Court Rules Against UBH in Precedent-Setting Case

The United States District Court for the Northern District of California handed down a decision on February 28 that United Behavioral Health (UBH/Optum), the country’s largest managed behavioral health care organization, illegally denied coverage for mental and substance use disorders based on flawed medical necessity criteria.

In the case, David Wit, et. al. v. United Behavioral Health, Chief Magistrate Judge Joseph C. Spero said in his ruling that UBH used internally developed medical necessity guidelines that comprehensively fell short of accepted standards of care to deny outpatient, intensive outpatient, and residential treatment to UBH beneficiaries. Plaintiffs in the case were individuals insured by UBH.

The court looked to clinical guidelines from APA, the American Society of Addiction Medicine, other professional associations, and the Centers for Medicare and Medicaid Services to establish the applicable standards of care. Spero outlined specific aspects of coverage that the accepted standards call for but were not met by UBH. Those items include the following:

“Having reviewed all of the versions of the Guidelines that Plaintiffs challenge in this case and considered the testimony of the witnesses addressing the meaning of the Guidelines, the Court finds, by a preponderance of the evidence, that in every version of the Guidelines in the class period, and at every level of care that is at issue in this case, there is an excessive emphasis on addressing acute symptoms and stabilizing crises while ignoring the effective treatment of members’ underlying conditions,” Spero wrote. “[I]n each version of the Guidelines at issue in this case the defect is pervasive and results in a significantly narrower scope of coverage than is consistent with generally accepted standards of care.”

This case is significant for mental health patients and providers who have long advocated for the use of medical necessity guidelines developed by professional organizations rather than those created by the insurance industry. A crucial finding with implications for plans that are subject to the federal Mental Health Parity and Addiction Equity Act is that mental and substance use disorders are to be treated like other chronic conditions.

As Spero wrote in his decision, “Many mental health and substance use disorders are long term and chronic. While current symptoms are typically related to a patient’s chronic condition, it is generally accepted in the behavioral health community that effective treatment of individuals with mental health or substance use disorders is not limited to the alleviation of the current symptoms. Rather, effective treatment requires treatment of the chronic underlying condition as well.”

Legal counsel and APA staff explained that the plaintiffs in Wit v. UBH were enrolled in self-insured plans administered by UBH. Self-insured plans, covered by the Employee Retirement Savings Insurance Act (ERISA), are exempt from the federal parity law. However, the court recognized that mental and substance use disorders are chronic illnesses and rejected the insurers’ practice of treating only the acute symptoms. This establishes a precedent for plans covered by the parity law requiring that they pay for continued treatment for mental and substance use disorders as they would any other chronic illness.

“We know that insurance companies and behavioral health managed care companies are using internally created medical necessity guidelines to deny patients care, and in plans subject to the federal parity law, these guidelines are being used to circumvent the law’s requirements,” said APA President Altha Stewart, M.D. “The decision by the district court in California is an important one and a victory for our patients. APA will continue to work to see that insurance companies do the right thing by treating mental illness and substance use disorders as the chronic conditions we know them to be.” ■

The decision can be accessed here.