Second Circuit Reverses Dismissal of Federal Mental Health Parity Claims

In a landmark decision, the Second Circuit Court of Appeals has partially reversed a lower court's dismissal of an action against UnitedHealthcare ("United") alleging violations of the Mental Health Parity & Addiction Equity Act of 2008 (the "Parity Act") and the Employee Retirement Income Security Act of 1974 ("ERISA"). The action, brought by the New York State Psychiatric Association ("NYSPA") and various mental health professionals and patients, alleges that United illegally applies more restrictive treatment limitations to care for mental health than for physical health care.

The Second Circuit's decision resolved three important legal questions in the plaintiffs' favor. First, in the District Court, United successfully argued that it could not be sued through ERISA's enforcement provisions because it was a "claims administrator," not the nominal ERISA "plan" or "plan administrator." In reversing the District Court's holding, the Second Circuit confirmed that a claims administrator that exercises control over the administration of benefits is indeed a proper defendant under the enforcement provisions set out in both ERISA Sections 502(a)(1)(B) and (a)(3).

Second, the Court rejected United's argument that plaintiffs could not sustain a claim under ERISA Section 502(a)(3) because it was duplicative of plaintiffs' claims under Section (a)(1)(B). The Court held that, although duplicative relief may not be awarded under both sub-sections, that is not itself grounds for dismissal at the pleading stage.

Finally, in reversing dismissal of NYSPA's claims, the Second Circuit held that, contrary to the District Court's holding, the Association had standing to bring claims on behalf of its members.

The case is entitled New York State Psychiatric Association, Inc. v. UnitedHealth Group (2d Cir. Aug. 20, 2015). In addition to serving as co-counsel for the plaintiffs in this action, the Maul Firm is plaintiff's counsel in a New York state court action against United alleging similar violations of New York's Mental Health Parity Law, also known as Timothy's Law.  

Court Blesses Provider Class Action Challenging Horizon's Bundling Policies

Judge William J. Martini of the District of New Jersey has granted class certification in an action by chiropractors challenging the bundling practices of Horizon Blue Cross Blue Shield of New Jersey ("Horizon").  The action asserts claims under ERISA and the common law stemming from Horizon's practice of incorporating payments for evaluation and management ("E/M") and physical therapy ("PT") services into a single "global fee" for chiropractic manipulation.

In granting class certification under both Fed. R. Civ. P. 23(b)(3) and (b)(1)(B), Judge Martini opined that the plaintiffs presented evidence that Horizon's systematic denial of E/M and PT services violated the terms of all of the relevant health plans and provider agreements.  As a result, the class certification motion posed a "simple, concrete question":

Can the Court fairly and efficiently determine whether the bundling policy violated the rights of the proposed classes? Or do the individual inquiries that will be required to ultimately determine what, if any, actual damages each class member gets, pose such an overwhelming problem as to make class certification impractical and unfair? On the evidence produced, the Court can indeed determine, on a class-wide basis, whether the bundling policy violated ERISA or breached all the non-ERISA contracts in this case.

Significantly, Judge Martini also held that questions regarding provider assignment of benefits, or the potential applicability of anti-assignment clauses, did not pose individual issues sufficient to defeat class certification. This is because the claim forms submitted by the class members to Horizon all contained an assignment of benefits, and Horizon's course of dealing with those class members rendered any anti-assignment clauses "null and void." That holding is of a piece with similar findings reached by Judge Debevoise when he similarly certified a provider class in the Premier v. UnitedHealth case we've discussed previously. Together, these decisions confirm the ability of providers to challenge insurer claims practices through ERISA class actions.

The action is entitled Demaria v. Horizon Healthcare Services, Inc. and the Court's decision can be read here. The Maul Firm is collaborating on this case with class counsel Buttaci & Leardi LLC and Zuckerman Spaeder LLP.

Court Certifies Class of Providers Challenging Repayment Demands by UnitedHealthCare

Senior U.S. District Judge Dickinson R. Debevoise of the District of New Jersey has certified a class of healthcare providers challenging UnitedHealthCare's ("UHC") policy of issuing repayment demands to out-of-network providers without complying with the notice and appeal rights mandated by the Employee Retirement Income Security Act ("ERISA"). The plaintiffs representing the certified class are a midwest-based provider of durable medical equipment and a surgical center operating in Beverly Hills, California. The case is entitled Premier Health Center, P.C. et al. v. UnitedHealth Group, et al., No. 11-425 (ES) (D.N.J.).

