Federal Court Rules That Health Insurers Must Pay for Follow-Up Mental Health Care

A U.S. District Court recently issued a landmark decision finding that one of the nation’s biggest insurers had unlawfully restricted payment for follow-up mental health services.  The court found that the insurer followed a policy that effectively cut off payment for mental health care as soon as an immediate crisis had passed.

The main issue was the insurer’s policy that effectively cut off payment for mental health care as soon as an immediate crisis had passed.  Compare this policy to the treatment of physical injuries.  If someone breaks their leg, they get surgery and a cast, but they also get months of follow-up care and doctor visits designed to heal the leg and prevent it from breaking again.  By contrast, under the insurer’s policy, if someone is an immediate suicide risk, they are hospitalized for as little as a few days until they are no longer feeling suicidal.  Unlike with the broken leg, the insurer refused to pay for follow-up care to try to prevent future mental health problems.  The court found that this clear double standard violated ERISA.

The case was brought as a nationwide class action against United Behavioral Health (UBH), and the insurer now faces substantial liability to upwards of 50,000 class members.  After a trial, the court found that UBH created its mental health payment policy primarily to save money, not based on generally accepted clinical guidelines.  The court held that, as a result, UBH had breached its fiduciary duty under ERISA.

UBH is likely to appeal.  If the case is affirmed on appeal, it could lead to major changes in mental health benefits, as many insurers have applied a policy similar to UBH’s.  UBH administers both fully-paid and self-funded plans, and the court did not make a distinction between the types of plans in its ruling.  Therefore, administrators of ERISA health and welfare funds that contract with private insurers to provide administrative services should carefully monitor their insurer’s policies on mental health benefits.

By Tom Gottheil | April 29, 2019

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