Appeal sought in landmark UnitedHealth class-action case

Modern Healthcare
March 13, 2023
By Nona Tepper


Thousands of patients have called on a federal court to reverse a landmark ruling allowing a UnitedHealth Group subsidiary to develop mental and substance abuse coverage guidelines they allege deviate from clinical standards.

The plaintiffs filed a petition to the 9th Circuit Court of Appeals on Friday that urges a three-judge panel to rehear their case. The American Medical Association, the American Psychiatric Association, multiple states and others have submitted amicus curiae briefs in support. UnitedHealth Group did not immediately respond to an interview request.

The case stems from two consolidated class-action lawsuits filed against United Behavioral Health in 2014, in which plaintiffs alleged the insurer breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 by developing unreasonable criteria to deny mental health and substance abuse treatment. UnitedHealth Group cannot be trusted to create internal standards that adhere to established clinical guidelines because the company profits from denying claims, the plaintiffs contended.

A federal district court ruled in favor of the plaintiffs in 2019. Chief Magistrate Judge Joseph Spero of the U.S. District Court for the Northern District of California ordered United Behavioral Health to reprocess 67,000 claims and to adhere its guidelines to those promulgated by medical societies. The decision sent shockwaves through the insurance industry by setting a legal standard for how carriers must develop coverage policies.

UnitedHealth Group appealed the decision, arguing it is permitted to develop internal criteria to assess medical necessity. A three-judge panel sided with the insurer and reversed the district court’s decision last year, ruling that the company is not required to cover every treatment clinicians prescribe and that reprocessing claims is not allowed under ERISA.

In the petition for appeal, the patient plaintiffs counter that reprocessing is allowed under federal law and that the insurer must rely on accepted medical standards for reviewing claims.

“The panel held that, contrary to the plans’ plain terms, [United Behavioral Health] can evaluate medical necessity using its finance department’s preferred standards rather than the medical community’s,” the petition says. “This conclusion, as dozens of amici have told this court, is both wrong and an incalculable setback in the nation’s fight against the mental health and addiction crisis.”

United Behavioral Health faces a separate, ongoing class-action lawsuit with identical claims, which covers patients whose mental and substance abuse care UnitedHealth Group reviewed from June 2017 to February 2018.


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