Denials of health insurance coverage for treatment of behavioral health conditions have been drawing increasing judicial attention.

Recently, in C.P. v. United Healthcare Insurance Company, 2023 WL 4108368, 2023 U.S. Dist. LEXIS 108452 (D. Utah June 21), a federal court in Utah questioned the role of insurance and an insurer’s good faith in its refusal to cover residential mental health treatment. The case, which was brought under the Employee Retirement Income Security Act since it involved an employer-sponsored health benefit plan, involved a minor who received treatment at the Maple Lake Academy for Boys. United Healthcare denied the ensuing claim for benefits, asserting the facility was not a “licensed” residential treatment center.

The court disagreed.

The minor patient (I.P.) whose parents brought the lawsuit had been diagnosed with Autism Spectrum Disorder and related secondary diagnoses for which he received residential behavioral health treatment. When I.P.’s parents submitted a claim to United for that treatment, the insurer denied the claim.

The plaintiffs submitted several appeals to United Healthcare in accordance with the plan’s appeal procedures, but received three successive denials, none of which offered any explanation as to why United Healthcare had determined that residential treatment was not medically necessary. Nor did the denials address any of the plaintiff’s treatment records or the opinions offered by the treatment providers. Then, in a so-called “Corrected” fourth denial, United Healthcare maintained that Maple Lake was not accredited as a residential treatment facility since it was accredited as a therapeutic boarding school.

The court was baffled by United Healthcare’s position.

The court noted that United Healthcare exhibited a predisposition to finding Maple Lake was not a licensed residential treatment facility even though the plaintiffs provided the defendant with a copy of the facility’s licensure as a residential treatment facility, the Utah Administrative Code provisions relating to such licensure, and federal data from the National Provider Identifier (NPI) database maintained by the U.S. Department of Health and Human Services, which classified Maple Lake as a “psychiatric residential treatment facility,” as well as the NPI profile which provided more descriptive information about the facility. The plaintiffs had also referenced a prior court ruling which had determined that Maple Lake was a residential treatment center — James C. v. Anthem Blue Cross and Blue Shield, No. 2:19-CV-38, 2021 WL 2532905 (D. Utah June 21, 2021).

Despite being provided with that information, initially, and at subsequent levels of appeal, United Healthcare repeatedly asserted that Maple Lake was not a residential treatment facility and its services were therefore not eligible for coverage. When the plaintiff sought an independent external review after exhausting available appeals to United Healthcare, the reviewer made the same error. Consequently, the court gave no weight to the external reviewer’s determination, saying in a footnote that the external reviewer’s opinion “is really of no import as United Healthcare’s denials must stand on their own.” (Citations omitted.)

The court then drew the conclusion that “United’s continued reliance on the erroneous unlicensed status of Maple Lake calls into question the veracity of its many denials.” The court suggested the error made by United Healthcare regarding Maple Lake’s licensure may have “improperly tainted” its evaluation of whether the services being provided were medically necessary.

The court added there was “no evidence” establishing “that United Healthcare engaged in any investigation (much less a thorough investigation) to determine whether … I.P.’s treatment [ ] might be covered.” The court also found disingenuous the lackluster efforts made by United Healthcare’s medical consultant to reach the treatment providers to discuss I.P.’s treatment, and the consultant’s mistaken conclusion that the services provided by Maple Lake were not covered.

Because the court was not entirely satisfied the services I.P. received were covered, though, it remanded the case to United Healthcare to reconsider its denial. However, the court imposed several conditions: It barred United Healthcare from reviving its assertion that Maple Lake was not a residential treatment center or from raising any new “after-the-fact plan interpretations devised for purposes of litigation.” (Citation omitted.)

The court also reminded United Healthcare that even though Maple Lake offers educational services which are not covered by the plan, “it seems beyond challenge that a residential treatment facility for adolescents would also have to include some educational component. These are young people ages 12-18 years old — middle and high school students — who have sought out help to address their mental health and/or substance abuse afflictions. How could it ever be appropriate for a facility like that to ignore the young person’s educational development?”

The court concluded its opinion by expressing concern as to whether United Healthcare’s motivation was “to preserve the plan’s financial assets rather than offering aid to the plan’s human assets (its members and beneficiaries), who expected that the plan they funded would provide at least some financial aid to cover their medical needs.” The court suggested that more dialogue and deliberation by United Healthcare was needed since the defendant’s disregard of I.P.’s treatment records led to a failure to develop a “meaningful or proper solution.”

The C.P. ruling is a very thoughtful decision that explained in detail why United Healthcare’s benefit denial was flawed, and showed how an initial error that was never rectified infected the entire claim determination. The ruling goes well beyond the case before the court, though, and suggests that the health care system in the United States is broken and desperately in need of repair.

As the court observed, the cost of health care is beyond the means of most individuals, which is why having insurance is a necessity. Insurance is expensive, too, but as the court pointed out, there is little point in even having insurance if patients are unable to obtain reimbursement for the costs of their medical needs. Perhaps the time has come to re-examine health care in America and work together to find a better way of getting necessary care and treatment to those who desperately need it so that disputes like the C.P. case become a thing of the past.

This article was first published by Chicago Law Bulletin on July 19, 2023.

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