Ninth Circuit Reverses Class Action Case on Behavioral Health Claims, Again

On August 21, 2023, the Ninth Circuit vacated its prior decision and issued a new opinion in a complicated class action lawsuit against United Behavioral Health (UBH, a subsidiary of Optum, a division of UnitedHealth Group). The case, which began in 2016, was sent back to the trial court for the second time.

The Court describes UBH as one of the country’s largest managed healthcare organizations that makes determinations on claims for treatment for mental health and substance use disorders for around 3,000 healthcare plans. UBH was the insurer for some of these plans, so it had a dual role in authorizing the payment of claims and paying the claims. Among the many procedural questions involved were the standing of the multiple plaintiffs to bring the civil action and the certification of various classes that were certified by the district court.

Substantively, the plaintiffs alleged a breach of the fiduciary duty to act solely in the interests of the participants and beneficiaries and the arbitrary and capricious denial of benefits. These claims centered around the internal guidelines that were used by UBH’s clinicians to determine whether mental health and substance use disorder claims were covered by the plans. Plaintiffs also alleged that UBH failed to follow the plan’s provisions when making claims decisions and that UBH’s guidelines were more restrictive than the generally accepted standards of care. At one point in the multiple hearings and appeals, UBH was ordered to reprocess 67,000 denied claims using independent claim guidelines.

In this latest appeal, the Court reversed some fiduciary breach and denial of benefits claims and sent some back to the district court to determine whether the plaintiffs should have been required to exhaust the plan’s administrative remedies (appeals through the plan) before filing suit. The Court also reversed the trial court’s class certification for the denial of benefits claim.

The number of lawyers listed in the opinion (three and one-half pages from across the country) as representing the parties and the amount of money at stake here (the possible reprocessing and paying of 67,000 claims), indicates that this case might be back with the Ninth Circuit in the future. The case serves as an important reminder that plan administrators should consult with counsel when considering deviating from the generally accepted standards of care in administrating behavioral health claims.

Wit v. United Behavioral Health»