The behavioral health industry is awaiting a vital federal appeals court decision in a long legal battle between payers and carriers.
Regardless of the decision, the decision in Wit v. United Behavioral Health will have far-reaching implications for behavioral health advocates who are pushing for insurers to respect reimbursement parity.
The class-action lawsuit — originally filed in May 2014 by David Witt, Natasha Witt and Brian Muir — alleges that United Behavioral Health wrongfully disregarded generally accepted medical standards when it developed its rules for determining the medical necessity of behavioral health services.
In 2019, a district court in Northern California found that United Behavioral Health violated the Employee Retirement Income Security Act (ERISA) and improperly dismissed behavioral health claims in favor of the plaintiffs. In March, the district court reversed the district court. The plaintiffs have since asked the district court to reconsider.
“When this decision came, it spread to every single state, every single payer,” American Addiction Centers CEO Tom Britton told Behavioral Health Business.
Effectively, he explained, this alerts payers across the country, telling them they can’t use financial motivation to make clinical decisions.
Plaintiffs and behavioral advocates on their side say the district court’s decision has halted the widespread use of medical standards of determination that are inconsistent with generally accepted medical standards.
The case was filed under ERISA. And while the case doesn’t directly challenge federal parity laws, Wit v. United Behavioral Health is considered a vital decision that empowers behavioral health during a widespread mental health pandemic and reins in payers they argue are focusing too much on on their profit margins.
In its appeal to the 9th U.S. Circuit Court of Appeals, United Behavioral Health said in filings that the plaintiffs failed to prove that decisions made by United caused harm. He also argued that the district court erred in interpreting the insurance plan’s documents in a manner inconsistent with court precedent regarding the law governing employer-operated health plans.
UnitedHealth Group Inc. (NYSE: UNH) and its subsidiary UnitedHealthcare did not respond to a request for comment.
In a brief in the appeals court, the insurance industry group AHIP similarly argued that the district court erred in certifying a class. He also argued that the district court’s ruling deprives health plans that work with employers of the discretion they deserve to administer health benefits.
“Unless reversed by the Court, the lower court’s holdings will have a lasting and detrimental impact on ERISA-covered benefit plans and their administrators and, as a result, on employees’ access to stable and affordable employment-based health insurance,” the ruling said. AHIP’s amicus brief.
AHIP was joined by the US Chamber of Commerce in support of United Behavioral Health.
The U.S. District Court for the Northern District of California ruled in February 2019 that United Behavioral Health violated ERISA, the law that governs certain employer health plans. The court found that United Behavioral Health improperly rejected behavioral health claims based on overly strict internal guidelines.
In November 2020, the district court also ruled that United Behavioral Health must reprocess up to 67,000 claims for about 50,000 enrollees in Connecticut, Illinois, Rhode Island and Texas.
Those guidelines biased and benefited United’s bottom line and did not meet generally accepted standards of care, according to an analysis of the case and the state of parity in the US by the Kaiser Family Foundation.
In March 2022, a three-judge panel of the 9th US Circuit Court of Appeals reversed the district court’s decision in a 6-page decision and 2-page concurrence.
It held that the district court misapplied the proper standard of review in ERISA cases and failed to give United Behavioral Health due deference to administer benefits.
What the Wit v. United Behavioral Health ruling means
Although the appeals court overturned a major court victory for behavioral health advocates, attorney David Thornton said in an interview that the decision itself is typical of ERISA cases. Thornton practices with the firm Bass, Berry & Sims PLC.
“In one respect, [appeals court] said, “That’s the standard of review: Is that arbitrary and capricious, or is that an abuse of discretion?” Thornton said, adding that the district court actually came to the answer that “the district court misapplied that standard.”
The plaintiffs in the case have asked for either the panel to rehear the case or the entire district court to rehear the case.
Appeals to review decisions at the district court level are generally denied, Thornton said. However, Wit v. United Behavioral Health appears “ripe” for a rehearing given the importance of the dispute and that the appeals court panel did not delve into the facts to support the basis of its ruling, Thornton said.
Thornton added that because the appeals court did not get into the specifics of the case in its ruling and that the ruling was so general that it did not set a useful precedent.
“I think this case is ripe for the entire 9th Circuit to take another look at it,” Thornton said. “I find it very unusual not to go into the facts.”
En banc hearings — or a hearing with all the judges of the 9th U.S. Circuit Court of Appeals — are rare on practical matters, according to Matthew Wolff, a shareholder and co-head of behavioral health with Baker, Donelson, Bearman, Caldwell & Berkowitz PC.
One reason an appellate court may do this is to correct errors of law or decisions inconsistent with binding circuit court or Supreme Court precedent. Another reason, Wolfe said, is that the controversy in the case is of great importance.
“This remains a hotly contested area of the law and whether the 9th Circuit grants the request,” Wolf said. “There will continue to be litigation in the same vein in other circuits. Ultimately, I suspect the Supreme Court will have to weigh in on these issues.
The future of behavioral health parity
The 9th U.S. Circuit Court of Appeals has not said whether it will grant or deny the plaintiff’s request that the appeals court rehear the case.
Assuming the status quo remains, health plans can determine whether a health service is medically necessary or not and need not align with accepted clinical standards, said David Lloyd, senior policy adviser at The Kennedy Forum.
“We think it really sets a very bad example,” Lloyd said. “What’s going to happen is you’re going to have health plans that say, ‘We don’t believe this is medically necessary for you, even though your clinician has recommended it.’ We decided this using new criteria that were actively developed with our financial self-interest in mind, and you have very little opportunity to challenge it. “
Lloyd pointed to several legislative efforts at the state and federal level to strengthen reimbursement parity for behavioral health.
Although not directly related to Wit v. United Behavioral Health, Congress attempted to address parity through the Mental Health Parity Act of 1996 (MHPA) and the Mental Health Parity and Addiction Equity Act of 2008. (MHPAEA).
However, behavioral health operators and advocates have long complained that insurers do not follow these laws and that the federal government’s executive branch lacks the teeth to prosecute violations.
Some data back up these complaints. Milliman Inc. 2019 Report found that disparities between behavioral health services and physical health services widened from 2013 to 2017.
In January, the U.S. Departments of Labor, Health and Human Services and the Treasury Department released a scathing report that said in part that none of the insurers that were investigated in 2021 for compliance with certain MHPAEA standards provided sufficient information for the federal government to evaluate them. The KFF analysis states that this report is “evidence of low compliance with parity”.
Even if, Wit. v. United Behavioral Health survives in the courts, Britton said “it’s not a silver bullet” and that appropriate state and federal legislation is needed to enshrine needed policy changes.
Part of the conversation about parity, Britton said, should focus on the scientific legitimacy of care, especially in addiction treatment.
“Payers don’t deny hypertension medications, ongoing primary care visits, annual echocardiograms and stress tests because they know it’s legitimate science,” Britton said. “Addiction medicine … is equally supported in the literature.”
Congress has recently signaled that it may take additional parity measures to bolster enforcement efforts, but has not enacted major reform.
In 2021, the Consolidated Appropriations Act of 2021 requires health plans to document and compare non-quantitative treatment limitations (NQTLs) that apply to behavioral health and physical health benefits, according to an article by law firm Ballard Spahr.
The recently passed Inflation Reduction Act originally included bill text that would have established civil monetary penalties for violations of the MHPAEA. However, the version of the bill signed on August 16 did not contain this language.