On March 22, 2022, the United States Court of Appeals for the Ninth Circuit reversed a district court judgment that ordered United Behavioral Health (UBH) to reprocess more than 50,000 claims for treatment of mental disorders. mental health and addictions that the district court had erroneously found. refused as not conforming to generally accepted standards of care. Although the Ninth Circuit agreed with the District Court that the plaintiffs had standing to bring the lawsuits and that the class actions had been properly certified, the Ninth Circuit found that the District Court failed to give sufficient deference to UBH’s interpretation of the underlying ERISA plan documents, as required. The Ninth Circuit found that UBH’s interpretation of the ERISA plans—that the plans did not require adherence to generally accepted standards of care—was reasonable. The Ninth Circuit has not certified its opinion for publication, which means that this decision will not have precedent effect. Plaintiffs can appeal the decision to the U.S. Supreme Court.
The appeal stems from two related class action lawsuits against UBH in the U.S. District Court for the Northern District of California. The plaintiffs in each class action were beneficiaries of ERISA-regulated health plans administered by UBH. Plaintiffs alleged that UBH wrongly denied them benefits for the treatment of mental health and substance abuse disorders because UBH’s Level of Care Guidelines and Coverage Determination Guidelines n did not comply with the terms of their insurance plans. The plaintiffs alleged that their health insurance plans provided treatment coverage consistent with generally accepted standards of care. They further claimed that UBH breached its fiduciary duty to members and arbitrarily dismissed their claims of violation of ERISA by developing guidelines inconsistent with generally accepted standards of care and giving the prioritize cost savings over members’ interests. UBH disagreed, saying that according to its interpretation of the ERISA plan documents, the plans do not requiring consistency with all generally accepted standards of care; they simply excluded from coverage care that did not meet generally accepted standards of care.
After a ten-day trial, the district court agreed with the plaintiffs and found that UBH breached its fiduciary duty to the plaintiffs and arbitrarily dismissed the ERISA violation claims. The district court determined that UBH’s internal guidelines for mental health and addictions coverage ignored generally accepted standards of care by focusing too narrowly on acute symptom and crisis coverage and excluding coverage the effective treatment of members’ underlying conditions. In a subsequent order addressing remedies for UBH’s breach of ERISA, the district court prohibited UBH from using its faulty guidelines when determining coverage and required that UBH retired more than 50,000 mental health and substance abuse treatment claims according to generally accepted standards of care.
In reversing the district court’s decision, the Ninth Circuit found that the district court improperly substituted its own interpretation of the ERISA plan documents for those of UBH. The Ninth Circuit said UBH’s interpretation that the plans did not require consistency with generally accepted standards of care was not unreasonable. The Court’s theory was that the plans excluded coverage for treatments inconsistent with generally accepted standards of care – they did not mandate coverage for all treatments that met generally accepted standards of care. Because the decision is unpublished, the Ninth Circuit documents are limited to the facts of this case and cannot be applied to future cases.