June 26, 2022

Volume XII, Number 177

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Ninth Circuit Reverses Landmark Wit Case Addressing Behavioral Health Coverage

The President and his administration continue to tout their efforts to strengthen coverage for behavioral health care, including significantly increasing behavioral health spending and strengthening parity between physical and behavioral health care coverage as part of the administration’s 2023 budget. Unfortunately, other rules can make it difficult to challenge plan administrators who undermine these important policies by interpreting health plans in ways that restrict these benefits.

One significant example occurred recently when the United States Court of Appeals for the Ninth Circuit reversed the lower court’s ruling in Wit v. United Behavioral Health, where the district court invalidated, on a class-wide basis, claim administrator guidelines used to determine coverage for mental health treatment on the ground that the guidelines violated the terms of the plans and/or applicable state law. The appellate court found the district court improperly substituted its own interpretation of the plan for the interpretation of the plan administrator, who was entitled to deference under ERISA standards.Wit v. United Behavioral Health, No. 20-17363, slip op. (9th Cir. Mar. 22, 2022) [hereinafter Wit II].

Appeals to the full Ninth Circuit and possibly to the Supreme Court are expected, as plaintiffs are likely to argue the appellate court improperly disregarded the district court’s factual findings about the plan administrator’s conflicts of interest and unreasonable plan interpretations, contrary to the weight of expert testimony on generally accepted standards of care and other evidence. The appellate court also apparently failed to address the district court’s finding that these guidelines violate existing laws in four states applicable to some claims. 

In addition to other continuing litigation around the country challenging similar guidelines, members of Congress and consumer groups are likely to redouble their efforts to pass more federal and state laws requiring health plans to maintain medical necessity standards which are not more restrictive than the generally accepted standards of care applicable to the provider’s treatment recommendations. This safeguard will provide more consistency between what plan members expect in terms of coverage and what their health plan actually covers for essential behavioral health services, as ERISA’s core function is to “protect contractually defined benefits.”2  
   
Lower Court’s Decision in Wit Changed the Playing Field

The district court’s 2019 decision in Wit was a significant breakthrough for patients and providers seeking to better align health insurance coverage (and payment) for behavioral health services with their provider’s treatment choices within generally accepted standards of care. See Wit v. United Behavioral Health, No. 14-cv-02346-JCS, 2019 WL 1033730 (N.D. Cal. Mar 05, 2019). The class of plaintiffs alleged that United Behavioral Health (“UBH”) breached its fiduciary duty as a claims administrator under the Employee Retirement Income Security Act (“ERISA”) by denying claims based on its own “Level of Care Guidelines” and “Coverage Determination Guidelines” (“Guidelines”). Id. at *5. Among other things, the Guidelines emphasized crisis stabilization rather than treatment for patients’ underlying conditions, failed to address the unique needs of adolescents, pushed patients into lower levels of care even when they would be less effective, and imposed prerequisites for coverage rather than determining the appropriate level of care based on a multi-dimensional approach. Id. at *17–22. Plaintiffs argued UBH’s Guidelines were designed to prioritize reduced health care spending over needed treatment for patients in a way that was inconsistent with generally accepted standards of care and state law requirements (where applicable), which were incorporated into the plans. Id. at *5. After a ten-day hearing that included expert clinical testimony, the district court held that UBH abused its discretion by using its Guidelines and subsequently ordered the claim administrator to reprocess denied benefit determinations based on the generally accepted standards of care rather than the flawed Guidelines. Id. at *55.

Court of Appeals Had a Different View of the Evidence and Standard of Review 

On March 22, 2022, the United States Court of Appeals for the Ninth Circuit reversed the trial court’s primary ruling.3 In a surprisingly short “not for publication” ruling, the appellate court found “UBH’s interpretation—that the Plans do not require consistency with [generally accepted standards of care]—was not unreasonable.” Wit II, slip op. at 7. The court reasoned that while the plans “exclude coverage for treatment inconsistent with [generally accepted standards of care], Plaintiffs did not show that the Plans mandate coverage for all treatment that is consistent with [generally accepted standards of care].” Id. The appellate court seemed to give no deference to the district court’s factual findings on this issue or on the administrator’s conflict of interest, which appears to be inconsistent with both applicable law and the court’s declaration that it was to review the district court’s findings of fact “for clear error.” Id. at 2.

It seems clear that Congress will be required, and likely motivated, to address underlying issues with parity and equity for behavioral health coverage. In the meantime, demand for access to care and treatment continues to grow. Policy change and litigation in this area are likely to accelerate in response to continuing denials for needed care.

 

1  On other important issues, the Ninth Circuit validated plaintiffs’ standing to bring this action and the district court’s certification of a class action, finding plaintiffs’ ERISA breach of fiduciary liability claims were capable of being resolved on a class-wide basis.  The court did not reach the issue of whether the district court’s “reprocessing” remedy “overextended Rule 23 in violation of the Rules Enabling Act.” Wit v. United Behavioral Health, No. 20-1736, slip op. at 6 (9th Cir. Mar. 22, 2022) [hereinafter Wit II].

2  US Airways, Inc. v. McCutchen, 569 U.S. 88, 100 (2013) (internal citation omitted).

3  A disposition that is deemed not appropriate for publication and not available for citation as precedent except as provided by Ninth Circuit Rule 36-3.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume XII, Number 94
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Bragg E. Hemme, Polsinelli PC, Medical Licensure Lawyer, State Hospital Regulatory Attorney
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In order to assist health care clients address their targeted business concerns, Bragg Hemme draws on a wealth of practical experience and a solid understanding of the industry gained during her time as both external and internal counsel. Her experience includes advising clients regarding the complex and ever-changing federal and state regulatory environment. She focuses her practice on government payer concerns such as:

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Jennifer L. Evans, Polsinelli PC, Denver, healthcare fraud matters lawyer, medicare reimbursements attorney
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Jennifer Evans brings legal, legislative and operational experience to health care matters. Her legal practice is focused on fraud and abuse, Medicare and Medicaid reimbursement issues, and regulatory compliance. Jennifer has experience working with clients that include multistate service providers to chronic patients, multistate pharmacies, Durable Medical Equipment companies, hospitals, physician practice managers, laboratories, health care management franchisors, and a specialty services extension of a physician practice.

Jennifer also served...

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David A. King Healthcare Attorney Polsinelli Nashville
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David King is a shareholder in the Health Care Litigation and Disputes practice in Nashville. Leveraging over 30 years of health care litigation experience, David’s well-seasoned approach is pragmatic and highly detailed, enabling clients to advance their business and legal interests in managed care disputes, managed care strategy and contracting and national and state legislative matters. He works with a wide range of health care entities, including profit and not-for-profit hospital systems, ambulatory surgery centers, air ambulance services, specialty providers,...

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Natalie A. Bartolovic Healthcare Lawyer Polsinelli
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Natalie Bartolovic is an Associate in the Health Care Alignment and Organization practice. She is passionate about the health care industry and has an understanding of the numerous complexities and legal issues that can impact health care-related businesses. She focuses on providing transactional, operational, and regulatory counsel on a variety of issues.  

Natalie regularly advises hospitals, health systems, practices, and providers on transactional and regulatory matters, including:

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Meaghan M. Gray Associate Tennessee Polsinelli PC
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Meaghan Gray‘s practice focuses on providing representation to hospital systems and other health care providers in managed care disputes and risk management matters. Understanding that the healthcare industry is constantly undergoing growth and change, Meaghan helps clients stay apprised of the latest legal and business developments and resolves disputes through negotiation, arbitration and litigation.

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