Court Rules for NYSPA, APA in Suit Against United Healthcare

The U.S. Court of Appeals for the Second Circuit ruled in August that a lawsuit against UnitedHealth Group and subsidiaries, including United Behavioral Health, for violation of the federal parity law can go forward, dismissing objections raised on appeal by United.

The court’s ruling allows a suit brought by the New York State Psychiatric Association (NYSPA) against United to go forward in the U.S. District Court for the Southern District of New York. The ruling also establishes at least two points that may be important in future claims against insurers.

First, it recognized that NYSPA could represent its members and their patients in pressing a claim under the Mental Health Parity and Addiction Equity Act (MHPAEA) through “associational standing.” Both APA and the AMA filed amicus briefs on behalf of NYSPA emphasizing that associations have traditionally been permitted to represent their members’ interest in litigation that is consistent with the mission of the association and that physicians are permitted to represent the interest of their patients.

APA President Renée Binder, M.D., commented, “The court’s decision gives professional organizations, such as APA and NYSPA, the right, on behalf of its members and their patients, to sue for mental health parity violations, which is important because patients are often unable to speak out for themselves. This ruling gives us hope that the Mental Health Parity Act of 2008 will now be enforced.”

Also, the court decision recognized that United could be sued even when it acted not as the insurer but as the administrator of a self-insured plan. This means that the carriers are at risk under MHPAEA whenever they exercise discretion in the administration of benefits and employees do not have to sue their employer (as United argued) to recover benefits.

The court opinion states that “United appears to have exercised total control over the … Plan’s benefits denial process. It enjoyed ‘sole and absolute discretion’ to deny benefits and make ‘final and binding’ decisions as to appeals of those denials. And assuming that United’s actions violated [the plantiff’s] rights under ERISA, United is the only entity capable of providing direct relief … We therefore hold that where the claims administrator has ‘sole and absolute discretion’ to deny benefits and makes ‘final and binding’ decisions as to appeals of those denials, the claims administrator exercises total control over claims for benefits and is an appropriate defendant in an action for benefits. United is such an administrator and is accordingly an appropriate defendant….”

Seth Stein, J.D., executive director of NYSPA, hailed the court’s decision as a victory for NYSPA members and their patients. “NYSPA pursued this lawsuit to help enforce federal parity rules,” he told Psychiatric News. “We are pleased that the court agreed that NYSPA had standing at this point in the litigation to represent the interests of our members and their patients, particularly where we believe that health plans are violating federal parity laws and interfering with access to care for the treatment of mental illness. The decision of the court regarding the ability to sue plan administrators is particularly important because it removes a technicality that plan administrators might raise to avoid being responsible when they make determinations that run afoul of federal parity laws.”

That technicality is that plan administrators could say it is the employers who are liable as plan purchasers.

The original lawsuit was brought by NYSPA and several individual patients, a member psychiatrist, and a psychologist in March 2013 alleging that UnitedHealth Group and subsidiaries, including United Behavioral Health, systematically violated the federal parity law and the Affordable Care Act. NYSPA joined the suit on behalf of its members and their patients.

At that time, Stein told Psychiatric News that NYSPA had fielded numerous complaints from its members about denial of mental health and substance use treatment by United (Psychiatric News, April 5, 2013).

APA and NYSPA were supported in the suit by the AMA, which also filed an amicus brief. The AMA brief stated, “The complaint here alleges systematic violations of federal and state law. These violations have injured members of NYSPA and their patients. The patients suffer social stigmas and other obstacles preventing their remedying these violations except through the aid of their psychiatrists. Due to the pervasive nature of the violations, an association of psychiatrists can and should lead the legal effort to right those wrongs.”

Also filing in support of NYSPA were the Department of Labor and former member of Congress Patrick Kennedy, one of the authors of the parity law. Both asserted that Congress never intended third-party entities such as an insurance company that is hired by self-insured companies and makes all decisions about employees’ medical and mental health benefits to be exempt from legal liability (Psychiatric News, May 16, 2014).

In his blog on APA’s website, APA CEO and Medical Director Saul Levin, M.D., M.P.A., wrote, “APA is working tirelessly to advance parity. ... We’ve brought greater attention to parity at the U.S. Department of Labor, to state attorneys general, and to major employers—and we are finding that many people are interested in helping.” ■

The blog post by Levin can be accessed here.