D.K. v. United Behavioral Health, 2021 WL 2554109 (D. Utah 2021)
An employee and child—both covered under a self-insured group health plan—sued the plan’s claims administrators for denying coverage for the child’s long-term residential mental health treatment. Following nearly three years of progressive treatment for anxiety, attention deficit disorder, and depression; multiple episodes of self-harm and attempted suicide; and repeated emergency room visits and hospitalizations, the child’s physicians had concluded that long-term residential treatment was required. The administrators authorized coverage for an initial 90 days, to be followed by a review to determine whether continued residential treatment was necessary. However, near the end of the 90 days, the plan informed the employee that it would deny coverage going forward. The denial notice expressly acknowledged that clinical evidence showed that the child required long-term residential treatment but stated that such treatment was excluded under the plan. The administrators maintained this position through two levels of internal appeals but then changed course, admitting that the relevant exclusion was no longer in the plan but denying the claim because long-term residential treatment was not deemed medically necessary.
At trial, the employee and child argued that (1) the treatment was medically necessary under the plan’s terms; (2) the claims administrators incorrectly disregarded the opinions of the child’s treating physicians; and (3) the administrators did not articulate how they applied the plan’s terms to the child’s medical history or current condition. The court considered each argument but then added a fourth issue: the implications of the administrators’ inconsistent rationale for denying the claim. The court concluded that even under ERISA’s deferential “arbitrary and capricious” standard of review, the administrators’ “wildly inconsistent” reasons for the decision were unacceptable. Rather than sending the claim back to the administrators for reevaluation (as is typical in such cases), the court ordered full payment for the child’s residential treatment.
EBIA Comment: This case serves as a reminder that mental health parity compliance is not the only concern when considering claims for mental health or substance use disorder treatment. (This employee abandoned a mental health parity claim early on in favor of a claim for recovery of benefits under ERISA.) When processing claims, plans must carefully comply with ERISA’s complex claims and appeals rules. Although courts generally give a great deal of deference to decisions made under compliant claims procedures, they will not afford such deference when the plan’s actions are arbitrary or inconsistent. For more information, see EBIA’s ERISA Compliance manual at Sections XXXIV.H (“‘Full and Fair Review’ Procedures for Group Health Claims and Appeals”) and XXXIV.N (“How to Protect Claim Denials From Being Reversed in Court”). See also EBIA’s Health Care Reform manual at Section XV (“Appeals Process and External Review Requirements”), EBIA’s Self-Insured Health Plans manual at Section XXVI (“Claims and Appeals”), and EBIA’s Group Health Plan Mandates manual at Section IX.G (“Disclosure of Criteria for Medical Necessity Determinations, Claims Denials, and Other Document Requests”).
Contributing Editors: EBIA Staff.