The COVID-19 pandemic has affected our health care system in many ways over the past two years. While much of the focus has been on vaccines and treatment, COVID-19 has also caused an increasing demand for mental health treatment,[1] including treatment for substance use disorders.[2]
The need for such services has been partially met by the huge step forward in obtaining insurance coverage for such services brought about by the Mental Health Parity and Addiction Equity Act,[3] which requires equal coverage for behavioral health and physical conditions.
However, despite the passage of more than a decade since the Parity Act’s enactment, and notwithstanding burgeoning demand, obtaining health insurance coverage for behavioral health treatment at the level of care recommended by treating behavioral health professionals has remained problematic, resulting in numerous lawsuits against health insurers.
Of those cases, Wit v. United Behavioral Health,[4] has had the greatest impact. In Wit, the U.S. District Court for the Northern District of California entered liability findings in 2019 in a class action brought against United Behavioral Health — a UnitedHealth Group Inc. subsidiary — challenging UBH’s use of criteria it had developed to determine the availability of insurance coverage for behavioral health treatment.
The decision followed a 10-day bench trial and resulted in a landmark ruling finding UBH’s behavioral health treatment guidelines were inconsistent with generally accepted standards of mental health care.[5] Following up on its initial ruling, in November 2020, the court entered a final judgment that ordered UBH to reassess over 60,000 denied claims;[6] and in a subsequent ruling in Janurary 2022, the court awarded the plaintiffs over $19 million in attorney fees.[7]
All of that came to naught with the issuance of an unpublished memorandum ruling from the U.S. Court of Appeals for the Ninth Circuit on March 22, overturning the lower court rulings.[8]
Most of the short memorandum opinion addressed the plaintiffs’ Article III standing rights and determined the plaintiffs sufficiently alleged a concrete injury attributable to the defendant’s conduct. The court of appeals also upheld class certification.
However, the court ruled the lower court failed to grant appropriate deference to UBH’s determination and concluded: “UBH’s interpretation — that the Plans do not require consistency with the [generally accepted standards of care] — was not unreasonable.”
The court also deflected the plaintiffs’ arguments with respect to UBH’s conflict of interest inherent in its dual role as the party deciding the plaintiffs’ entitlement to benefits and the entity funding the benefit payments. A concurring opinion authored by U.S. Circuit Judge Danielle Forrest agreed with the result but disagreed with the majority’s conclusion that a class was properly certified.
The Ninth Circuit’s cursory treatment of the district court’s detailed findings issued following a lengthy bench trial is a huge disappointment to mental health advocates and is open to serious question.
First, Rule 52 of the Federal Rules of Civil Procedure addresses findings of fact and conclusions of law issued by a district court following a bench trial and states:
Findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court’s opportunity to judge the witnesses’ credibility.[9]
There was no mention of the clear error standard of review in the memorandum opinion, nor was there any discussion of the fact that Chief Magistrate Judge Joseph Spero of the Northern District of California, who issued the 2019 opinion in Wit along with the 2020 judgment that followed, based the court’s findings on expert witness testimony presented at the trial.
The lower court also determined the UBH treatment guidelines were inconsistent with criteria that are mandated in several states developed by the American Society of Addiction Medicine, along with guidelines issued by the American Academy of Child and Adolescent Psychiatry, and the American Association of Community Psychiatrists.[10]
The lower court’s decision was so thorough in its analysis that it was surprising the Ninth Circuit concluded it was reasonable for UBH to utilize guidelines that do not require consistency with generally recognized standards of care and treatment.
While the Employee Retirement Income Security Act permits courts to grant deference to claim determinations reached by benefit plan administrators,[11] the benefit plans administered by UBH required treatment to be medically necessary; and the UBH guidelines at issue were quoted in the 2019 ruling as stating they are “objective,” “evidence-based” and “derived from generally accepted standards of behavioral practice.”
Hence, the district court’s finding that the UBH guidelines failed to meet such standards should have been subjected to review for clear error and not disregarded on the ground that discretion permitted UBH to utilize treatment guidelines that were inconsistent with generally accepted standards of care.
Finally, the Ninth Circuit’s failure to recognize UBH’s conflict of interest as a significant factor was astonishing in view of the lower court’s findings.
