Appeals court revives UnitedHealth behavioral health lawsuit

August 24, 2023

August 24, 2023 04:14 PM UPDATED 4 HOURS AGO

Appeals court revives UnitedHealth behavioral health lawsuit


A federal appeals court has revived a high-profile class action lawsuit that accuses a UnitedHealth Group subsidiary of improperly denying mental health claims.

A three-judge panel of the U.S. Court of Appeals for the 9th Circuit ruled Tuesday that some policyholders may be entitled to relief from United Behavioral Health, partially reversing an earlier decision.

The U.S. District Court for the Northern District of California, which sided with the plaintiffs in 2020, will now reconsider allegations that United Behavioral Health breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 and decide whether United Healthcare members needed to exhaust every administrative avenue the insurer provided when it denied their claims to receive a remedy from the court.

“We are committed to ensuring all our members have access to mental healthcare consistent with the terms of members’ health plan and in compliance with state and federal rules,” a UnitedHealthcare spokesperson wrote in an email. “As part of our broader commitment to quality care, we continue to support our members with increased access to providers and new ways to quickly get the effective behavioral support they need.”

UnitedHealth Group faces a challenge from two consolidated class-action lawsuits filed against United Behavioral Health in 2014. The plaintiffs allege the company enforced unreasonable medically necessity standards for mental health and substance use disorder treatment. The 2020 decision reverberated throughout the insurance industry by establishing a legal standard for how carriers must develop behavioral health benefits.

The new appeals court ruling finds that UnitedHealth Group may be liable under ERISA for breach of fiduciary duty and wrongful denial of benefits for some members. The judges also decided that the district court improperly enlarged the plaintiff’s class by including members to whom UnitedHealth denied mental health or substance abuse coverage after completing a “full and fair review of his or her claim,” according to the opinion

The Justice Department, attorneys general from 12 states and the District of Columbia, and trade groups including the American Hospital Association, the American Medical Association and the National Association for Behavioral Healthcare submitted amici curiae briefs on behalf of the plaintiffs. The health insurance association AHIP and the U.S. Chamber of Commerce offered briefs supporting UnitedHealth Group.

Under the original circuit court decision, United Behavioral Health would have had to reprocess more than 67,000 claims and appoint an outside supervisor to oversee the claims review process for 10 years. The 9th Circuit overturned that ruling last year, finding that UnitedHealth Group was not obligated to cover all generally accepted behavioral health treatments and that reprocessing claims was not an appropriate remedy. The plaintiffs petitioned for a rehearing of the case in March.

Zuckerman Spaeder, which represents the complainants, applauded the appeals court ruling. “This is a far better opinion that addresses many of our major concerns and, importantly, opens the door for us to deliver even more for the plaintiffs,” Zuckerman Spaeder partner Brian Hufford said in a news release on Wednesday.

The law firm is engaged in a separate class-action lawsuit against United Behavioral Health in the U.S. District Court for the Northern District of California that makes identical allegations during a different time frame.