Interestingly, the plaintiffs, who were denied coverage for residential treatment of mental health or substance abuse issues, do not seek monetary damages. Instead, they ask only for a declaratory judgment that clinical criteria used by UMR to deny coverage are overly restrictive and breach generally accepted medical care standards. Further, they seek a determination that the administrator acted in an arbitrary and capricious manner by adopting these guidelines. In Wit v. United Behavioral Health, the Northern District of California previously described these guidelines as “’infected” by financial incentives meant to restrict access to care.”
Brief residential treatment only
Luciana Berceanu was a participant in the Advanced Pain Management LLC Group Benefit Plan, which is sponsored by her employer. On June 9, 2016, her minor daughter was admitted for residential treatment at Rogers Memorial Hospital in Wisconsin.
UMR approved coverage for her daughter’s residential treatment through June 26, 2016 but refused coverage for residential treatment thereafter. Under the United Behavioral Health (UBH) guidelines, which the it had adopted, the administrator determined that the daughter could be treated less expensively in an outpatient partial hospital program.
On the advice of her treating physician, the daughter remained in residential treatment through the end of August 2016. Her mother ultimately incurred substantial out-of-pocket costs to pay for her daughter’s care.
Judy Hernandez was a participant in the Kawasaki Welfare Benefits Plan, which was sponsored by her employer, Kawasaki Precision Machinery (USA), Inc. On February 19, 2019, her husband was admitted for residential treatment at Shadow Mountain Recovery Center in New Mexico. His treatment was for a substance use disorder, complicated by a co-occurring mental health condition.
UMR approved coverage for Mr. Hernandez’s residential treatment through March 6, 2019, but denied coverage thereafter. As in Ms. Berceanu’s case, UMR maintained that Mr. Hernandez could be treated less expensively in an intensive outpatient program. On the clinical advice of the actual treating providers, Mr. Hernandez remained in residential treatment at Shadow Mountain until March 26, 2019, during which he received the recommended intensive outpatient services.
Despite finding that Mr. Hernandez met the criteria for coverage for services at the intensive outpatient level of intensity, UMR denied all coverage for his continued care in his residential treatment program, rather than reimbursing at the rate applicable to intensive outpatient programs. This denial allegedly created a windfall for the sponsor of the Kawasaki Plan sponsor and for UMR’s affiliated stop-loss insurer. Ms. Hernandez incurred significant unreimbursed expenses for her husband’s residential treatment.
Generally Accepted Standards of Medical Practice
Generally accepted standards of medical practice, in the context of mental health and substance use disorder services, are the standards that have achieved widespread acceptance among behavioral health professionals. There is a continuum of intensity at which services are delivered. The goal is to match patients with the level of care that is most appropriate and effective for treating their conditions.
These standards are gleaned from a variety of sources including:
- peer-reviewed publications;
- professional groups like the American Society of Addiction Medicine and the American Psychiatric Association; and
- the Medicare benefit policy manual issued by the Centers for Medicare and Medicaid Services.
ERISA fiduciary obligations
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- act solely in the interest of plan participants and beneficiaries;
- act with the exclusive purpose of providing benefits to participants and beneficiaries and paying reasonable plan expenses;
- carry out fiduciary duties in a prudent manner;
- follow the terms of the plan documents unless inconsistent with the law; and
- hold plan assets in a trust or under a contract of insurance.
The fact that the plaintiffs in Beceanu may now proceed as a class gives them a much better chance of having the issue of fiduciary dereliction determined by a court. If it proceeds to trial, expert testimony and a thorough exploration of the facts is likely to figure prominently.