The Court's opinion can be viewed here. In finding that the plaintiffs satisfied the requirements for certification under federal rules, Judge Debevoise reaffirmed an earlier holding that UHC's repayment demands violate ERISA rules in at least three respects common to the class:

First, they fail to provide “[a] description of the plan's review procedures and the time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action under section 502(a) of [ERISA] following an adverse benefit determination on review.” 29 C.F.R. § 2560.503–1(g)(1)(iv). Second, they fail to indicate that the provider, “upon request and free of charge, [will have] reasonable access to, and copies of, all documents, records, and other information relevant to the” overpayment determination. 29 C.F.R. § 2560.503–1(h)(2)(ii). Third, they fail to “[p]rovide claimants at least 180 days following receipt of a notification of an adverse benefit determination within which to appeal the determination.” 29 C.F.R. § 2560.503–1(h)(3)(i).

Defendants fail to provide any evidence whatsoever that United substantially complied with the three aforementioned ERISA regulations....

The class representatives are joined as plaintiffs in the lawsuit with several national and state associations of chiropractors. In addition to challenging UHC's repayment demands, these chiropractic associations have also asserted claims challenging UHC's practices with respect to provider profiling, pre-authorization and utilization review.

The plaintiffs are represented by Zuckerman Spaeder LLP, Buttaci & Leardi LLC and the Maul Firm P.C. Out-of-network providers with pending repayment demands from UHC or its subsidiaries are encouraged to e-mail attorney Anthony F. Maul.

Court Awards Damages and Issues Permanent Injunction on Behalf of Providers Who Faced Recoupments by Independence Blue Cross

The United States District Court for the Northern District of Illinois has awarded damages and a permanent injunction to two Philadelphia-area chiropractors who were subjected to post-payment recoupments by insurer Independence Blue Cross ("IBC"). The Court had previously issued a permanent injunction against IBC on behalf of the Pennsylvania Chiropractic Society ("PCA"), holding that IBC's recoupments failed to comply with the due process requirements of the Employee Retirement Income Security Act ("ERISA"). However, the Court's new decision extends similar injunctive relief directly to the individual providers, Mark Barnard, D.C. and Barry Wahner, D.C., who testified on behalf of the PCA in a December 2013 trial. The new decision also requires that IBC repay, with interest, the money it recouped from Drs. Barnard and Wahner.

The Court's opinion can be viewed here, and the Court's permanent injunction can be viewed here. The Maul Firm represented Drs. Barnard and Wahner in conjunction with co-counsel including Zuckerman Spaeder LLP.

New York's Mental Health Parity Law to be Tested in Court

A class-action lawsuit filed on June 4, 2014 in the Supreme Court of the State of New York, County of Suffolk was recently served on UnitedHealthcare Insurance Company of New York, and United Behavioral Health (doing business as OptumHealth Behavioral Solutions). The Empire Plan is also named as a defendant. The complaint alleges that the defendants’ practices violate anti-discrimination laws protecting crucial access to mental health services, including outpatient psychotherapy, to artificially inflate corporate profits and limit costs.

“By attempting to ration outpatient psychotherapy for mentally ill patients, defendants have flagrantly jeopardized the health and well-being of their insured members,” said Meiram Bendat, mental health attorney and founder of Psych-Appeal Inc.

Through December 31, 2013, UHC administered the Empire Plan’s mental health and substance abuse program, which insures more than one million participating New York state employees and their dependents, including members of the state executive branch, judiciary, legislature, public school teachers, firefighters and police officers. The class-action suit alleges that during this time, UHC violated Timothy’s Law, which requires insurers to administer benefits for severe mental illnesses in parity with medical and surgical benefits. In the case of the lead plaintiff, the complaint alleges that the defendants’ rationing practices led to his college age son’s psychiatric hospitalization and academic withdrawal.

“Without a private right to enforce Timothy’s Law and class-wide relief, insurers like UHC will continue to pay lip service to mental health parity,” added co-counsel Anthony F. Maul of The Maul Firm, P.C.

The complaint also alleges that UHC failed to maintain an independent appeals process to review coverage denials.

The Maul Firm Investigates Claims Relating to UnitedHealthCare's Coordination of Benefits with Medicare

The Maul Firm has launched an investigation concerning allegations that UnitedHealthCare's method of coordinating benefits with Medicare improperly increases costs to patients. Please see our press release describing the investigation.  Potential claimants are advised to contact principal attorney Anthony F. Maul, Esq.

Government Probe Portends Obamacare Eligibility Chaos

According to a recent New York Times report, the Obama Administration is probing hundreds of thousands of Obamacare enrollees regarding their eligibility for government premium subsidies. The Times reports that, Serco, a company hired by the government to validate enrollment information, has determined that two million individuals who enrolled in Obamacare through public exchanges provided personal data that conflicts with government records. That would be approximately a quarter of all Obamacare enrollees.

