UnitedHealth beneficiaries seek to revive case over mental health coverage

The corporate logo of the UnitedHealth Group appears on the side of one of their office buildings in Santa Ana, California
The corporate logo of the UnitedHealth Group appears on the side of one of their office buildings in Santa Ana, California, U.S., April 13, 2020. REUTERS/Mike Blake
  • Panel largely reversed major trial victory for beneficiaries
  • Plaintiffs warn of 'disastrous consequences' if ruling stands

(Reuters) - UnitedHealth Group Inc beneficiaries are asking a federal appeals court to reconsider a ruling limiting the insurer's obligation to cover mental health treatment, which they said had "disastrous consequences" for mental health and addiction patients.

In a petition filed Friday, the beneficiaries said the 9th U.S. Circuit Court of Appeals should hold an en banc rehearing of the case, with all the court's judges. A three-judge panel last year overturned the beneficiaries' trial victory.

UnitedHealth and its attorney did not immediately respond to requests for comment.

The case began with a pair of consolidated class action lawsuits in 2014 that accused UnitedHealth's mental health unit, United Behavioral Health (UBH), of denying claims as not medically necessary based on internal coverage guidelines aimed at keeping down costs, rather than on generally accepted standards of care.

The plaintiffs said the policy violated UBH's fiduciary duty to the beneficiaries under the Employee Retirement Income Security Act (ERISA), a federal law that governs employee benefit plans.

In 2020, following a bench trial, Chief Magistrate Judge Joseph Spero in San Francisco issued a sweeping ruling in favor of the plaintiffs, ordering UBH to reprocess more than 50,000 claims under the oversight of a court-appointed special master.

Last March, a three-judge panel reversed the entire ruling, and the plaintiffs sought a rehearing.

In January 2023, while the rehearing petition was pending, the panel of its own accord vacated its order and issued a new one. This time it sided with the plaintiffs on some legal issues, including that the district court had been correct to certify classes for breach of fiduciary duty.

However, the new order still gave little practical benefit for the plaintiffs. It said the district court could not order claims to be reprocessed for the class, and it found that UBH was still entitled to use its own guidelines.

In Friday's renewed petition for rehearing, the plaintiffs said that the court should find that UBH must follow generally accepted standards for deciding medical necessity.

"By holding otherwise, the panel put medical necessity in the hands of UBH's finance department rather than the medical community," they said. "And that holding will have incredibly dangerous nationwide consequences."

They noted that the federal government, multiple states and major medical associations had all weighed in on the plaintiffs' side.

"In short, this is one of the most important ERISA cases - perhaps the most important ERISA case - of the 21st century," they said.

The case is Wit v. United Behavioral Health, U.S. District Court, Northern District of California, No. 14-cv-05337.

For the plaintiffs: Brian Hufford and Caroline Reynolds of Zuckerman Spaeder and Meiram Bendat of Psych-Appeal Inc

For UBH: Jennifer Romano of Crowell & Moring

Read more:

Ruling limiting mental health benefits undermines fight against addiction, three AGs say

UnitedHealth unit must reprocess more than 50,000 denied mental health claims

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.