March 2, 2021

Volume XI, Number 61

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March 02, 2021

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March 01, 2021

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Recent Developments in Mental Health Benefit Denials

The Mental Health Parity and Addiction Equity Act (Parity Act) requires health plans to provide the same coverage for mental health conditions as they provide for physical conditions, and that financial requirements and treatment limitations applicable to mental health and substance use disorder benefits be no more restrictive than those that apply to medical and surgical benefits.

But can a mental health provider directly challenge an insurer’s benefit denial of coverage for a patient’s mental health treatment under the Parity Act or ERISA? The 2nd U.S. Circuit Court of Appeals recently said “no.”

In American Psychiatric Association v. Anthem Health Plans, the 2nd Circuit ruled that individual physicians and physician associations lacked standing to sue health plans under the Parity Act and ERISA. Ultimately, this ruling could affect the future legal avenues available to providers who desire to advocate on behalf of their mental health patients and challenge allegedly unfair or illegal benefit denials.

In the case, two Connecticut psychiatrists, together with the American Psychiatric Association (APA), the Connecticut Psychiatric Society, Inc. and the Connecticut Council of Child and Adolescent Psychiatry, alleged that four insurers failed to provide mental health and substance use benefits owed under beneficiaries’ plan documents, the Parity Act, ERISA, and Connecticut common law. The plaintiffs argued that the insurers imposed unnecessary administrative burdens on the psychiatrists, and reimbursed them at a lower rate than non-psychiatric physicians who provided comparable medical services, which ultimately prevented them from accepting health insurance. The trial court dismissed the case, holding that both the physicians and associations lacked legal standing to sue under ERISA, and the Parity Act did not create a statutory cause of action. On appeal, the 2nd Circuit acknowledged that policy reasons might support allowing physicians to bring suit on behalf of patients with mental health and substance use disorders in the absence of statutory authorization for such action, but agreed with the trial court that the psychiatrists lacked standing to sue under ERISA. The court also rejected the argument of one psychiatrist, who asserted standing from an assignment of two patients’ claims for violations of the Parity Act. The court held that for purposes of conferring an ERISA cause of action upon a provider, an assignment of claims to a provider must be made in exchange for consideration in the form of healthcare services, which was not present in this case.

While the issues involved in this case are something to watch, the decision doesn’t mean the end of benefit denial lawsuits across the country. It’s important to note that the American Psychiatric Association decision is binding only as to cases in 2nd Circuit states (New York, Connecticut and Vermont) until other circuits or the U.S. Supreme Court decide to opine on the issue.

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© Copyright 2020 Dickinson Wright PLLCNational Law Review, Volume VI, Number 210
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About this Author

Alexandra A. Hall, Dickinson Wright, HIPAA Regulation Lawyer, Health Care Reimbursement Attorney
Associate

Alexandra A. Hall is an associate in Dickinson Wright’s Health Care Practice group. Alexandra practices in all areas of health care law and represents a variety of health professionals and organizations. Alexandra’s experience at large health care organizations provides her with a comprehensive understanding of the health care field. She advises clients on issues ranging from reimbursement, state and federal fraud and abuse laws, and HIPAA. She assists a wide range of health care providers with complex statutory and regulatory issues, including the establishment of...

248-433-7576
Jessica L. Russell, Dickinson Wright, Healthcare Compliance Lawyer, Corporate Governance Attorney
Associate

Jessica advises corporate clients on matters related to corporate governance, contracting, regulatory compliance, and licensing. Jessica regularly counsels clients in highly regulated industries and is experienced in resolving compliance and licensing matters with state and federal regulatory agencies. Some of Jessica’s notable industry experience includes representation of clients in the healthcare, consumer finance, and alcoholic beverage manufacturing industries.

248-433-7503
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