Behavioral Health Benefit Coverage and Wit v. United Behavioral Health

Behavioral Health Benefit Coverage and Wit v. United Behavioral Health

Legal Sidebar

Behavioral Health Benefit Coverage and Wit
v. United Behavioral Health
December 21, 2022
The National Institute of Mental Health estimates that nearly 53 million American adults live with a
mental illness, and about 24 million (46.2%) received treatment in 2020. The demand for behavioral
health services, including mental health and substance use disorder (SUD) treatment, also increased
during the COVID-19 pandemic. As a result, access to and coverage for behavioral health services has
been a priority for many in the 117th Congress.
This Legal Sidebar discusses the U.S. Court of Appeals for the Ninth Circuit’s decision in Wit v. United
Behavioral Health, which could have implications for individuals with private health insurance plans who
are seeking behavioral health coverage. Some stakeholders anticipate that the case’s disposition could
affect private insurance patients’ access to mental health and SUD treatment nationwide.
Background
Wit was brought as a class action in the U.S. District Court for the Northern District of California
against United Behavioral Health (UBH), one of the largest behavioral health plan administrators
in the country. At issue in the case is whether UBH may use internal guidelines, which are not
based on generally accepted standards of care (GASC), to guide its behavioral health care
coverage determinations (i.e., its decisions as to whether the plan’s covered benefits are
medically necessary, and coverable, for the given enrollees that sought the treatments).
According to plaintiffs and the amici curiae, it has become common practice for plan
administrators to base coverage decisions, at least in part, on internally developed guidelines as
UBH did in Wit.

Although plan administrators owe fiduciary duties to their enrollees, federal law does not require private
health insurers (or benefit administrators such as UBH) to base their benefit coverage decisions on GASC.
Federal law does not define GASC, and there is no universal clinical definition. Instead, the district court
in Wit looked at a variety of sources to determine the GASC, including the American Society of Addiction
Medicine (ASAM) Criteria, which the court found are ”the most widely accepted articulation of the
Congressional Research Service
https://crsreports.congress.gov
LSB10881
CRS Legal Sidebar
Prepared for Members and
Committees of Congress

Congressional Research Service
2
generally accepted standards of care for how to conduct a comprehensive multidimensional assessment of
a patient” with a SUD.
The three classes of plaintiffs in the Wit case comprise more than 60,000 people, all of whom were denied
behavioral health benefits under their plans’ terms when UBH determined, based at least in part on its
internal guidelines, that the requested behavioral health treatment was not medically necessary. Plaintiffs
were denied coverage for a range of services, including inpatient hospitalization for mental health
treatment, inpatient SUD treatment, and outpatient treatment, including psychotherapy services. The
plaintiffs are all beneficiaries of employer-sponsored health plans with behavioral health benefits
administered by UBH. The Employee Retirement Income Security Act (ERISA) governs all of the plans.
There are three distinct classes of plaintiffs, one of which is composed of beneficiaries whose plans are
governed by both ERISA and the state laws of Connecticut, Illinois, Rhode Island, and Texas. These
states require plan administrators to base coverage decisions on GASC.
Plaintiffs sued UBH under Section 502 of ERISA, which, in part, allows employee benefit plan
participants and beneficiaries to sue their plan administrator to recover benefits due under the plan or
otherwise enforce the plans’ terms. Plaintiffs alleged UBH breached its fiduciary duty to administer the
plans in the beneficiaries’ interest by “prioritizing cost savings over members’ interests.” Plaintiffs also
argued that UBH’s denials of their claims constituted an arbitrary and capricious denial of benefits.
Plaintiffs have emphasized that the case does not concern whether the beneficiaries were actually entitled
to benefits, but rather whether plan administrators may use internal guidelines that are inconsistent with
GASC as a basis for claim denials.
District Court Decision
The district court issued a decision on March 5, 2019, finding that UBH breached its fiduciary duty to
plaintiffs by violating the duties of loyalty, due care, and compliance with plan terms by relying on
unreasonable guidelines that do not adhere to GASC. The court further ruled in plaintiffs’ favor on the
denial-of-benefits claim, finding that “UBH’s Guidelines were unreasonable and an abuse of discretion,
because they were more restrictive than [GASC].” The court further found that UBH violated the state
laws of Illinois, Connecticut, Rhode Island, and Texas by not adhering to GASC when making benefit
determinations. The district court ordered UBH to reprocess more than 60,000 claims, all of which were
initially denied on the basis that they were not medically necessary under UBH’s internal guidelines.
The Appropriate Standard of Review and UBH’s Conflict of Interest
A central issue in Wit is whether UBH breached its duty to the plan beneficiaries. District courts review
the question of whether a breach of duty occurred under an abuse-of-discretion standard. The U.S.
Supreme Court has held that under that standard, a plan administrator’s decision is entitled to deference
and should be upheld if it is reasonable. The Supreme Court (as well as a lower circuit court) has also
acknowledged, however, that some degree of skepticism regarding the plan administrator’s decision to
deny benefits is warranted when there is evidence of a conflict of interest. In Wit, the court found UBH’s
conflict of interest clear and said that as a result, “significant skepticism is warranted in determining
whether UBH abused its discretion when it adopted the guidelines.” According to the district court, the
“most striking” indicator of UBH’s abuse of discretion was its refusal, for which it had no clinical
justification, to adopt the ASAM Criteria. The court identified several facts indicating that UBH’s
guidelines were driven by financial considerations. For example, the court emphasized a decision of
UBH’s CEO not to amend the guidelines to broaden the coverage for Applied Behavior Analysis, a
common treatment for autism spectrum disorder, citing “business implications,” even after the company’s
Utilization Management Committee had approved the change.

