The federal Department of Labor (DoL) has sued UnitedHealthCare for alleged discrimination against patients seeking mental health treatment. DoL contends that UnitedHealthCare, one of the country’s largest health insurers, systematically imposes illegal limitations on coverage for mental health and substance abuse disorder treatment. The August 11, 2021 lawsuit alleges these practices violate ERISA. DoL also asserts UnitedHealthCare is violating the Mental Health Parity Act, a federal law prohibiting discrimination against people with mental health conditions:
Basically, DoL alleges UnitedHealthCare did this in two different ways: (1) paying less for out-of-network mental health treatment than it pays for out-of-network medical and surgical care; and (2) singling out mental health treatment for a special “review program” that limited these benefits in a way that was not applied to similar non-mental health treatment. This is alleged to have happened as far back as 2013.
This isn’t the first time UnitedHealthCare has found itself in court over mental health coverage. A prior lawsuit by made similar allegations, resulting in a ruling that the insurance company had illegally discriminated against mental health patients through secret internal guidelines making it harder to access mental health treatment in order to boost corporate profits.
But the fact that these practices have drawn the ire of federal regulators is significant. DoL is charged with enforcing violations of ERISA. But most federal regulators lack the resources to pursue any but the worst and most systemic violations. DoL’s choice to pursue this particular suit suggests the agency considers these practices to be especially egregious, particularly given the company has already been sued by private insureds.
Hopefully, this signals a pattern of more proactive ERISA enforcement by regulators.
A recent decision from federal court in Oregon is an interesting example of how ERISA disability benefit disputes can arise where the claimant suffers from complex and hard-to-diagnose conditions such as fibromyalgia. Since conditions like fibromyalgia defy easy identification, these cases often turn on the claimant’s treating doctor’s documentation of the claimant’s symptoms.
Jane Medefesser sued her LTD carrier, MetLife, after MetLife denied her disability insurance claim. Medefesser suffered from a host of medical conditions including fibromyalgia and migraines. Medefesser’s doctors opined her medical conditions impacted her ability to function even in a sedentary job.
MetLife initially approved Medefesser’s disability claim. But MetLife subsequently changed its position and terminated Medefesser’s benefits after an “independent” doctor hired by MetLife determined Medefesser could perform sedentary work. MetLife also relied on opinions from its physicians that Medefesser’s doctors were, supposedly, exaggerating Medefesser’s symptoms.
The court disagreed with MetLife that Medefesser’s doctors were exaggerating her symptoms. To the contrary, the court noted that, given the complexity of Medefesser’s condition, the treating doctors who personally examined Medefesser were in the best position to reliably assess her disability.
This ruling is notable because it addresses a common issue in ERISA disability cases involving conditions like migraines or fibromyalgia. Where the claimant’s disability arises from complex conditions that defy easy diagnosis, disability insurers have an incentive to rely on the supposed lack of “objective” findings or review by “independent” consultants. These consultants’ opinions typically boil down to: “if it doesn’t show up on an x-ray, it’s not real.” The Medefesser decision is a great example of a judge rejecting such an argument.
ERISA-governed disability benefit claims are subject to the Department of Labor’s regulation requiring full and fair investigation of claims. The regulation includes rules requiring claims administrators apply plan provisions correctly and thoroughly investigate claims. A claims administrator’s failure to adhere to the rules expressed in the regulation can be the difference-maker if the benefit dispute proceeds to litigation. A recent unpublished Ninth Circuit Court of Appeals decision, Alves v. Hewlett-Packard Comprehensive Welfare Benefits Plan, emphasizes this.
Alves applied for short-term disability and long-term disability under his employee benefit plan. The plan’s claims administrator, Sedgwick, determined Alves’ condition did not render him disabled, i.e., that Alves could still perform his job duties. On that basis, Sedgwick denied both the short- and long-term disability claims. The federal district court agreed with Sedgwick.
The Ninth Circuit Court of Appeals reversed the district court. The Ninth Circuit agreed that Sedgwick’s decision Alves didn’t qualify for short-term disability benefits was adequately supported by Alves’ medical information. But the court found Sedgwick incorrectly evaluated Alves’ long-term disability claim. Sedgwick denied Alves’ long-term disability claim because Sedgwick concluded Alves failed to meet the plan’s one-week waiting period. The court concluded Alves’ clearly met this requirement. Accordingly, the court remanded Alves’ long-term disability claim to Sedgwick for further investigation. The Ninth Circuit admonished Sedgwick to follow ERISA’s rules requiring full and fair investigation of claims in reviewing Alves’ long-term disability clam on remand.
The Ninth Circuit’s opinion is unpublished, meaning it is only persuasive precedent. Lower courts may follow this decision if they find it persuasive, but they are not required to.
The Alves decision is an important reminder that ERISA claims administrators can be held accountable for failing to correctly apply plan provisions and failing to investigate claims in compliance with ERISA’s implementing regulation.
ERISA applies to most insurance obtained through an employer. “COBRA” coverage is insurance coverage you get after your employment ends. So it’s understandable if you assume that COBRA coverage isn’t ERISA-governed.
Surprisingly, many courts have held that ERISA governs COBRA coverage after all.
ERISA generally applies to any insurance procured by an employer for the purpose of providing insurance benefits for its employees. When an employee’s employment ends under the right circumstances, the employee is eligible to purchase COBRA coverage to replace the lost employer-sponsored coverage. Congress enacted COBRA (the “Consolidated Omnibus Budget Reconciliation Act”) in 1986 to make sure people changing jobs don’t have a gap in their insurance coverage. COBRA requires that certain employer-sponsored insurance benefits plan allow employees changing jobs to continue coverage under the right circumstances. COBRA coverage must generally be identical to the coverage the former employer provides. And if the employer modifies coverage, the modifications must generally apply to the former employee’s COBRA coverage.
Thus, even though COBRA coverage would appear to be distinct from the employer’s ERISA plan, a former employee with COBRA coverage is effectively continuing to participate in their former employer’s ERISA plan by paying the premiums themselves.
For that reason, courts typically treat COBRA coverage as ERISA-governed – a result that might be counterintuitive for many employees.
On February 15, 2019, Aetna Inc. announced a settlement of allegations Aetna wrongfully denied mental health treatment. The plaintiff and a group of Aetna insureds had filed a class action lawsuit under ERISA alleging Aetna wrongfully denied health insurance for a specific treatment for major depression called Transcranial Magnetic Stimulation (“TMS”).
The lawsuit alleges Aetna had a uniform policy of denying coverage for TMS on the basis TMS was purportedly “experimental and investigational.” Experimental/investigational exclusions are common in health plans, particularly plans issued through employers under ERISA. In theory, such exclusions limit the insurer’s obligation to pay for treatment where there’s insufficient evidence the treatment will effectively treat the insured. Unfortunately, in practice, experimental/investigational exclusions are frequently used as a justification for health plans’ refusal to cover any treatment that is new or novel enough to be expensive.
If approved by the judge, the settlement would require Aetna to pay $6.2 million to reimburse insureds who were wrongfully denied coverage for TMS treatment. Aetna had already changed its policies to allow coverage for TMS earlier in the lawsuit. The settlement class includes participants in employee-sponsored health plans administered by Aetna who were denied health insurance coverage for TMS on the basis of Experimental, Investigational, or “Unproven Services.”