In 2008, the U.S. Supreme Court ruled in Metropolitan Life Insurance Co. v. Glenn[12] that an insurer’s conflict of interest is a factor that must be considered in every ERISA-governed benefits case. In compliance with that directive the district court made explicit findings regarding UBH’s conflict of interest.
The district court concluded:
The Court finds that the financial incentives discussed above have, in fact, infected the Guideline development process. In particular, instead of insulating its Guideline developers from these financial pressures, UBH has placed representatives of its Finance and Affordability Departments in key roles in the Guidelines development process throughout the class period.
Judge Spero further remarked:
[T]he evidence at trial established that the emphasis on cost-cutting that was embedded in UBH’s Guideline development process actually tainted the process, causing UBH to make decisions about Guidelines based as much or more on its own bottom line as on the interests of the plan members, to whom it owes a fiduciary duty.
The Ninth Circuit made no mention whatsoever of those findings.
Combined with the reviewing court’s acceptance of UBH’s use of guidelines to determine reimbursement for behavioral health treatment that were inconsistent with generally accepted standards of care and treatment, the appellate decision cries out for en banc review by the entire Ninth Circuit.
Mark D. DeBofsky is a shareholder at DeBofsky Law.
This article was first published by Law 360 on March 28, 2022.
[1] See, e.g., American Psychological Association, “Demand for mental health treatment continues to increase, say psychologists,” at https://www.apa.org/news/press/releases/2021/10/mental-health-treatment-demand#:~:text=The%20number%20of%20psychologists%20who,the%20start%20of%20the%20pandemic.; “‘Nobody Has Openings'” Mental Health Providers Struggle to meet Demand, New York Times February 17, 2021; updated September 14, 2021.
[2] See, National Institute on Drug Abuse, “COVID-19 & Substance Use,” at https://nida.nih.gov/drug-topics/comorbidity/covid-19-substance-use.
[3] 29 U.S.C. § 1985a.
[4] Wit v. United Behavioral Health, 2019 U.S. Dist. LEXIS 35205, 2019 WL 1033730 (N.D. Cal. March 5, 2019).
[5] The court identified the following generally accepted standards of care for mental health treatment:
a. Effective treatment requires treatment of the individual’s underlying condition and is not limited to alleviation of the individual’s current symptoms.
b. Effective treatment requires treatment of co-occurring behavioral health disorders and/or medical conditions in a coordinated manner that considers the interactions of the disorders and conditions and their implications for determining the appropriate level of care.
c. Patients should receive treatment for mental health and substance use disorders at the least intensive and restrictive level of care that is safe and effective. Placement in a less restrictive environment is appropriate only if it is likely to be safe and just as effective as treatment at a higher level of care in addressing a patient’s overall condition, including underlying and co-occurring conditions.
d. When there is ambiguity as to the appropriate level of care, the practitioner should err on the side of caution by placing the patient in a higher level of care.
e. Effective treatment of mental health and substance use disorders includes services needed to maintain functioning or prevent deterioration.
f. The appropriate duration of treatment for behavioral health disorders is based on the individual needs of the patient; there is no specific limit on the duration of such treatment.
g. The unique needs of children and adolescents must be taken into account when making level of care decisions involving their treatment for mental health or substance use disorders.
h. The determination of the appropriate level of care for patients with mental health and/or substance use disorders should be made on the basis of a multidimensional assessment that takes into account a wide variety of information about the patient.
[6] Wit v. United Behavioral Health, 2020 U.S. Dist. LEXIS 205435, 2020 WL 6479273 (N.D. Cal. November 3, 2020).
[7] Wit v. United Behavioral Health, 2022 U.S. Dist. LEXIS 2083, 2022 WL 45057 (N.D. Cal. January 5, 2022).
[8] Wit v. United Behavioral Health, 2022 U.S. App. LEXIS 7514, 2022 WL 850647 (9th Cir. March 22, 2022).
[9] Federal Rule of Civil Procedure 52(a)(6).
[10] 2019 U.S. Dist. LEXIS 35205 at *170-181.
[11] Firestone Rubber & Tire Co. v. Bruch, 489 U.S. 101 (1989).
[12] Metro. Life v. Glenn, 554 U.S. 105 (2008).
