Litigating health benefit claim denials is extremely challenging for plaintiffs. Especially under the Employee Retirement Income Security Act — where many cases are decided under the arbitrary and capricious standard of review that upholds an insurance claim denial so long as the basis for the claim decision is viewed as reasonable by a court —overturning claim denials is of ten near impossible. Insurers have also insulated their claim decisions by developing coverage guidelines for various medical procedures, drugs, medical devices and
courses of treatment. It is particularly daunting to convince a court to conclude that a claim denial is unreasonable when the determination is based on consistently applied treatment protocols, which presumably have been developed in accordance with the latest research and are based on what is purported to be a clinical consensus. When it comes to behavioral health treatment it can be even more daunting.

Historically, insurers have discriminated against persons suffering from mental illness by imposing exclusions, limitations and requirements that have never been applied to medical and surgical treatment. Since the passage of the Mental Health Parity and Addiction Equity Act, or MHPAEA, though, health insurers can no longer impose limitations on mental health benefits that are more restrictive than “the predominant treatment limitations applied to substantially all medical and surgical benefits” and it is no longer lawful to apply “separate treatment limitations” only to mental health benefits.[1]

Since the passage of the MHPAEA, there have been several significant court rulings involving behavioral health treatment denials, particularly for conditions that have necessitated residential treatment. But no case in this area has been more impactful than
Wit v. United Behavioral Health.[2]

The plaintiffs in Wit challenged and successfully overcame United Healthcare’s reliance on a set of treatment guidelines it had developed to manage reimbursement for claims involving behavioral health treatment, especially at more intensive levels of care such as residential

The Wit decision, which was issued by the U.S. District Court for the Northern District of California following a 10-day bench trial, utilized an approach that has been popularized by trial lawyer Rick Friedman that he calls “the rules of the road.” In Wit, federal Magistrate
Judge Joseph Spero began his opinion by listing various consensus standards of psychiatric care that have been accepted as necessary for the safe and effective treatment of patients. The court then showed how those rules were broken by the defendant.

Some of the sources of currently accepted treatment protocols cited by the court were the American Society of Addiction Medicine criteria; the American Association of Community Psychiatrists’ Level of Care Utilization System; the Child and Adolescent Level of Care
Utilization System, developed by the American Association of Community Psychiatrists and the American Academy of Child and Adolescent Psychiatry; and the Medicare benefit policy manual issued by the Centers for Medicare & Medicaid Services.

The court found the American Society of Addiction Medicine criteria were “the most widely accepted articulation of the generally accepted standards of care for how to conduct a comprehensive multidimensional assessment of a patient with substance related disorder,
translate that into patient treatment needs and match those needs to the appropriate level of care.”

The court further noted that many states require insurers administering behavioral health benefits to utilize the American Society of Addiction Medicine criteria in making benefit determinations.

The court also deemed the Level of Care Utilization System and Child and Adolescent Level of Care Utilization System criteria authoritative because they also utilize a multidimensional assessment of each patient and of fer recommendations for level of treatment based on (1) risk of harm; (2) functional status; (3) medical, addictive and psychiatric co-morbidity; (4) recovery environment; (5) treatment and recovery history; and (6) engagement and recovery status.

Based on the trial testimony, the court identified several standards of generally accepted behavioral health care, which included the following:

• “[E]ffective treatment requires treatment of the individual’s underlying condition and is not limited to alleviation of the individual’s current symptoms.” The court further explained the “goal [is] not simply stabilizing the patient’s condition but altering the course of the patient’s disease toward wellness.”

• “[E]ffective 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.”

• “[P]atients should receive treatment for mental health and substance use disorders at the least intensive and restrictive level of care that is safe and effective.” The court admonished, though, that “the fact that a lower level of care is less restrictive or intensive does not justify selecting that level if it is also expected to be less effective.”

