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Benefits

Court Allows Challenge to Insurer’s PTSD Payment Limitation to Proceed

EBIA  

EBIA  

Smith v. United Healthcare Ins. Co., 2019 WL 3238918 (N.D. Cal. 2019)

A group health plan participant filed a class action lawsuit against her insurer because it paid reduced benefits for her outpatient psychotherapy treatment for post-traumatic stress disorder (PTSD) provided by a licensed social worker. Under her plan, out-of-network mental health and substance use disorder benefits were reduced by 25% if services were provided by a psychologist and 35% if provided by a masters-level counselor. She argued that the limited reimbursement rates for mental health and substance use disorder services provided by psychologists or counselors were a discriminatory financial requirement, a quantitative treatment limitation, and a nonquantitative treatment limitation under the federal mental health parity rules. The insurer asked the court to dismiss the case because the participant was pursuing multiple theories under the parity rules and had not identified a specific medical or surgical practice that it treated more favorably than a comparable mental health service.

The court denied the insurer’s request, ruling that the participant could continue to pursue her claim that the reduced reimbursement rate violated the parity rules in multiple ways. The court also determined that, at this stage in the proceedings, the participant did not have to identify a particular medical or surgical analogue for which the insurer did not apply a comparable reimbursement reduction. The court concluded that it would “flout the plain text” of the parity rules if an insurer could pay providers of mental health services less simply because they are providers of mental health services. Such a policy would, by its very terms, be applicable only with respect to mental health or substance use disorder benefits, as prohibited by the parity rules.

EBIA Comment: Mental health parity cases become more expensive for insurers to defend as courts allow them to proceed. Because the allegations in this case involve (among other things) a quantitative limitation, the plan’s terms and operation should be scrutinized under a complex mathematical test that analyzes whether the financial requirements or treatment limitations on mental health or substance use disorder benefits are more restrictive than those that apply to “substantially all” of the plan’s medical and surgical benefits in the same classification (e.g., outpatient, out-of-network care). The plan will also have to meet the standard that a plan can have no separate cost-sharing requirements that apply only to mental health or substance use disorder benefits. For more information, see EBIA’s Group Health Plan Mandates manual at Sections IX.D (“Mental Health Parity: Financial Requirements and Quantitative Treatment Limitations”), IX.E (“Mental Health Parity: Nonquantitative Treatment Limitations”), and IX.K (“Mental Health Parity: Table of Cases”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.C.2 (“MHPA and MHPAEA: Mental Health Parity”).

Contributing Editors: EBIA Staff.

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