Making Mental Health Parity a Reality—The Challenge Continues

Now more than ever, we are aware of the close interplay between mental and physical health. Historically, our health care system has too often turned a blind eye to mental health conditions—simply treating and providing coverage for physical ailments and sending patients on their way. Health insurance companies both reflected and exacerbated this problem, providing no or wholly inadequate coverage for mental health services. The 2008 passage of The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act—commonly known as the Parity Act—was a giant leap forward in outlawing discrimination by insurers against mental health services. Under the Parity Act, if a health plan covers both medical/surgical conditions and behavioral health conditions (i.e., mental illnesses or substance use disorders), it must provide benefits for both types of conditions “at parity” – that is, on an equal basis. This means, for example, if a plan covers routine outpatient services in a doctor’s office to treat medical conditions like strep throat, it must also provide comparable coverage for outpatient services in a therapist’s office for treatment of depression or an opioid addiction.

Despite the Parity Act, insurance providers across the country too often still discriminate against those suffering from mental health conditions. That discrimination takes many forms. One way that insurers have narrowed the scope of coverage for serious mental health or substance abuse conditions is through the development and application of internal clinical “guidelines” that an insured must satisfy to be eligible for insurance coverage. Health plans usually require services to meet the generally accepted standard of care in order to be covered; however, internally developed guidelines can be much more restrictive than GASC, so that using them to decide whether that requirement is satisfied violates the terms of the plans. Where that is the case, the internal guidelines narrow the possibility for coverage under the plan and plan beneficiaries are more likely to be denied critical mental health coverage. While many insurance providers have, for years, used such guidelines to deny or limit coverage for those seeking mental health treatment, those practices were difficult to address through a direct Parity Act challenge, because insurers also use internal clinical guidelines when evaluating medical and surgical treatments. 

Yet the law still provides an opportunity to interrupt and change such practices. ERISA, the federal statute that governs private employer welfare benefit plans, including health care plans, imposes on plan administrators—in practice, often insurance companies or their subsidiaries—far-reaching fiduciary duties, including a duty to act solely in the interests of the health plan members. Enforcing those duties can help to ensure that health plans do not merely comply with the Parity Act on their face, but in practice as well.  

By way of example, in Wit v. United Behavioral Health, a trial court found, on behalf of a class of plaintiffs who had been denied coverage for mental health and substance use disorder treatment, that United Behavioral Health violated the terms of the patients’ plans and breached its fiduciary duties under ERISA because it denied coverage based on guidelines that did not represent GASC (which the patients’ plans required). See Wit v. United Behav. Health, No. 14-CV-02346-JCS, 2019 WL 1033730 (N.D. Cal. Mar. 5, 2019)¹.  As part of the relief for the class, the court ordered United to drop its internal guidelines in favor of ones that have been created by independent professional organizations to reflect GASC, and to reprocess more than 67,000 claims that had been denied based on United’s use of its own guidelines. The case is currently on appeal to the Ninth Circuit. 

The Wit case shows that there are avenues for holding insurers accountable for unlawful coverage decisions about mental health benefits. Both patients and their behavioral health care providers can play a unique and important role in forcing insurers to comply with the Parity Act and ERISA. Throughout this series, we will explore the challenges of achieving genuine parity for behavioral health services, and how lawyers and courts are (or are not!) meeting that challenge.

¹ Zuckerman Spaeder LLP represented the plaintiffs in Wit v. UBH and its companion case, Alexander v. UBH.

• ERISA
• Parity Act