claims

Court Orders Expansive Remedies In Class Actions Challenging Insurer’s Processing of Mental Health Claims - Photo by Jawadur Rahman Srijon from Pexels

This week’s notable decision is Wit, et al. v. United Behavioral Health, No. 14-CV-02346-JCS, 2020 WL 6479273 (N.D. Cal. Nov. 3, 2020), where the court issued the remedies in two Employee Retirement Income Security Act (ERISA) class actions, Wit et al. v. United Behavioral Health. and Alexander et al. v. United Behavioral Health.

By way of background, the defendant, United Behavioral Health/OptumHealth Behavioral Solutions (“UBH”), administers mental health and substance use disorder benefits for commercial welfare benefit plans, and as such, developed internal guidelines (“Guidelines”). In Wit, following a 10-day bench trial, the court found for Plaintiffs, including that: 1) UBH improperly denied benefits for treatment of mental health and substance use disorders because their Guidelines did not comply with the terms of their insurance plans and/or state law; 2) deliberately used internal guidelines that were found to be inconsistent with the terms of the class members’ health insurance plan, all in an effort to “protect its bottom line;” and 3) UBH lied to state regulators and its own executives responsible for writing and implementing the guidelines—in a concrete attempt to mislead the court in this matter.

In Alexander, the court found that the Guidelines failed to reasonably interpret the plan’s requirement that they be based on “generally accepted standards of care,” and as such the court found a breach of fiduciary duty and the wrongful denial of claims for benefits. Following, the Plaintiffs sought relief in the following ways: 1) declaratory relief in the form of a declaration that UBH violated the terms of the class members’ plans requiring that coverage be consistent with generally accepted standards of care and clarifying class members’ rights under the plans; 2) an order remanding UBH’s coverage determinations for reprocessing under standards that are consistent with generally accepted standards of care; 3) injunctive relief designed to prevent UBH from harming class members in the same way in the future; and 4) appointment of a special master to monitor UBH’s compliance with the court’s remedies order.

From the outset, UBH launched several objections, including about Plaintiffs’ request for declaratory relief. UBH argued it should be denied, citing United States v. Washington, 769 F.2d 1353, 1356-1357 (9th Cir. 1985) and other authority. The court, however, found that UBH failed to cite any persuasive authority that a declaratory judgment was inappropriate. In no uncertain terms, the court found that, “[t]he scant authority UBH cites does not support its position,” including their citing of a non-ERISA case. The court concluded that the relief Plaintiffs sought was available under § 1132(a)(1)(B) and that, in the alternative, relief was available under § 1132(a)(3). The court awarded the declaratory relief requested by Plaintiffs.

Plaintiffs further sought the reprocessing of claims and requested the following specifics: 1) allow for completion of the class members’ records on remand; 2) specify the criteria to be applied on remand; 3) specify the procedures UBH should follow when the reprocessing is complete; 4) expressly require the payment of pre- and post-judgment interest on any benefits to which a class member is entitled after reprocessing; 5) require UBH to certify compliance with the reprocessing procedures and report to the court on its compliance; and 6) set deadlines that ensure that reprocessing proceeds expeditiously. Further, Plaintiffs asked the court to appoint a special master to monitor compliance.

UBH argued that Plaintiffs had not established the reprocessing remedy would benefit every member of the certified class and therefore such relief should not be awarded. The court found in favor of Plaintiffs’ request for reprocessing of the class members’ claims for coverage. The court rejected UBH’s argument that class members who were denied benefits under the Guidelines, but did not subsequently obtain the treatment for which they had requested coverage, were not entitled to have their claims reprocessed. Going further, the Court called out UBH for the outright harm they have caused:

“[The harm that] UBH caused by applying overly restrictive guidelines to make coverage determinations goes beyond the money spent by class members who could afford to obtain the treatment that UBH refused to cover. Rather, it was the unfair adjudication of claims that was experienced by all of the class members (and for some deprived them of much-needed treatment that should have been covered by their health plans).

Another notable conclusion by the court was that UBH would be precluded from offering any new reasons for denying benefits that were not contained in the original denial letters (citing several cases, including Harlick v. Blue Shield of California, 686 F.3d 699, 719–20 (9th Cir. 2012)). Further, the court noted that instead of UBH’s own Guidelines, the most recent versions of CALOCUS [Child and Adolescent Level Of Care Utilization System], CASII [Child and Adolescent Service Intensity Instrument], ASAM [American Society of Addiction Medicine], and ECSII [Early Childhood Service Intensity Instrument] should be used during the reprocessing of claims as the court found that they reflected the “generally accepted standards of care.”

Finally, the court awarded Plaintiffs injunctive relief in several ways. Of particular note, the court found that because there was a “significant danger” of UBH committing recurrent violations by utilizing flawed Guidelines, as a result of the financial temptation tied with applying such Guidelines, the court awarded injunctive relief governing the criteria UBH would be required to apply to coverage determinations. Additionally, the Court found that “UBH abused its discretion in administering the class members’ plans, placing its financial interests before its duties to plan members and depriving members of their right to determinations of coverage that were consistent with their plans.” As such, the court found it was appropriate to appoint a special master to oversee the reprocessing of claims.

In sum, the court found that UBH had long breached its fiduciary duties to the class members and as a result, “each and every adverse benefit determination” within the class should be remanded to UBH for reprocessing under the manners consistent with the FFCL—and all at UBH’s expense, including the payment of interest. The court further concluded that class members had the right to submit new and additional information that supported their claim for benefits.

The remedies awarded to Plaintiffs serve as a beacon of hope and a monumental victory for all those who UBH has discriminated against. For far too long, UBH wrongfully denied benefits to people simply because of their diagnosis(es) and their inability to able to prove their treatment was worthy of UBH’s unfair Guidelines designed to favor UBH’s own pockets. We hope that the remedies awarded will be a lesson to all those who administer mental health benefits—no longer will torrid and abusive practices be tolerated, especially when it results in the almighty dollar reigning more important than the treatment needs of human beings.

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