1. Case Name: N.Y. State Psychiatric Ass’n, Inc. v. Unitedhealth Grp. United States District Court for the Southern District of New York, October 31, 2013
2. Type of Treatment Services Denied: Not provided.
- Plaintiff: Anthony Frank Maul, Don Brian Hufford, Jason Samuel Cowart, Robert J. Axelrod, Brian Lee Poulter, Pomerantz, Grossman, Hufford, Dahlstrom & Gross, LLP; Meiram Bendat, Psych-Appeal, Inc.; Health Michelle-Mason McKeon, Michael Lee Cohen, Cohen McKeon, LLP
- Defendant: Andrew John Holly, Michelle S. Grant, Stephen Paul Lucke, Dorsey & Whitney LLP; Elizabeth Rozon Baksh, Richard Howard Silberberg, Dorsey & Whitney, LLP
4. Format: Decision and Order Granting Defendants’ Motion to Dismiss and Denying Plaintiffs’ Motion for Preliminary Injunction
- ERISA Claim? Yes.
- Class Action or Individual Action? Class Action
- Defendant? Insurer or subsidiary
- Type of Insurance Plan? Employer sponsored health plan and one non-ERISA plan offered by the State of New York
- Type of Coverage Denial? No provided.
6. Legal Pointer: When bringing ERISA cases, the statute requirements must be clearly alleged in the Complaint ensure applicability.
7. Legal Issues and Causes of Action: A polyglot group of unrelated plaintiffs who ether 1) applied to their employer-sponsored health plan for reimbursement of the cost of mental health care or substance abuse treatment, or 2) provided mental health care for which their patients were not fully reimbursed by their employer-sponsored health plans. In each instance, Defendants had something to do with the denial of benefits sought. Plaintiffs seek money damages and an injunction requiring United to treat mental health or substance abuse benefits no less favorably than it treats medical or surgical benefits when it assesses whether claims are reimbursable under various employer-sponsored health plans.
- Ruling: United moved to dismiss all claims asserted, arguing that every plaintiff failed to state a claim against it and that the NYSPA lacks standing to pursue any claim. Plaintiffs cross-moved for a preliminary injunction, seeking to enjoin United’s practices that allegedly violate mental health parity laws. As to all claims, the motion to dismiss was granted.
8. Narrative Case Description: All of the individual plaintiffs charge that United applies a different standard to request for reimbursement of the cost of mental health and substance abuse treatment, as opposed to medical or surgical treatment, and that United wrongly denied them or their assignors mental health benefits to which they were entitled under their plans. Some plaintiffs claim that they were not allowed to take appeals from denials of benefits, or that inadequate procedures were followed in appeals.
Plaintiffs Denbo, Smith and Olin
Plaintiffs Denbo, Smith and Olin brought three claims against United, all of which essentially allege that United improperly denied them benefits in violation of the terms of their respective ERISA plans and of federal law. More specifically, Count 3 charges United with violating the terms of the CBS, STSCO and Oracle Plans by denying the plaintiffs benefits to which they were entitled. Plaintiffs assert that United violated plan terms by under-reimbursing mental health claims, failing to adhere to general standards of medical necessity, and performing prospective and concurrent review (as opposed to retrospective reviews) in instances when not authorized to do so by relevant plan terms. They claim that United is liable to them because it was an administrator of the three Plans. The Court concluded that Plaintiffs sued the wrong party. Plaintiffs did not allege that United was the plan administrator of any of their plans, nor could they, since their respective Plan Documents name CBS Retirement Committee, the SYSCO Administrative Committee, and Oracle as the Plan Administrators. Therefore, United is not the proper defendant for the benefits claims asserted under Count 3. Here, Plaintiffs are seeking to redress the wrongful denial of benefits. In such instances, court have consistently rejected claims for equitable relief that would effectively order the provision of benefits, on the grounds that adequate monetary relief is available.
Additionally, the Court dismissed Count 1, which alleges that United failed to provide both quantitative and nonquantitative parity between coverage for mental health care and medical/surgical services in its role as a claims administrator for the plans. Plaintiffs sue United in its capacity as a fiduciary; they do not purport to bring this claim against United as an administrator as was the case was Count 3. As such, Count 1 must be dismissed because, in its capacity as a claims administrator of self-insured EIRSA plans, United is a party to which the Parity Act applies. The CBS, SYSCO, and Oracle Plans are all group health plans within the meaning of the statute; plaintiffs do no contend that United qualifies as a group health plan nor do plaintiffs contend that United offers health insurance coverage in connection with a group health plan in its capacity as a claims administrator for CBS, SYSCO and Oracle Plans. Because United does not sell coverage to the self-funded plans in this case, United does not offer coverage to the plans. United’s only alleged connection to these plans is its roles as their claims administrator; it processes claims and makes coverage determinations. An entity that is process claims and making coverage determinations that will be paid with someone else’s money is not an entity that is offering coverage in connection with that Plan or selling coverage for purposes of that Plan. Thus, the ERISA breach of fiduciary duty claims raised in Count 1 based on alleged Parity Action violations must be dismissed.
The Court further held that Count 5 must also be dismissed because it has been brought against the wrong defendant. Only group health plans or entities providing health insurance coverage in connection with group health plans are liable for violations of the ACA and United is neither.
Dr. Julie Ann Allender is a mental health provider. She alleges that she is currently treating a United Insured patient whose benefits are sponsored by a large group health plan. Allender’s patient allegedly assigned his right to assert claims under ERISA to Allender. On behalf of her patient, Allender joins plaintiffs Denbo, Smith and Olin in Counts 1 and 5, bringing breach of fiduciary duty claims under ERISA for United’s alleged violations of the Parity Act and the ACA. Allender’s claims on behalf of her patient are subject to dismissal for the same reason that Denbo’s, Smith’s, and Olin’s claims per Count 1 and 5 were dismissed.
Dr. Shelly Menolascino is a mental health provider. She asserts four ERISA claims against United on behalf of certain of her patients. She joins the other plaintiffs in brining Count 1 and 5. Again, for the same reasons as above, those counts are dismissed. Mr. Menolascino asserts ERISA denial of benefits and breach of fiduciary duty claims due to the United’s dispute over the correctness of the billing codes she used when she submitted claims for counseling sessions with her patients, insisting that she should have billed under a different code or codes, for which lesser reimbursement was offered under the Plans. Again, this claim was dismissed because EIRSA imposes obligations only upon the employee benefits plans themselves and Menolascino does not alleged that United is the plan for any of her patients.
9. Additional Comments: The Court also held that it lacked subject matter jurisdiction over the claims brought by Plaintiff Kamins. His health insurance plan is not subject to ERISA and also brought NY state action claims. The New York State Psychiatric Association’s Claims were also dismissed because the Court found that it lacked standing to bring claims of its members.
11. Practical Implications and Lessons Learned: None.
12. All Legal Theories Presented in Case: ERISA, Parity Act, ACA, the New York Parity Act, the New York Deceptive Trade Practices Act and the New York Prompt Payment Statute
13. Successful Legal Theories in Case: None.