Mental health advocates decry a decision by the 9th Circuit Court of Appeals impacting how insurers can process behavioral health claims. The latest decision in Wit v. United Behavioral Health involves mental health claims, but many fear the implications could also affect decisions involving employer-provided long-term disability plans overseen by ERISA.
In 2014, a class action lawsuit charged United Behavioral Health (UBH) with violating generally accepted standards for processing regular insurance claims related to mental health and addiction. In 2019, a federal judge in Northern California agreed, ordering UBH to reprocess nearly 70,000 rejected claims. UBH appealed that ruling, and in March of 2022, the 9th Circuit reversed the judge’s ruling.
Generally accepted standards vs. insurers’ self-interest
The original lawsuit contended that UBH ignored generally accepted standards of care (GASC) when developing its own rules for assessing the medical necessity for behavioral health services claims. The plaintiffs argued that the rules prioritized UBH’s financial health rather than the patient’s best interests.
In 2022, the three-judge panel of the 9th Circuit found that it’s “not unreasonable” for insurers to develop standards inconsistent with GASC. But the court then issued a corrected ruling in January 2023, finding that UBH violated its fiduciary duty by putting its financial interests ahead of patients. The panel also found that UBH violated the laws of four states. However, the judges added that over 50,000 patients have no right to have their claims reprocessed.
Implications for disability claims overseen by ERISA
While the appeals court’s amended ruling amounts to a partial reversal of its 2022 decision concerning UBH’s action, it leaves open whether insurers can draft their own standards for assessing claims instead of following the decades-old GASC. The appeals court remanded the case for further proceedings, so we may not have heard the final word.
However, legal experts fear that left unchanged, the court’s actions will have far-reaching consequences for behavioral health claims covered by long-term disability plans governed under the Employee Retirement Income Security Act (ERISA). They say that could have devastating effects for individuals’ rights over mental health insurance coverage.