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Federal court rules in United Behavioral Health claims denial case

Benefits Administration and Outsourcing Solutions|Health and Benefits|Total Rewards|Wellbeing

By Maureen Gammon and Kathleen Rosenow | November 23, 2020

UBH must reprocess over 60,000 denied claims, mainly for chronic behavioral health issues, using generally accepted standards of care.

A class action lawsuit in California against United Behavioral Health (UBH) for its handling of behavioral health claims from 2011 to 2017 ended with a decision issued by the federal District Court for the Northern District of California in the remedies phase. In 2019, the court ruled in Wit v. United Behavioral Health that UBH had violated ERISA’s fiduciary duties by wrongfully using its internally developed coverage determination guidelines (CDGs) and level of care guidelines (LOCGs) to deny care, applying criteria that were more restrictive than the generally accepted standard of care for behavior conditions.

The court’s remedies decision, issued on November 3, 2020, requires UBH to reprocess the more than 60,000 denied claims, using court-approved criteria of generally accepted standards of care. Although the case was decided under ERISA and not under the Mental Health Parity and Addiction Equity Act (MHPAEA), the outcome benefits those individuals with mental health and substance use disorders (MH/SUD) and the adjudication of their claims under employer group health plans.

The lawsuit only directly affects claims of individuals who joined the class action, and the reprocessing of their claims, which is ongoing; however, UBH is permanently enjoined from using its own behavioral health CDGs and LOCGs that were at issue in Wit.


ERISA requires plan administrators and others who exercise any discretionary authority or discretionary control over the management of the plan and disposition of plan assets to act as fiduciaries. The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. In Wit v. UBH, the court held that UBH (which also operates as OptumHealth Behavioral Solutions) breached its fiduciary duties by developing and employing flawed medical necessity criteria for behavioral health services.

The case concerned MH/SUD claim denials by UBH under certain employer group health plans that all required, as a condition of coverage, that the requested treatment be consistent with generally accepted standards of care. Typically, the claims were for chronic MH/SUD conditions, which UBH denied based on its own LOCGs and CDGs, instead of national evidence-based guidelines for outpatient, intensive outpatient and residential treatment of MH/SUDs that have been developed by nonprofit, clinical specialty organizations, such as the American Society of Addiction Medicine (ASAM). The court found that UBH’s medical-necessity criteria were designed to approve coverage solely for “acute” episodes or crises, such as when individuals are actively suicidal or suffering from severe withdrawal. The court ruled for the claimants, stating that under generally accepted standards of care, chronic and comorbid conditions should be effectively treated, even when those conditions persist, respond slowly to treatment, or require extended or intensive levels of care. Apparently, UBH did not file an appeal of this decision.

August 2020 ruling

In 2019, the court issued its ruling on the facts of the case but deferred ruling on the question of whether the diagnosis-specific UBH CDGs listed in the trial exhibits incorporated UBH’s LOCGs. In August, the same California federal district court determined that all of UBH’s CDGs did incorporate its internally developed LOCGs. This meant that all the claim denials that were part of the class action lawsuit were determined using standards that are more restrictive than the generally accepted standards of behavioral health care and are subject to the remedies applied by the court.


On November 2, 2020, the same federal judge that decided the 2019 case and made the August 2020 ruling decided the remedies phase of the case and ordered:

  • Permanent injunction. UBH is permanently prohibited from using any of the internally prepared CDGs and LOCGs that were at issue in the case when making coverage-related determinations.
  • Injunctive relief related to what criteria may and may not be used to make future coverage determinations.The court imposed a 10-year injunction (which could possibly be reduced to five years) during which UBH must make any and all coverage-related determinations under ERISA-governed plans about whether services are consistent with generally accepted standards of care. The court found that UBH is in danger of a recurrent violation of its 2019 ruling, even though UBH stated that it is faithfully applying ASAM, Level of Care Utilization System (LOCUS) and other third-party guidelines to make coverage determinations.
  • Injunctive relief requiring training of clinicians and top-level executives. The court ordered that UBH clinicians and top-level executives (current and future hires) be trained to ensure they understand their obligations under ERISA when making coverage decisions.
  • Court-ordered supervision. The court also ordered the appointment of a special master to oversee UBH’s compliance with both reprocessing and prospective injunctive relief.
  • Notices. The court ordered UBH to notify the class members of the court’s liability findings and the remedies it awarded.
  • Reprocessing. Most important, after UBH’s employees complete court-ordered training on generally accepted standards of behavioral health care, UBH will be required to reprocess over 60,000 mental health and substance use disorder treatment claims that it illegally denied from 2011 to 2017. UBH is required to reevaluate only whether the proposed treatment at the requested level of care was consistent with generally accepted standards of care. The court provided procedures on how the claims are to be reprocessed, reimbursements to claimants made (if the claim is approved) and the provisions of interest payments on such reimbursements.
  • No retaliation. In reprocessing the claims, UBH is prohibited from: 1) denying a request on any ground other than the lack of medical necessity or the clinical inappropriateness of the services; 2) reevaluating any coverage determination made with respect to a class member other than the remanded adverse benefit determinations; and 2) seeking to recoup or offset, from the class member or his or her provider(s), any amounts UBH pays pursuant to the court order.

Going forward

Group health plan sponsors should review the court decisions and discuss them with their legal counsel and behavioral health third-party administrators (TPAs) to ensure that the TPAs are administering their plans appropriately. Group health plan sponsors should also consider conducting an in-depth review of their plans for compliance with MHPAEA, especially regarding nonquantitative treatment limitations.

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