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Major 9th Circuit Win on Mental Health Parity | The Phia Group

By: Micah Iberosi-Parnell, Esq.

Last week, The Ninth U.S. Circuit Court of Appeals, often known for being more politically liberal than other federal appeals courts, reversed a landmark decision that required the nation's largest behavioral health insurer to adopt more stringent standards for mental health and substance abuse treatment and reprocess tens of thousands of claims.

The Ninth Circuit concluded that United Behavioral Health (UBH) adequately followed plan terms when it denied coverage by self-insured and fully insured employer health plans for residential and outpatient treatment from 2011 to 2017. Plaintiffs alleged that UBH developed Guidelines that were not consistent with the terms of their insurance plans, and they were entitled to Guidelines that would result in the fair adjudication of their claims. They also alleged that they suffered injury because UBH failed to develop Guidelines that were consistent with generally accepted standards of care. Plaintiffs’ alleged harm includes the risk that their claims will not be administered to provide full benefits under their plans and that they cannot make informed decisions about whether to purchase alternative coverage.

The Circuit decision is important because plaintiffs bringing ERISA claims for substance use disorder and mental health treatment have been relying on the decision by the federal district court to argue that the use of level of care guidelines (in this case, written by UnitedHealthcare) lead to abuse of discretion.

Although this is a major win for payers with their own clinical guidelines, this is unlikely to be the final word on the matter. The case may be appealed by the Supreme Court or new cases could be brought under a slightly different legal theory. Instead of relying on abuse of discretion as the specific ERISA violation, future Plaintiff could cite to violations of the MHPAEA itself, for which ERISA provides a cause of action.