• “[W]hen 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.” The court based that finding on research showing worse outcomes for patients treated at a lower level of care than what is appropriate.

• “[E]ffective treatment of mental health and substance use disorders includes services needed to maintain functioning or prevent deterioration.” This criterion emphasizes that treatment goals should not only be based on anticipated improvement but must
also be based on preventing a relapse or a deterioration in functioning.

• “[T]he appropriate duration of treatment for behavioral health disorders is based on the individual needs of the patient [especially children and adolescents]; there is no specific limit on the duration of such treatment.”

In its ruling, the court compared United’s behavioral health guidelines to the foregoing standards and found the guidelines inadequate because they placed too much weight on crisis stabilization and did not give sufficient consideration to treatment that was likely to be effective in achieving improvement in the patient’s underlying condition or preventing a relapse or deterioration.

The court was critical of the use of the guidelines to push patients down to lower levels of care that are less effective and for punishing patients who fail to display motivation to participate in treatment. The court cited one of the experts who testified at trial and pointed

[S]ometimes it’s lack of motivation or reluctance or even f rank opposition to treatment that requires a certain intensity of treatment to get to persuade them to get with the program and to do better and to become cooperative and to become motivated.

The court was especially critical of the guidelines’ failure to address unique needs presented by children and adolescents and for not sufficiently taking into consideration the unique issues presented by each patient.

Finally, Wit determined the process utilized in developing the guidelines was “fundamentally flawed because it is tainted by UBH’s financial interests.” The court cited evidence presented at trial that showed business personnel participated in committees that had developed the
guidelines, which had systematically reduced approval of reimbursement for more intensive treatment.

Prior to the issuance of the Wit decision, most courts simply accepted insurers’ arguments that their claim decisions were made in accordance with industry-developed guidelines without examining whether there was a consistency between the insurers’ guidelines and
generally accepted standards of care and treatment. The impact of the Wit ruling has been profound.

Since Wit came out, courts have been less willing to defer to health insurers and have been more dubious about the validity of treatment guidelines. In the past year, the case has been repeatedly cited and formed the basis of the U.S. District Court for the District of Connecticut’s ruling in S.B. v. Oxford Health Insurance Inc.[3] and the U.S. District Court for the Northern District of California’s ruling in Bain v. Oxford Health Insurance,[4] as well as in other cases involving a host of issues relating to the level of intensity of behavioral
health treatment approved by insurers.

In S.B., for example, the court expressed concern that United’s guidelines conflicted with plan terms because of a “general bias … toward crisis management … rather than the effective and otherwise medically necessary treatment of the underlying condition.” The Bain ruling also reiterated Wit’s main findings.

Wit has thus become a valuable tool for plaintiffs, and its lessons are now being applied as the foundation for claim appeals. To be sure, guidelines fulfill a useful role in assuring consistency and quality of medical care. However, when guidelines deviate from accepted
standards of care and deny patients the treatment that is necessary to achieve improvement in their conditions or to prevent a relapse or deterioration, such protocols will no longer be accepted by courts as justification for unreasonable claim denials.

Particularly under ERISA, where the statute imposes fiduciary obligations upon plan administrators to employ “higher-than-marketplace quality standards,”[5] plaintiffs counsel and courts must be vigilant to ensure that policies promising to reimburse for medically
necessary care deliver on that promise.

Mark DeBofsky is a shareholder at DeBofsky Law.

This article was originally published in Law360 on March 17, 2020.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] 29 U.S.C. § 1185a(a)(3)(A)(ii).
[2] 2019 U.S. Dist. LEXIS 35205, 2019 WL 1033730 (N.D. Cal. March 5 2019).
[3] 2019 U.S. Dist. LEXIS 191803, 2019 WL 5726901 (D. Conn. Nov. 5, 2019).
[4] 2020 U.S. Dist. LEXIS 30874 (N.D. Cal. Feb. 14, 2020).
[5] Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 115 (2008)

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