Ninth Circuit Reverses Dismissal of Class Action Claiming Insurer Violated MHPAEA and ERISA

The U.S. Court of Appeals for the Ninth Circuit reversed a trial court’s dismissal of a class action lawsuit in which group health plan participants alleged that the insurer violated the Mental Health Parity and Addiction Equity Act (MHPAEA) and its fiduciary duties under the Employee Retirement Income Security Act (ERISA). The case is Ryan S. v. UnitedHealth Grp., Inc.2024 WL 1561668 (9th Cir. 2024).

The plan participant claimed that the insurer violated the MHPAEA by applying a more stringent standard of review to benefits claims for outpatient and out-of-network mental health/substance use disorder (MH/SUD) claims than for similar medical/surgical claims. More specifically, the plan participant alleged that based on a state report, the insurer’s use of a certain algorithm triggered additional levels of review for some MD/SUD claims but not for medical/surgical claims. The plan participant viewed the usage of the algorithm as a violation of the MHPAEA and the insurer’s fiduciary duties under ERISA.

However, the federal trial court dismissed the case, finding that the plan participant had failed to show that United Health had categorically denied his MH/SUD claims. The court further reasoned that the plan participant failed to identify any medical/surgical claims the insurer processed more favorably than equivalent MD/SUD claims.

On appeal, the Ninth Circuit reversed the trial court’s dismissal of the case, ruling that the plan participant alleged a sufficient violation of the MHPAEA and ERISA. The court pointed out that a plaintiff need not allege a categorical practice or differential treatment of medical/surgical claims as opposed to MH/SUD claims. Rather, the MHPAEA only requires that plaintiffs allege a claims review process is more restrictive for medical/surgical claims than for MH/SUD claims. Therefore, the plan participant had brought a plausible claim by alleging that the insurer was using an algorithm that applied a more stringent review process to MH/SUD claims than to medical/surgical claims.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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