- Erman, Erica A.
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Earlier this month, on March 5, 2019, the United States District Court in the Northern District of California filed its 106-page Findings of Fact and Conclusions of Law in the class action Wit v. United Behavioral Health (“UBH”).
Below is an overview of some of the most noteworthy portions of the decision.
What were the Plaintiffs’ claims?
The Plaintiffs in Wit asserted two claims against UBH: (1) breach of fiduciary duty (the “Breach of Fiduciary Duty Claim”), and (2) arbitrary and capricious denial of benefits (the “Denial of Benefits Claim”) based on a facial challenge to UBH’s Level of Care Guidelines and Coverage Determination Guidelines (collectively, “Guidelines”). Both claims arose under ERISA. Plaintiffs argued that these Guidelines did not comport with generally accepted behavioral health standards of care and thus, wrongfully denied coverage to many patients, including both adults and children.
According to Plaintiffs, UBH breached the duties it owed as an ERISA fiduciary to the class members by (1) developing guidelines for making coverage determinations that are far more restrictive than those that are generally accepted even though Plaintiffs’ health insurance plans provide for coverage of treatment that is consistent with generally accepted standards of care; and (2) prioritizing cost savings over members’ interests. As to the second claim, Plaintiffs allege that the Denial of Benefits Claim is based on the theory that UBH improperly adjudicated and denied Plaintiffs’ request for coverage by using its overly restrictive Guidelines to deny benefits.
What did the court think?
The court agreed, and found that the Guidelines were fundamentally flawed by being “tainted” via significant involvement by the Financial Department in their development and the Guidelines’ unwavering and inflexible language.
The court explained that the preponderance of the evidence showed that the only reason UBH declined to adopt criteria following the generally accepted standards of care, despite a clear consensus among UBH’s addiction specialists that those generally accepted standards of care criteria were preferable to UBH’s own Guidelines, was that its Finance Department wouldn’t sign off on the change. “The Court finds that the financial incentives…have, in fact, infected the Guideline development process.” “In other words, UBH’s Finance Department had veto power with respect to the Guidelines and used it to prohibit even a change in the Guidelines that all of its clinicians had recommended.”
Regarding the Guidelines’ inflexibility to follow generally accepted standards of care, although every class member’s health benefit plan includes, as one condition of coverage, a requirement that the requested treatment must be consistent with generally accepted standards of care, the court found that there was no evidence in the record that the much more restrictive words in the Guidelines could be ignored when they are in conflict with generally accepted standards of care.
What are the generally accepted standards of care in the field of mental health and substance use disorder treatment and placement, and how do the UBH Guidelines breach these standards?
1. It is a generally accepted standard of care that effective treatment requires treatment of the individual’s underlying condition and is not limited to alleviation of the individual’s current systems.
The court elaborated, “While current symptoms are typically related to a patient’s chronic condition, it is generally accepted in the behavioral health community that effective treatment of individuals with mental health or substance use disorders is not limited to the alleviation of the current symptoms. Rather, effective treatment requires treatment of the chronic underlying condition as well.”
Regarding UBH’s Guidelines, the Court reasoned, “Although the Guidelines contain statements of principle that are consistent with generally accepted standards of care, they are not incorporated into the specific Guidelines that establish rules for making coverage determinations.”
2. It is a generally accepted standard of care that effective treatment requires treatment of co-occurring behavioral health disorders and/or medical conditions in a coordinated manner that considers the interactions of the disorders and conditions and their implications for determining the appropriate level of care.
The court elaborated, “Co-occurring disorders can interact in a “reciprocal way” that makes each of them “worse.” Because co-occurring disorders can aggravate each other, treating any of them effectively requires a comprehensive, coordinated approach to all conditions.”
Regarding UBH’s Guidelines, the Court reasoned that the Guidelines deviate from this by focusing on the “current” condition.
