UnitedHealth beneficiaries' case over mental health denials partly revived

A federal appeals court has partially revived a closely watched class action by UnitedHealth Group beneficiaries accusing the insurer of wrongly denying claims for mental health coverage.

A three-judge panel of the 9th U.S. Circuit Court of Appeals on Tuesday ruled that some beneficiaries may be entitled to have their claims reprocessed, reversing its own earlier finding. It sent the case back to San Francisco federal court, where the plaintiffs had won a sweeping order requiring UnitedHealth to reprocess more than 50,000 denied claims.

While the panel on Tuesday said that order had gone too far, it left the door open for more limited remedies. U.S. District Judge Michael Anello of the Southern District of California, a visiting judge on the court, wrote the opinion, joined by Circuit Judges Morgan Christen and Danielle Forrest.

Brian Hufford of Zuckerman Spaeder, a lawyer for the plaintiffs, said he was pleased with the result and looked forward to seeking relief for the plaintiffs in the district court.

"We're back in the fight," he said.

UnitedHealth and its attorneys did not immediately respond to requests for comment.

The case began with a pair of consolidated class action lawsuits in 2014 that accused UnitedHealth's mental health unit, United Behavioral Health (UBH), of denying claims as not medically necessary based on internal coverage guidelines aimed at keeping down costs, rather than on generally accepted standards of care.

The plaintiffs said the policy violated UBH's fiduciary duty to the beneficiaries under the Employee Retirement Income Security Act (ERISA), a federal law that governs employee benefit plans.

In 2020, following a bench trial, Chief Magistrate Judge Joseph Spero in San Francisco ordered UBH to reprocess more than 50,000 claims, and appointed a special master to oversee compliance for 10 years.

In March 2022, the three-judge 9th Circuit panel reversed the entire ruling, finding that UBH was not obligated to cover all treatments that fall within generally accepted standards of care. The plaintiffs sought a rehearing.

In January, while that rehearing petition was pending, the panel issued a new opinion partly reversing itself, reviving claims for breach of fiduciary duty but still finding that court-ordered reprocessing was not an available remedy under ERISA.

Tuesday's opinion, however, found that some beneficiaries in the case may be entitled to have their claims reprocessed if they can show they were prejudiced by UBH's guidelines.

The case has attracted attention because of its potential implications for mental health coverage, with the U.S. government and major medical associations weighing in with briefs supporting the plaintiffs.

The attorneys general of Illinois, Connecticut and Rhode Island said in a May 2022 brief with the 9th Circuit that if the court's original decision were to stand, it could worsen the opioid epidemic by limiting coverage for addiction treatment.

The case is Wit v. United Behavioral Health, U.S. District Court for the Northern District of California, No. 14-cv-05337.

For the plaintiffs: Brian Hufford and Caroline Reynolds of Zuckerman Spaeder; and Meiram Bendat of Psych-Appeal

For UBH: Miguel Estrada of Gibson Dunn; and Jennifer Romano of Crowell & Moring

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