While it isn't yet clear how many enrollees will have their subsidies invalidated, the implications of this probe could spell chaos for both patients and providers. In the first instance, one would expect that individuals found to be ineligible for their subsidies would be asked to make back payments on their premiums. That would likely cause a large number of enrollees to lose their coverage, either because they can't or don't want to pay unsubsidized premiums. It's possible that the termination of these enrollees' coverage would be retroactive (especially if they refuse to pay back subsidies they've already received). 

In the meantime, these Obamacare enrollees are presently going to doctors and receiving medical care. Depending on when their coverage terminates, there is likely to be some confusion over whether patients were or were not insured at the time they received care. In the private insurance market, these "member eligibility" issues often result in insurers retroactively denying coverage for services, and demanding that providers repay any insurance benefits that were paid out. The provider then faces the challenge of seeking repayment from the patient.

Depending on the scope and consequences of the government's probe, there are likely to be a raft of coverage terminations in its wake. If these terminations play out the way they typically do outside the context of Obamacare, we should expect widespread eligibility disputes and, potentially, recoupments from providers.     

Class Action Alleges Improper Denial of Mental Health Benefits by UnitedHealthCare

In collaboration with Psych-Appeal Inc. and Zuckerman Spaeder LLP, the Maul Firm has filed a nationwide class action alleging that UnitedHealthCare improperly denies benefits for mental health care in violation of ERISA and the Mental Health Parity and Addiction Equity Act. In particular, the lawsuit alleges that United's use of overly-restrictive coverage criteria for mental health services violates both the mental health parity laws and the terms of United members' insurance contracts.

Details of the class action, captioned Wit v. UnitedHealthCare Insurance Company, 3:14-cv-02346 (N.D. Cal.), are described in a press release issued by Psych-Appeal Inc. 

Court Issues Permanent Injunction Against Independence Blue Cross on Behalf of Maul Firm Client

On May 19, 2014, U.S. District Court Judge Matthew Kennelly of the Northern District of Illinois issued a permanent injunction requiring Independence Blue Cross ("IBC") to provide ERISA-compliance due process when issuing repayment demands to members of the Pennsylvania Chiropractic Association ("PCA"). The injunction follows the Court's trial decision, in which Judge Kennelly held that IBC systematically violated the rights of PCA members by seeking to recoup money from them without affording them the informational items and appeal processes required by ERISA. Judge Kennelly also issued an opinion and order along with the injunction.

The case is a landmark achievement, as it is the first time a provider association has achieved permanent injunctive relief under ERISA on behalf of its members. At trial, attorney Anthony F. Maul of the Maul Firm was co-lead counsel to the PCA. 

Third Circuit Deals a Big Blow to Mandatory Arbitration of ERISA Claims Brought by Providers

A recent decision of the US Court of Appeals for the Third Circuit deals a one-two punch in favor of providers seeking to assert ERISA claims based on assignments of benefits from their patients. The decision,CardioNet, Inc. v. Cigna Health Corp., 13-2496, 2014 WL 1778149 (3d Cir. May 6, 2014), is sure to become an important precedent for provider ERISA suits within the Third Circuit and beyond.

The CardioNet decision breaks new ground in two major respects. First, it represents the first time the Third Circuit has held "that health care providers may obtain standing to sue by assignment from a plan participant." Id. at *9 n.10. While The Third Circuit had previously, in Pascack Valley Hosp., Inc. v. Local 464 A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 400 n.7 (3d Cir. 2004), recognized that a majority of its sister circuits endorsed the concept of provider standing through assignment, the Court had declined, until now, to adopt that position itself. Numerous district court cases have presumed the Third Circuit would rule this way if the question were ever squarely before it. Now we know that presumption was accurate.

Perhaps more importantly, however, CardioNet also creates significant new law regarding the enforceability of arbitration clauses contained in participating provider agreements. The defendant, Cigna, sought to apply the arbitration clause to CardioNet's ERISA claim for benefits. The Third Circuit, however, construed the arbitration clause narrowly and held that it applied only to operation of the provider agreement, not a claim for coverage under the terms of the applicable health plan. 2014 WL 1778149, at *9. Moreover, the Third Circuit went on to state that even if the dispute did fall within the scope of the arbitration clause, the fact that CardioNet was derivatively bringing its claims on behalf of its patients meant that the arbitration clause did not apply. Id. at *10.

Prior to this decision, defendants had been very successful in dismissing ERISA claims brought by in-network providers where the provider agreement included an arbitration clause. It appears that tactic will no longer be viable in the Third Circuit. And, when paired with new US Department of Labor regulations that limit mandatory arbitration of adverse benefit determinations, 29 C.F.R. § 2560.503-1(c), the CardioNet decision may mean that mandatory arbitration of provider ERISA claims will be a thing of the past.