Courts Rule on Behavioral Health Coverage Determinations

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By Jenifer K. Robbennolt, Alice Curtis Campbell Professor of Law and Professor of Psychology, University of Illinois

United Behavioral Health (UBH) manages an array of health insurance plans that cover behavioral health services. A class of individuals covered under health benefit plans administered by UBH sued the company, alleging that UBH incorrectly denied their requests for coverage for mental health or substance use disorder treatment. The plaintiffs claimed that UBH’s level of care and coverage determination guidelines “fell below generally accepted standards of care,” were not consistent with the terms of their plans, and “prioritiz[ed] cost savings over members’ recovery of benefits.”

In Wit v. United Behavioral Health (2019), a trial judge in the U.S. District Court for the Northern District of California found that UBH’s guidelines for making coverage determinations for mental health and substance use disorder treatment were more restrictive than generally accepted standards of care in a variety of ways. The judge also determined that UBH’s process for developing those guidelines was “tainted” by conflict of interest and an emphasis on cost-cutting. The court therefore found UBH liable for improperly denying benefits based on its too-restrictive guidelines and for breaching its fiduciary responsibilities of loyalty, due care, and compliance with the terms of the plans. The court ordered UBH to reprocess more than 60,000 claims, adopt coverage guidelines that reflect generally accepted standards of care, and train its employees in using the appropriate criteria to fulfill their fiduciary responsibilities to plan members.

In March 2022, a three-judge panel of the Ninth U.S. Circuit Court of Appeals reversed the trial court’s ruling, finding that UBH’s determinations and interpretations of plan requirements were not unreasonable and that “even if UBH has a conflict of interest because it serves as plan administer and insurer for fully insured plans that are its main source of revenue, this would not change the outcome on these facts.” A request that the full court rehear the case is pending. The American Psychological Association (APA) and other organizations have submitted a joint amicus brief in support of the request for a rehearing that highlights the harmful effects that the panel’s decision will have on patient access to care.

The case raises many issues of interest to psychologists. Beyond questions about access to appropriate and effective treatment for behavioral health and substance use disorders and concerns about parity for such treatment, the court’s assessment of UBH’s conflict of interest is also important. The trial court held that less deference should be given to UBH’s decisions and interpretations because UBH had a conflict of interest in acting as both a plan administrator and insurer. Consistent with this instinct, psychological research demonstrates that conflicts of interest make neutral assessments difficult, for those with a conflict rarely recognize how it affects their own decision-making. Although disclosure of a conflict is often thought to be a useful fix—albeit one that did not happen with UBH—disclosure of a conflict has its own complications, such as potentially licensing even more biased decisions.

A better option to resolve such cases is to separate the decision-makers from the conflict. One way of separating decisions about coverage and decisions about cost might require a company to choose to administer the plan or insure it, but not do both. Another method would separate decisions about care and cost within the company. The trial court’s remedy in Wit followed this approach, requiring the company to use generally accepted standards of care to guide coverage decisions to better insulate decisions about coverage from considerations about cost. No matter how Wit is ultimately resolved, the case highlights the importance of attending to such conflicts of interest.

This post is also published in agreement with APA’s Monitor on Psychology as a Judicial Notebook column.

Edited by Ashley M. Votruba, J.D., Ph.D., SPSSI Blog Editor, Assistant Professor, University of Nebraska-Lincoln