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The ERISA Edit: Focus on Mental Health Coverage and Enforcement Continues

Employee Benefits Alert

Wit v. UBH Plaintiffs Seek Rehearing En Banc from Ninth Circuit

The plaintiffs in the class action lawsuit Wit v. UBH, Nos. 20-17363, 20-17364, 21-15193, 21-15194 (9th Cir.) have asked the full panel of judges on U.S. Court of Appeals for the Ninth Circuit to reconsider the January 26, 2023, decision by three of its members reversing the district court's ruling in plaintiff's favor on their denial of benefit claims. After a 10-day trial and voluminous briefing by the parties, the district court ruled that UBH violated ERISA when it denied class members mental health and substance use disorder claims by applying internal guidelines that conflicted with generally accepted standards of care (GASC). The district court ordered UBH to reprocess over 65,000 claims for participants in over 3,000 health plans. On appeal, the Ninth Circuit held that UBH's interpretation of plan terms as not requiring consistency with GASC was not an abuse of discretion and reversed the lower court's decision. It also decertified the class of plaintiffs on their denial of benefits claim and held that the district court erred when it excused unnamed class members from demonstrating compliance with the plans' administrative exhaustion requirement. It also ruled that reprocessing of claims is not a remedy available under ERISA. Insofar as the lower court's judgment in favor of the plaintiffs on their breach of fiduciary duty claim was based on the district court's erroneous interpretation of the plans, the Ninth Circuit held that claim was also reversed.

In their March 10, 2023, Petition for Rehearing, the plaintiffs ask the appellate court to reconsider its rulings that reprocessing of claims is not a proper ERISA remedy, that absent class members had to exhaust their benefit claims, and that UBH's interpretation of plan terms and use of its guidelines was not an abuse of discretion. They claim the Ninth Circuit's January 26 decision will have "dire nationwide consequences" because "virtually every insurer in America uses commercial guidelines in its medical-necessity reviews."   

At its core, this case, which focuses on benefits coverage based on plan medical necessity terms and not mental health parity, is about what the plans' terms say and whether UBH's interpretation and implementation of those terms was an abuse of discretion. The Ninth Circuit recognized this in its decision when it stated: "The Plans exclude coverage for treatment inconsistent with GASC or otherwise condition treatment on consistency with GASC. While the GASC precondition mandates that treatment be consistent with GASC as a starting point, it does not compel UBH to cover all treatment that is consistent with GASC. Nor does the exclusion – or any other provision in the Plans – require UBH to develop Guidelines that mirror GASC. And while treatment consistent with GASC is a precondition to coverage, there are other Plan provisions that still exclude certain treatment even if they are consistent with GASC." Hence, under the plan terms, while consistency with GASC is a necessary precondition for coverage, it may not be sufficient for coverage.

President's 2024 Budget Seeks More Funding for MHPAEA Enforcement

Last week, the president announced his 2024 budget, which included a proposal for $275,000,000 over 10 years in mandatory funding for the Department of Labor (DOL) to perform additional Non-Quantitative Treatment Limitations (NQTL) Mental Health Parity and Addition Equity Act (MHPAEA) audits. The proposal also includes a revenue projection of $35,000,000 over 10 years from civil monetary penalties for MHPAEA noncompliance. DOL has asked Congress to amend ERISA to allow for such penalties for several years.

Upcoming Speaking Engagements and Events

On March 21, Joanne Roskey will present, "Behind the Scenes at the Employee Benefits Security Administration: Priorities and Enforcement," to members of the ERISA Industry Committee.

Joanne Roskey and Dawn Murphy-Johnson will present, "No Surprises Act Enforcement: How to Prepare for a DOL Audit," a PLI webinar on March 30, 2023, at 1 p.m. ET, discussing the NSA and how it impacts ERISA plans and their administration.

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