Recently, the U.S. Court of Appeals for the Ninth Circuit reversed a district court’s dismissal of key claims in Ryan S. v. UnitedHealth Grp., Inc., explaining that such claims alleging violations of both the Mental Health Parity Addiction and Equity Act (MHPAEA) and Employee Retirement Income Security Act of 1974 (ERISA) fiduciary duties were sufficiently plead and as such, are being remanded for further proceedings. While the matter has yet to be resolved, this litigation serves as a reminder for employers (as plan sponsors of group health plans) of certain requirements under MHPAEA and ERISA, discussed further below.
Background
While initially dismissed by the district court, the Ninth Circuit determined that the plaintiff sufficiently alleged two of the three initial claims being made, namely (1) that the defendants applied an internal insurance carrier process that violates MHPAEA, and (2) a violation of MHPAEA is a breach of fiduciary duty under ERISA. As such, these matters will be heard during further proceedings. More specifically, the allegations state that outpatient, out-of-network mental health/substance abuse disorder (MH/SUD) claims are being subject to a more stringent review process than comparable medical/surgical (M/S) claims, which resulted in claims being denied. The case alleges that this is in violation of MHPAEA, as well as a breach of ERISA’s fiduciary obligations (by failing to act solely in the interest of plan participants and beneficiaries). See Ryan S. v. UnitedHealth Grp., Inc. for further details.
The decision of the Ninth Circuit helps set a pleading standard for MHPAEA claims. Highlights from the case include:
- Treating MH/SUD claims more stringently can lead to a violation of MHPAEA, regardless of whether it leads to denial of claims, as MHPAEA requires that any limitations on MH/SUD benefits provided under an ERISA plan cannot be more restrictive than limitations applied to M/S benefits.
- A MHPAEA violation is enough to support an ERISA breach of fiduciary duty claim, as the language of ERISA suggests that a violation of MHPAEA is a breach of fiduciary duty.
Employer Takeaways
Employer plan sponsors should be mindful of the above when selecting and administering group health plans and may want to consider reviewing their plans’ processes to ensure compliance with MHPAEA and ERISA. As a reminder, the Department of Labor’s MHPAEA Self-Compliance Tool is available to help evaluate group health plan compliance with MHPAEA.
MHPAEA compliance and related enforcement continues to be a top priority for the Departments of Labor, Health and Human Services, and Treasury. Sequoia will continue to monitor and communicate important employer updates surrounding MHPAEA as they occur.
Additional Resources
- Ryan S. v. UnitedHealth Grp., Inc.
- Department of Labor MHPAEA Self-Compliance Tool
- Sequoia Foreword:
- Ongoing Mental Health Parity Compliance Concerns Identified in the 2023 Report to Congress
- Proposed Rules Prioritize Mental Health Parity Compliance
- Guidance Released on the New Mental Health Parity Comparative Analysis Requirements
- The DOL Continues to Signal Increased Enforcement of Federal Mental Health Parity
Connect with a Sequoia consultant to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with your Compliance Checklist that highlights important compliance dates, action items, and resources.
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