Lawsuit Filed by Zuckerman Spaeder Includes New Challenge to United Behavioral Health’s Policy of “Bundling” Claims for Coverage of Facility-Based Treatment
In a class action lawsuit Zuckerman Spaeder LLP filed today, six named plaintiffs allege that United Behavioral Health (UBH) unlawfully denied coverage for medically necessary mental health and substance use disorder treatment. The lawsuit is challenging, for the first time, a UBH coverage policy that allegedly causes UBH to deny coverage for certain services merely because they are provided in a residential treatment setting, even though UBH accepts that the services themselves are medically necessary.
According to the class action complaint, UBH developed and used internal coverage policies that “disregard or directly flout the terms of the Plaintiffs’ Plans” and, in doing so, violated its fiduciary duties under the Employee Retirement Income Security Act (ERISA). The lawsuit specifically addresses the administrator’s actions on two fronts.
First, the lawsuit alleges that the clinical coverage guidelines UBH used in 2018 and 2019 to evaluate the medical necessity of behavioral health services unlawfully restricted the coverage otherwise available under the Plaintiffs’ health plans. These guidelines were nearly identical to those UBH used from 2011 to 2017 – which, in a landmark 2019 ruling (Wit/Alexander, et al. v. United Behavioral Health), were found to be “pervasively more restrictive than the generally accepted standards” for determining medical necessity, in violation of the health plans UBH administered. Even after the 2017 trial in that case, during which UBH’s own expert testified that no practitioner “worth his salt” would use these guidelines to make clinical decisions, UBH deployed substantially similar guidelines for two more years.
Second, the lawsuit challenges a UBH policy that requires all providers of facility-based behavioral health treatment to submit requests for coverage by “bundling” all services the facility provides to a patient on a given day—such as individual and group therapy, laboratory tests, and pharmaceuticals—into a single claim. Under this policy, if UBH denies coverage because it deems the requested level of care to be higher than the patient needs, it denies all coverage for all services the patient receives (or would receive) at the facility—even if, by UBH’s own determination, the patient does need some of those services. This policy, in use since at least 2016, affects inpatient, residential, partial hospitalization, and intensive outpatient levels of care.
“This lawsuit exposes and challenges UBH’s unfair bundling of residential treatment services into a single claim that is either paid fully or not at all,” said Zuckerman Spaeder partner D. Brian Hufford. “Using this all-or-nothing policy, UBH rejects services that it concedes are medically necessary by forcing them to be linked together with others that UBH may have a legitimate reason to deny. If UBH properly authorized coverage for at least some of the services provided in residential treatment, more patients would be able to afford this level of care, which is often a life-saving option for patients.”
“When it comes to behavioral health coverage, UBH’s actions are as consistent as they are unjustifiable,” said Zuckerman Spaeder partner Caroline E. Reynolds. “UBH has an obligation to follow the written plan documents when deciding coverage requests, but it disregarded those plan terms when it developed and used its restrictive and self-serving policies and practices. As these allegations demonstrate, UBH’s efforts to restrict coverage have continued even in the face of numerous adverse legal rulings, the testimony of its own experts, pressure from political leaders, and more.”
The lawsuit, filed in the U.S. District Court for the Northern District of California, is Barbara Beach, et al. v. United Behavioral Health. The Zuckerman Spaeder team includes Mr. Hufford, Ms. Reynolds, partner Jason S. Cowart, and associates Devon W. Galloway and Samantha M. Gerencir. Meiram Bendat of Psych-Appeal, Inc. serves as co-counsel.
Under the leadership of Mr. Hufford, Ms. Reynolds, and Mr. Cowart, Zuckerman Spaeder has achieved several groundbreaking mental health wins, delivered multiple historic settlements, and continues to pursue additional mental health-related lawsuits against insurers. The mental health effort is part of a national practice representing patients and health care providers in disputes with health insurance companies. The firm’s cases have received high-level support from former U.S. Representative Patrick Kennedy and the U.S. Department of Labor, which has filed four amicus briefs supporting Zuckerman Spaeder cases in the Second, Third, Fifth, and Eighth Circuit Courts of Appeals, with the firm obtaining successful decisions each time.