Mental Health Treatment Denied to Customers by Giant Insurer's Policies, Judge Rules

March 5, 2019

United Behavioral Health, a subsidiary of UnitedHealth Group, was found to have let “financial incentives” infect “the guideline development process,” according to a federal ruling.Credit: Mike Blake/Reuters

In a scathing decision released Tuesday, a federal judge in Northern California ruled that a unit of UnitedHealth Group, the giant health insurer, had created internal policies aimed at effectively discriminating against patients with mental health and substance abuse disorders to save money.

U.S. Chief Magistrate Judge Joseph C. Spero found that United Behavioral Health, the insurer’s unit that administers treatments for mental illness and addiction in private health plans, had violated its fiduciary duty under federal law.

In his 106-page decision, Judge Spero described the company’s guidelines as “unreasonable and an abuse of discretion” and having been “infected” by financial incentives meant to restrict access to care.

“There is an excessive emphasis on addressing acute symptoms and stabilizing crises while ignoring the effective treatment of members’ underlying conditions,” he said. He dismissed much of the testimony by UnitedHealth’s experts as “evasive — and even deceptive.”

Patients said they were denied care as soon as they appeared stable. One of the plaintiffs in the case said in a filing her son, who struggled with substance abuse, died after he was forced to leave a residential treatment facility when the insurer denied coverage.

“In our view, it’s a monumental win for mental health and substance abuse patients,” said D. Brian Hufford, an attorney with Zuckerman Spaeder, who, along with Psych-Appeal, a private law firm specializing in insurance coverage for mental health issues, is representing the plaintiffs. The plaintiffs are part of a class-action lawsuit against United Behavioral Health, and say they were covered under the United plans from 2011 to 2017 and denied care.

In the aftermath of the ruling, the company maintained that it had not failed to provide the proper care.

“We look forward to demonstrating in the next phase of this case how our members received appropriate care,” said UnitedHealth in an emailed statement. “We remain committed to providing our members with access to the right care for the treatment of mental health conditions and substance use disorders.”

Judge Spero is expected to reach a final judgment in the next few months.

The case represents the latest development in the contentious debate over how health insurance companies cover mental health and substance abuse disorders, as compared to medical conditions like diabetes, multiple sclerosis and asthma. In spite of the passage of a federal law, the Mental Health Parity and Addiction Equity Act of 2008, patients have long complained about the difficulty of getting care covered, especially when they are in no immediate danger.

When the federal parity law prevented insurers from placing sharp limits on behavioral health coverage, the companies “came up with an even more insidious approach,” Mr. Hufford said, by developing internal rules that focused on providing expensive outpatient and residential care only when patients were acutely ill.

Once the acute condition was treated, the companies would reduce or deny services, he said. The care “wasn’t addressing the underlying issue or the chronic condition,” he said.

Advocates praised the judge’s decision as making clear that insurers cannot ignore standards that would be applied to other forms of medical care in determining whether they will cover a mental health or substance abuse treatment. “This should put health plans on notice that they simply can’t make up the rules as they go along,” said Angela Kimball, the national director of public policy and advocacy for NAMI, the National Alliance on Mental Illness.

Such denials of care are not limited to UnitedHealth, said Patrick Kennedy, the mental health advocate and former member of Congress who is pushing for stronger enforcement of federal and state parity laws. The judge’s ruling that UnitedHealth had not complied with the law is an “independent validation of what we have as advocates been saying for 11 years since this law was passed,” he said.