Congressional Research Service
3
UBH’s Guidelines Fell Short of Generally Accepted Standards of Care
In deciding that UBH abused its discretion under the plan by denying benefit claims using its internal
guidelines, the court first clarified that UBH’s internal guidelines were not part of the terms of plaintiffs’
plans, but rather that UBH used them “as objective criteria for making standardized decisions about
coverage.” The court then conducted a thorough analysis of whether the guidelines adhered to the GASC.
The court reviewed the sources of GASC, particularly the ASAM Criteria, and made factual findings with
respect to the GASC for treatment of mental health and SUDs.
In finding that UBH’s guidelines were not based on medically appropriate standards, the court identified
several shortfalls, including that they were overly focused on treatment of acute symptoms, rather than
treatment of chronic conditions and the provision of holistic care. For example, the court noted that the
guidelines incorrectly necessitated the continuation of acute symptoms in order for the plans to continue
coverage, observing that the denial of coverage at one level of care did not necessarily mean approval at a
lower level of care. Other issues identified included that the UBH guidelines required patients to
“improve within a reasonable time,” and equated “improvement” with “control of acute symptoms,”
rather than the patient’s holistic improvement.
The court also found that the UBH guidelines deviated from GASC because they denied coverage if a
patient demonstrated an unwillingness to participate in treatment, “regardless of whether attempts to
motivate the patient may eventually be effective or whether it is likely that treatment at this level of care
is likely to be effective despite the patient’s low motivation.” Further, the court stated that “one of the
most troubling aspects” of the guidelines is that they do not appropriately address the behavioral health
needs of children and adolescents.
The UBH Guidelines Violated State Law
After determining that the UBH guidelines did not follow medically acceptable standards of care in
evaluating claims for behavioral health benefit coverage, the court next analyzed whether the guidelines
violated the state laws of Illinois, Connecticut, Rhode Island, and Texas. Plaintiffs from each of these
states formed a class, alleging that UBH’s use of internal guidelines that were incompatible with GASC
violated these states’ laws, which require plan administrators to base coverage denials for SUD treatment
on lack of evidence of medical necessity on medically appropriate standards. Three of the states require
UBH to use the ASAM Criteria for determining medically necessary care; Texas requires UBH to use the
criteria developed by its Department of Insurance. The court found that UBH violated each of these states’
laws in using its internal guidelines, because the guidelines were incompatible with GASC.
Ninth Circuit Decision and Motion for Rehearing
En Banc
UBH appealed the district court’s ruling to the Ninth Circuit. On March 22, 2022, the Ninth Circuit issued
a succinct reversal of the district court. After concluding that plaintiffs had standing to bring their case
and were a properly certified class, the panel reversed the district court, stating: “While the district court
noted the correct standard of review, [it] misapplied this standard by substituting its interpretation of the
Plans for UBH’s.” Further, the panel found that “UBH’s interpretation—that the Plans do not require
consistency with the GASC—was not unreasonable.” The Ninth Circuit did not evaluate the district
court’s analysis of whether the Guidelines complied with GASC.
On May 5, 2022, plaintiffs filed a motion for rehearing en banc, currently pending before the Ninth
Circuit, arguing that the court’s decision enables plan administrators to more easily deny behavioral