3. It is a generally accepted standard of care that patients should receive treatment for mental health and substance use disorders at the least intensive and restrictive level of care that is safe and effective.
The court elaborated, “The evidence at trial did not support the conclusion that under generally accepted standards of care, there is a balancing of effectiveness against the restrictiveness or intensity factor; in other words, the fact that a lower level of care is less restrictive or intensive does not justify selecting that level if it is also expected to be less effective. Placement in a less restrictive environment is appropriate only if it is likely to be safe and just as effective as treatment at a higher level of care in addressing a patient’s overall condition, including underlying and co-occurring conditions.”
Regarding UBH’s Guidelines, the Court reasoned that the Guidelines do not adhere to these principles. Instead they actively seek to move patients to the least restrictive level of care at which they can be safely treated, even if a lower level of care may be less effective for that patient.
4. It is a generally accepted standard of care that when there is ambiguity as to the appropriate level of care, the practitioner should err on the side of caution by placing the patient in a higher level of care.
The court elaborated, “Research has demonstrated that patients with mental health and substance use disorders who receive treatment at a lower level of care than is clinically appropriate face worse outcomes than those who are treated at the appropriate level of care….On the other hand, there is no research that establishes that placement at a higher level of care than is appropriate results in an increase in adverse outcomes.”
Regarding UBH’s Guidelines, the Court reasoned, “Not only do the Guidelines in all relevant years contain provisions that improperly instruct clinicians to consider only safety and not effectiveness in deciding whether to move a patient to a lower level of care; they also deviate from generally accepted standards of care by using language that strongly conveys to clinicians that they should err on the side of moving members to lower levels of care even when there is uncertainty about whether such a move is safe. For example, the 2011 Guidelines use the terms “clear and compelling evidence” that patients should be kept at a higher level rather than a safe, but less effective lower level of treatment.”
5. It is a generally accepted standard of care that effective treatment of mental health and substance use disorders includes services needed to maintain functioning or prevent deterioration.
Regarding UBH’s Guidelines, the Court reasoned, “UBH Guidelines deviate from that standard by requiring a finding that services are expected to cause a patient to “improve” within a “reasonable time” and further restricting the concept of “improvement” to “reduction or control of the acute symptoms that necessitated treatment in a level of care.”
6. It is a generally accepted standard of care that the appropriate duration of treatment for behavioral health disorders is based on the individual needs of the patient; there is no specific limit on the duration of such treatment.
The court reasoned that to follow the generally accepted standard of care, there should be attempts to motivate a patient to participate in treatment before treatment at that level of care is discontinued, and sometimes effective treatment will require the patient to move to a higher level of care in the fact of such a lack of motivation.
The court found that “[b]eginning in 2014, UBH’s common Discharge Criteria clearly violated the standards set forth above by providing that the “continued stay criteria are no longer met” when the “member is unwilling or unable to participate in treatment and involuntary treatment of guardianship is not being pursued.” However, the Guidelines for 2011, for example, did not make lack of motivation an automatic reason for discontinuation of coverage at a given level of care, and leave room for coverage at a given level of care even where the patient is not actively participating in treatment for an “initial period of stabilization and/or motivational support.” Thus, the court found “these requirements are not inconsistent with the generally accepted standards of care discussed above.”
7. It is a generally accepted standard of care that the unique needs of children and adolescents must be taken into account when making level of care decisions involving their treatment for mental health or substance use disorders.
The court reasoned that it is necessary to apply a more lenient standard to children and adolescents since they are not fully developed psychologically. “As a corollary of these more lenient standards, children and adolescents are likely to need longer duration of treatment than adults.”
