UnitedHealth Group wins reversal in landmark case on behavioral health coverage

An appellate court sided with a UnitedHealth Group subsidiary this week in reversing a landmark behavioral health case where a lower court judge said the insurer's coverage decisions were tainted by its financial interests.

Plaintiffs in the class action lawsuit argued that United Behavioral Health (UBH), a division of the Minnetonka-based health care giant, breached fiduciary duties and wrongly denied benefits to enrollees in employer-sponsored health plans.

One of the named plaintiffs in the case is a Twin Cities woman whose 21-year-old son died of a drug overdose a few months after UBH said it would no longer pay for residential treatment of his drug addiction.

But the U.S. Court of Appeals for the Ninth Circuit found that United had discretionary authority to interpret the terms of the employer health plans, and the insurer "was not unreasonable" in deciding the plans did not require consistency with generally accepted standards of care.

"The plans exclude coverage for treatment inconsistent with the [generally accepted standards of care]," the judges wrote. "Plaintiffs did not show that the plans mandate coverage for all treatment that is consistent with [those standards]."

Plaintiffs argued United Behavioral Health had a conflict of interest, but the appellate court ruled "this would not change the outcome on these facts" even if the conflict could be shown.

UnitedHealth Group operates UnitedHealthcare, which is the nation's largest health insurer.

"We are pleased with the court's ruling and continue to support our members with the mental health care services they need, when they need it, as part of our broader commitment to accessible, quality care," the company said in a statement.

Attorneys for plaintiffs did not comment on the ruling.

In March 2019, patient advocates said coverage for mental health and addiction services could improve across all health plans following a ruling in the case from Judge Joseph Spero of the U.S. District Court of Northern California. He found UBH breached its fiduciary duty by adopting coverage guidelines that did not reflect general standards of care.

Guidelines the insurer developed for making coverage decisions were "riddled with requirements that provided narrower coverage" for patients, Spero wrote. He added that the process for developing the guidelines was "fundamentally flawed because it is tainted by UBH's financial interests."

The process then resulted in UBH making decisions about guidelines "based as much or more on its own bottom line as on the interests of the plan members, to whom it owed a fiduciary duty," the judge wrote.

In November 2020, Spero ordered that United should reprocess tens of thousands of claims from behavioral health patients as a remedy.

Spero wrote at the time: "The harm that UBH caused by applying overly restrictive guidelines to make coverage determinations goes beyond the money spent by class members who could afford to obtain the treatment that UBH refused to cover."