Congressional Research Service
4
health benefit claims. Plaintiffs argue that the decision “nullifies” state laws requiring insurance
companies to determine medical necessity by using GASC and that it “gutted the well-established conflict
of interest doctrine that is vital to protecting ERISA plan participants.” By giving UBH deference, the
plaintiffs urge that “the panel gave insurers a roadmap for insulating from scrutiny decisions tainted by
even egregious conflicts of interest.” Plaintiffs also pointed out that almost all states require ERISA plan
administrators to follow the GASC, and that most insurers use internal guidelines, at least some of which
are stricter than the GASC, to make those determinations. Plaintiffs insist that allowing UBH to use
guidelines that are more restrictive than those accepted by the medical community will affect mental
health and addiction coverage nationwide. Several amici curiae filed briefs in support of plaintiffs, one of
whom claims the case is an example of how “insurers dig a new—but often illegal—trench, finding new
ways to deny critically needed behavioral health services.”
In its response to the plaintiffs’ motion for rehearing, UBH counters that “the panel’s fact-bound,
unpublished decision fails the ordinary requirements for rehearing, and nowhere approaches the type of
earth-shattering ruling Plaintiffs portray it as.” UBH emphasizes its discretion to interpret plan terms and
urges that rehearing is not warranted on the state laws at issue. The company states that many of the
plaintiffs “likely would not benefit” from having their claims reprocessed anyway, and that the panel’s
ruling does not interfere with state law because it does not preclude states from enforcing their own
insurance requirements. UBH also argues that while its guidelines were used to inform decisions of
medical necessity, consistency with the GASC was merely one of several requirements for a medical
necessity determination. The Ninth Circuit could rule on the motion for rehearing soon.
Considerations for Congress
Congress has a number of options available if it seeks to pursue these issues further. It could wait to
assess the results of the case that remains pending before considering any potential legislative changes. It
could instead or in addition amend ERISA to change the amount of deference to which plan
administrators are entitled when courts review their benefit determinations. In September 2022, the House
of Representatives passed H.R. 7780, the Mental Health Matters Act, which would amend ERISA Section
502 to require district courts to review de novo plan administrators’ denial decisions for certain types of
ERISA health plans. Such a provision could change the outcome of cases brought under Section 502, as it
would allow district courts to review some plan benefit determinations de novo, rather than giving
deference to the administrator, as the Ninth Circuit did in the Wit case.
There is currently no federal requirement that plan administrators base their coverage decisions on GASC.
As a further option, Congress could amend ERISA to require, as many states have done, that any
administrator’s internal guidance to evaluate coverage decisions or interpret plan terms be based on
GASC. If Congress were to do so, it could amend ERISA such that the requirement would apply to all
types of private health plans.

Author Information

Hannah-Alise Rogers

Legislative Attorney

Congressional Research Service
5

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.

LSB10881 · VERSION 1 · NEW