Regarding UBH’s Guidelines, the Court reasoned, “One of the most troubling aspects of UBH’s Guidelines is their failure to address in any meaningful way the different standards that apply to children and adolescents with respect to the treatment of mental health and substance use disorders. Throughout the Class Period, UBH failed to adopt separate level-of-care criteria tailored to the unique needs of children and adolescents. Nor do the Guidelines instruct decision-makers to apply the criteria contained in the Guidelines differently when the member is a child or adolescent….Generally accepted standards of care do not require that UBH create an entirely separate set of guidelines to address the needs of children and adolescents. They do, however, require that UBH’s Guidelines instruct decision-makers to apply different standards when making coverage decisions involving children and adolescents, where applicable, including relaxing the criteria for admission and continued stay to take into account their stage of development and the slower pace at which children and adolescents generally respond to treatment. UBH has failed to meet this requirement for all relevant years.”
8. It is a generally accepted standard of care that the determination of the appropriate level of care for patients with mental health and/or substance use disorders should be made on the basis of a multidimensional assessment that takes into account a wide variety of information about the patient.
On whether UBH Guidelines are consistent with generally accepted standards of care, the court stated:
“Having reviewed all of the versions of the Guidelines that Plaintiffs challenge in this case and considered the testimony of the witnesses addressing the meaning of the Guidelines, the Court finds, by a preponderance of the evidence, that in every version of the Guidelines in the class period, and at every level of care that is at issue in this case, there is an excessive emphasis on addressing acute symptoms and stabilizing crises while ignoring the effective treatment of members’ underlying conditions.” (Emphasis added.)
The court continued, “These requirements are not consistent with generally accepted standards of care because they are overly focused on treatment of acute symptoms. In particular, under these provisions a member is denied coverage – even if the other criteria are met – if the reason the patient requires the prescribed level of care and “cannot” be treated in a lower level of care is anything other than “acute changes in the member’s signs and symptoms and/or psychological and environmental factors.” But as discussed above, neither “acute symptoms” nor “acute changes” should be a mandatory prerequisite for coverage of outpatient, intensive outpatient or residential treatment.”
Additional highlights from the decision:
• “Mitigating” the impact of the 2008 Parity Act: The court found that “the record is replete with evidence that UBH’s Guidelines were viewed as an important tool for meeting utilization management targets, “mitigating” the impact of the 2008 Parity Act, and keeping “benex” down.” The Parity Act, simplified, mandates that behavioral healthcare and physical healthcare be treated equally. Thus, UBH’s Guidelines helped UBH minimize their behavioral health costs illegally.
• Financial self-interest was a “critical consideration”: As briefly discussed above, the court found that UBH’s Financial and Affordability Departments play “key roles in the Guideline development process.” As the court states, “The Court finds that the financial incentives discussed above have, in fact, infected the Guideline development process. In particular, instead of insulating its Guideline developers from these financial pressures, UBH has placed representatives of its Finance and Affordability Departments in key roles in the Guidelines development process throughout the class period.”
- For example, UBH’s decision making with respect to coverage of Transcranial Magnetic Stimulation (“TMS”), a treatment for major depressive disorder, was influenced by a commissioned internal study of the “financial impact” of covering TMS claims where medically necessary and the “return on investment” if it revised the Guidelines to cover TMS treatment in accordance with national standards.
- As another example, although the Utilization Management Committee had approved a Guideline broadening coverage of Applied Behavioral Analysis (“ABA”), a treatment for autism spectrum disorder, UBH’s CEO overruled the recommendation, cautioning UBH staff, “[w]e need to be more mindful of the business implications of guideline change recommendations.”
The court found by a preponderance of the evidence, that UBH “breached its fiduciary duty by violating its duty of loyalty, its duty of care, and its duty to comply with plan terms by adopting Guidelines that are unreasonable and do not reflect generally accepted standards of care” for both residential treatment and intensive outpatient treatment. Plaintiffs were harmed by being denied their right to fair adjudication of their claims for coverage based on Guidelines that were developed solely for UBH’s benefit. Furthermore, the court found “by a preponderance of the evidence, that UBH’s Guidelines were unreasonable and an abuse of discretion because they were more restrictive than generally accepted standards of care.”
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