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United to Pay Over $18 million to Settle Disputes Regarding Alleged Parity Violations: New York Federal Court Combines Federal and State Investigations with Class Action Lawsuits (August 11, 2021)

In an unprecedented move, the U.S. Department of Labor (DOL) recently teamed up with an individual state to bring joint enforcement actions under the Mental Health Parity and Addiction Equity Act of 2008 (Federal Parity Law). New York State Attorney General (NYAG) Letitia James and DOL Secretary Marty Walsh simultaneously filed two complaints (see NYAG complaint and DOL complaint) and two settlements to resolve these complaints with a federal court in Brooklyn. In the settlements, United Healthcare (United) agreed to pay more than $18 million in regulatory fines, settlement amounts, and attorneys’ fees over allegations of parity violations.

These settlement agreements, published on August 11th, highlight the expanding trend of governmental enforcement actions and litigation focused on appropriate levels of insurance coverage for mental health and substance use disorder (MH/SUD) treatment services.

The main United entities involved in the settlement agreements are United Healthcare Insurance Co., United Behavioral Health, and Oxford Health Insurance Inc. (together, “United”).

Joint Press Announcement

On August 12th, The U.S. Department of Labor and New York Attorney General issued a joint press release noting that United has unlawfully denied coverage to 20,000 New Yorkers for mental health and substance use treatment.

“In the shadow of the most devastating year for overdose deaths and in the face of growing mental health concerns due to the pandemic, access to this care is more critical than ever before,” said Attorney General James. “United’s denial of these vital services was both unlawful and dangerous — putting millions in harm’s way during the darkest of times. There must be no barrier for New Yorkers seeking health care of any kind, which is why I will always fight to protect and expand it. I thank Secretary Walsh for his partnership on this important matter.”

“Protecting access to mental health and substance use disorder treatment is a priority for the Department of Labor and something I believe in strongly as a person in long-term recovery,” said U.S. Secretary of Labor Marty Walsh. “This settlement provides compensation for many people who were denied full benefits and equitable treatment. We appreciate Attorney General James and her office for their partnership in investigating, identifying, and remedying these violations.”

Tiered Reimbursement Policy Prohibited

The first settlement is based on an improper tiered reimbursement policy by United for reimbursing less for out-of-network behavioral health therapy services for psychologists and master’s level counselors (including social workers).  Specifically, United reduced reimbursement rates for psychologists by 25% and for master’s level counselors by 25% or 35% when compared to the reimbursement rates for physicians providing the same mental health services.  A similar discounting strategy was not used for medical/surgical providers.  Among other concerns, the allegations state that United plans violated their fiduciary responsibilities under the Employee Retirement Income Security Act (“ERISA”), along with violating New York and the Federal Parity Laws.

As part of the settlement agreement, United has agreed not to reinstate this inequitable provider reimbursement policy and also not to apply any tiering policy to certain New York-based plans for two years.  In addition, United will pay:

  • $10 million into the Tiered Reimbursement Settlement Fund;
  • $650,000 in fines to New York; and
  • The costs of class notice and settlement administration.

United also has agreed to pay up to $3.35 million for attorneys’ fees and class representative incentive awards.

This first settlement is based on two class action lawsuits filed by the law firms of Zuckerman Spaeder LLP and Psych-Appeal, Inc., called Jane Doe v. UnitedHealth Group Inc., No. 1:17:cv-4160 (E.D.N.Y.), and Jane Smith v. UnitedHealthcare Insurance Co., et al., which was originally filed in Northern California, then transferred to New York (as No. 1:21-cv-02791). The U.S. Secretary of Labor (“DOL”) and the Attorney General of New York (“NYAG”) initiated similar legal actions arising from their investigations concerning this issue, and the federal court in the Eastern District of New York consolidated all of the actions for purposes of settlement. The class action settlement still must be approved by the Court. The class plaintiffs have requested preliminary approval from the Court, so that the class can receive notice about the settlement.

Denials of Care Based on Improper Utilization Review Criteria

The second settlement agreement addresses an improper practice by  United Behavioral Health’s “Alert Program,” which uses specific algorithms to claims data to “identify clinical risk, utilization and outliers for outpatient treatment.”  The Alert Program was used to make adverse benefit determinations through United’s medical necessity criteria.  However, United applied the “outlier management” criteria for only a subset of mental health conditions and used “non-comparable data sets” when compared to medical/surgical benefits.

DOL and the NYAG initiated similar legal actions, and the Court consolidated the two actions for purposes of settlement.


United has agreed to stop using the “Alert Program” (but they can still use other forms of utilization management).  As part of the settlement agreement, United will pay:

  • $2.5 million into the Alert Common Fund to cover self-funded eligible members;
  • $1.1 million into the Alert Common Fund for distribution to fully-insured and non-ERISA eligible members;
  • $650,000 in fines to New York; and
  • The costs of class notice and settlement administration.

Other Parts of the Settlements

In addition to the financial payments, United also must meet several non-financial requirements.  This includes disclosing these settlements on their websites and doing a better job disclosing applicable non-quantitative treatment limitations (“NQTLs”) comparative analysis and similar documents.

These settlements are the successful product of federal and state investigations occurring in parallel with two private class action lawsuits and reflect the expanding trend of governmental enforcement actions and litigation focused on mental health parity.

New York — NY State Office of the Attorney General Assesses $3 million in Fines Against 7 Health Plans for Violating State and Federal Parity Requirements (May 2018)

Report issued to summarize results of NYAG’s industry-wide initiative to investigate health plans’ compliance with state and federal parity laws.  The Attorney General findings can be viewed online here.

The enforcement action includes eight (8) agreements with seven (7) health plans, including:  MVP, EmblemHealth, Excellus, Beacon Health Options, Cigna, HealthNow and Anthem:

  • Four (4) settlements required plans to implement reforms in their administration of behavioral health benefits, particularly related to medical management practices, coverage of residential treatment, co-pays for outpatient treatment, and regular submission of compliance reports
  • Two (2) of the settlements focused on coverage of particular services
  • Two (2) of the settlements addressed improper imposition of preauthorization requirements for MAT.

Through the work of the NYAG, plans are imposing fewer barriers to necessary mental health treatment, plans reimbursed more than 300 consumers over $2 million for their out-of-pocket costs for previously denied claims, plans paid a total of $3 in penalties, and plans are letting providers prescribe, without preauthorization, MAT for patients suffering with SUD.

National Parity Map

View the state parity reports to learn about legislation, regulation, and litigation related to parity implementation

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Common Violations

In seeking care or services, be aware of the common ways parity rights can be violated.