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.