A UnitedHealth Group subsidiary breached its fiduciary duty by adopting coverage guidelines that did not reflect general standards of care, a federal judge said this week in a ruling that advocates said could help improve coverage for mental health and addiction services in employer health plans.
Judge Joseph Spero of the U.S. District Court of Northern California in the ruling issued Tuesday night sided with patients in a class-action lawsuit that was filed in 2014 against United Behavioral Health (UBH), a subsidiary of the Minnetonka-based health care giant.
At issue were coverage-determination guidelines used by the insurer that were "riddled with requirements that provided narrower coverage" for patients, Spero wrote. The judge said the process for developing the guidelines was "fundamentally flawed because it is tainted by UBH's financial interests."
The process then resulted in UBH making decisions about guidelines "based as much or more on its own bottom line as on the interests of the plan members, to whom it owed a fiduciary duty," the judge wrote.
Plaintiffs did not ask the court to determine whether individual class members were actually entitled to the benefits they sought. Instead, they asserted a challenge to the guidelines used by United in making decisions.
Yet to come is the remedy phase of the court proceedings.
"We look forward to demonstrating in the next phase of this case how our members received appropriate care," UnitedHealth Group said in a 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."
United Behavioral Health (UBH) is one of many health care businesses within UnitedHealth Group, which is Minnesota's largest company. It also includes UnitedHealthcare, which is the nation's largest health insurer, and Optum, a fast-growing company that sells services to other health insurers. UBH also operates as OptumHealth Behavioral Solutions.
Advocates for better coverage of behavioral health care needs cheered the ruling, saying it could help fulfill the promise of federal legislation that was designed to bring parity in insurance coverage for physical and behavioral health treatments.
"This is a turning point in our efforts to hold insurers accountable for discriminating against those with mental health and addiction challenges," former U.S. Rep. Patrick Kennedy, who runs a group focused on parity rights, said in a statement. "This is a landmark case that reinforces the need for equity in how health plans cover physical and mental health conditions."
The lawsuit names 11 out of more than 50,000 plaintiffs in the case, according to the Zuckerman Spaeder LLP law firm. They were beneficiaries of employer health plans where UBH served as a claims administrator. Plaintiffs alleged United denied them or their loved ones coverage for residential or outpatient treatments between 2011 and 2016.
UBH started developing coverage-determination guidelines in 2010 in response to the federal parity law. When patients or their health care providers submit a request for coverage, United employees look at whether the prescribed treatment, at the proposed level of care, meets criteria in the applicable guidelines.
During a 10-day bench trial, Spero found the UBH's expert witnesses "had serious credibility problems."
"The court found with respect to a significant portion of their testimony each of them was evasive — and even deceptive — in their answers when confronted with contrary evidence," the judge wrote.
The guidelines deviated from generally accepted standards of care, Spero found, in ways that made it harder for patients to get coverage. Guidelines placed excessive emphasis on addressing acute symptoms, he wrote, rather than treating underlying conditions. They failed to address effective treatment of co-occurring conditions, the judge found, and broke with standards of care in pushing patients to lower levels of care. And they failed to address the different needs of children and adolescents.
Jason Cowart, an attorney with Zuckerman Spaeder, said in a statement that United is not alone "manipulating" internal coverage criteria to increase the number of denied claims.
"Our cases demonstrate that even though the written terms of a health plan may appear adequate and lawful, many insurers make nearly all coverage decisions based on internal guidelines," Cowart said. "The court's ruling reveals how important those guidelines are."
Spero found that UBH violated laws in four states by failing to apply criteria that complied with state standards for making coverage determinations relating to substance use disorders treatment. And the judge outlined how the guidelines fit with the company's financial interests.
Financial concerns were apparent, Spero wrote, in United's decisions on whether to change coverage guidelines for easier access to an autism treatment called applied behavioral analysis and a treatment called transcranial magnetic stimulation for major depressive disorder.
They were perhaps most obvious, the judge said, in the company's refusal to adopt a professional group's criteria for making substance use disorder coverage determinations. Testimony during the trial showed United's financial department would not provide a "green light" to the change, the judge wrote, due to concerns about the impact on "Ben Ex," the shorthand for benefit expense.
"UBH's finance department had veto power with respect to the guidelines and used it to prohibit even a change in the guidelines that all of its clinicians had recommended," Spero wrote of the decision on substance use disorder coverage. More broadly, the judge wrote that "instead of insulating its guideline developers from these financial pressures, UBH has placed representatives of its Finance and Affordability Departments in key roles in the guidelines development process."
Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck