UnitedHealth Unlawfully Denied Mental Health Treatment, Judge Finds

One of the ways in which ERISA protects insureds is by imposing a fiduciary duty on certain decision makers, requiring that decisions about coverage and benefits be made in the best interests of the plan participants and not in the best interests of an insurer’s profits.  A recent federal court ruling highlights the importance of insurers’ fiduciary duties under ERISA.
This week, a U.S. federal judge in Northern California found insurer UnitedHealth violated ERISA by systematically denying coverage for mental health treatment for thousands of plan participants.  The judge determined UnitedHealth’s internal guidelines for mental health coverage provided narrower coverage based on UnitedHealth’s financial interests.  According to the judge, that resulted in UnitedHealth putting its own interests over those of plan participants, breaching UnitedHealth’s fiduciary duties under ERISA.

A federal law called the Mental Health Parity Act forbids most insurance from discriminating against mental health conditions.  Under the law, insurers generally must cover mental health conditions to the same degree they cover physical ailments.  The judge found UnitedHealth’s internal guidelines developed in response to the Mental Health Parity Act deviated from generally accepted standards of care and made it harder for patients to obtain coverage for mental health treatment.  As a result, UnitedHealth’s guidelines made it harder for patients to obtain coverage.  Among other things, UnitedHealth emphasized treating crisis symptoms over preventative care.  The judge found UnitedHealth’s defense of its guidelines was evasive and deceptive.

Instead of complying with the law, UnitedHealth’s guidelines were found to promote UnitedHealth’s profits.  The judge noted UnitedHealth ignored generally accepted criteria for making coverage determinations out of concerns compliance would cost the company money.  To ensure that costly treatment would be routinely denied, UnitedHealth gave its fiance department veto power over its coverage guidelines.

This ruling represents an important enforcement of ERISA’s protections for insureds.

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