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.
This ruling represents an important enforcement of ERISA’s protections for insureds.
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.”
Among the challenges of a mental health condition is the difficulty persuading health insurers to cover treatment. Mental health conditions can be difficult to objectively diagnose and can require lengthy and expensive treatment often with little prospect of a conventional “cure.” Hence, health plans have a powerful incentive to minimize coverage for mental health conditions to reduce costs.
In response, the federal government, as well as Washington and many other states, have enacted mental health parity laws. In general, these laws prohibit health insurers and health plans from discriminating against mental health conditions by mandating mental health conditions be covered to the same degree as physical ailments.
On June 6, 2018, the Ninth Circuit Court of Appeals confirmed the federal Mental Health Parity Act prohibits health plans from discriminating against mental health conditions for the purposes of health insurance coverage. In Danny P. v. Catholic Health Initiatives, the court determined the health plan violated the law by denying the plaintiff’s claim for the cost of an inpatient stay at a residential mental health treatment facility.
In ruling for the plaintiffs, the court determined the Mental Health Parity Act required the health plan’s coverage of inpatient mental health treatment facilities be no more restrictive than coverage for stays at skilled nursing facilities. Since the Act prohibited imposing more restrictive coverage requirements on mental health treatment than on treatment for physical conditions, the Act precluded the health plan from deciding to cover room and board at skilled nursing facilities for medical patients while refusing to provide the same coverage for mental health inpatient care.
The Danny P. decision is an important win for patients seeking mental health treatment and vindicates Congress’ intent in passing the Mental Health Parity Act that mental health patients be free from discrimination by their health plans.