A Wake-Up Call for Health Plans: U.S. Supreme Court Rejects United Behavioral Health’s Appeal

Editors note: This piece is part of a broader series on the efficacy of, bias against, and advocacy for psychodynamic treatments.

By Kathryn Gallagher, PhD

The U.S. Supreme Court has declined to consider United Behavioral Health’s appeal of a Tenth Circuit decision in a case involving the denial of a behavioral health claim. This recent decision underscores the requirement for health plans to engage meaningfully with clinicians and members when evaluating claims and has established binding precedent in this circuit.

The case centered around “A.K.,” an adolescent who required long-term residential mental health treatment, and her parents, who tirelessly fought to obtain coverage for the care she needed. For years, United Behavioral Health (“United”), one of the largest health insurance providers in the nation, repeatedly interrupted A.K.’s residential mental health services, often based on a nearsighted view that once a crisis is stabilized, treatment is no longer medically necessary. Tragically, this young person has since died by suicide.

Health insurance benefits are designed to help people access the care they need to maintain their health and well-being without facing overwhelming obstacles and financial burdens. Unfortunately, disparities in insurance coverage for behavioral health often force people to choose between going without medically necessary care or paying out of pocket, potentially resulting in massive out-of-pocket expenses. ^{i ii iii iv} The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, as amended, prohibits insurance companies from obstructing access to medically necessary mental health and substance use services. However, intermediate levels of care, such as residential treatment, are frequently subjected to discriminatory or unequal treatment by health plans. ^{v vi vii viii}

Currently, there is no universal definition of “medical necessity” at the federal level, nor is there a federal mandate that medical necessity determinations comport with generally accepted standards of care. Several states, such as California, Illinois, and Oregon, have established definitions of medical necessity that align with generally accepted standards of care and require the use of utilization review criteria developed by nonprofit professional associations. However, state insurance laws only apply to fully insured health plans.

In the absence of federal regulations, many health plans are free to rely on for-profit, proprietary medical necessity guidelines that can markedly deviate from generally accepted standards of care, even though this practice often conflicts with the health plans’ definitions of medical necessity. These substandard guidelines inappropriately require patients to exhibit acute symptoms and crises to receive coverage for residential treatment, a subacute level of care. Such a focus on symptom reduction and crisis stabilization, rather than clinical recovery, reflects a long-standing tension between health plans’ profit motives and their fiduciary responsibilities. ^{ix x xi xii} As a result, patients and clinicians are burdened with navigating a system that is inconsistent and subject to arbitrary determinations.

After years of repeated claim denials, administrative errors on United’s part, failed appeals, and obstructed requests for information, A.K. and her parents successfully sued United for failing to provide a “full and fair review” as required under the Employee Retirement Income Security Act (ERISA), a federal law that sets standards for employer-sponsored health plans. United appealed, but the Tenth U.S. Circuit Court of Appeals upheld the district court’s decision. Among other findings, the court held that United acted arbitrarily and capriciously by not adequately considering the opinions of A.K.’s physicians and failing to provide a proper explanation for the denials, concluding that by doing so, “…United effectively 'shut its eyes' to readily available medical information.” 

Like A.K., patients at the Austen Riggs Center are sometimes subject to medical necessity denials based on generic, conclusory, and flawed statements, bereft of any meaningful discussion or examination of case facts or medical history. These denials frequently disregard documented medical needs and contradict the providers’ professional recommendations and concerns. By doing this, insurers who have never personally evaluated the patients routinely place their medical judgment above that of their treating providers, who are undoubtedly better equipped to make credible recommendations about the most appropriate and necessary care.

“Although the Supreme Court sent the correct signal that health plans must engage in meaningful dialog with their members about their health coverage, stronger laws are still required to hold health plans accountable,” said Meiram Bendat, JD, PhD, Austen Riggs Center Board of Trustees member and Psych-Appeal founder. Federal legislation is needed to establish a uniform definition of medical necessity tied to generally accepted standards of care. Additionally, all insurers should use medical necessity guidelines developed by nonprofit professional associations for the relevant clinical specialty. Finally, healthcare plans should cover all mental health and substance use conditions without exception. Absent these and other measures, vulnerable Americans will continue to face unjustifiable barriers and financial hardships in their pursuit of basic healthcare, and their providers will continue to suffer alongside them.

i Melek, S., Davenport, S. & Gray, T. J. (2019). Addiction and mental health vs. physical health: Widening disparities in network use and provider reimbursement. Milliman Research Report. https://www.milliman.com/en/insight/addiction-and-mental-health-vs-physical-health-widening-disparities-in-network-use-and-p

ii Reinert, M, Fritze, D. & Nguyen, T. (2022). The state of mental health in America 2023. https://mhanational.org/sites/default/files/2023-State-of-Mental-Health-in-America-Report.pdf

iii Substance Abuse and Mental Health Services Administration. (2023). Key substance use and mental health indicators in the United States: Results from the 2022 National Survey on Drug Use and Health (HHS Publication No. PEP23-07-01-006, NSDUH Series H-58). Center for Behavioral Health Statistics and Quality, Substance Abuse and Mental Health Services Administration. https://www.samhsa.gov/data/report/2022-nsduh-annual-national-report

iv Lazar, S. G. (2021). The cost-effectiveness of psychodynamic therapy: The obstacles, the law, and a landmark lawsuit. Psychoanalytic Inquiry, 41(8), 624-637. doi:10.1080/07351690.2021.1983404

v U.S. Departments of Labor, Health and Human Services, & Treasury. (2022). MHPAEA report to Congress: Realizing parity, reducing stigma, and raising awareness: Increasing access to mental health and substance use disorder coverage. https://www.cms.gov/files/document/2022-mhpaea-report-congress.pdf

vi U.S. Departments of Labor, Health and Human Services, & Treasury. (2023, July). MHPAEA comparative analysis report to Congress. www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/laws/mental-health-parity/report-to-congress-2023-mhpaea-comparative-analysis.pdf

vii Melek, supra note i.

viii Bendat, M. (2014). In name only? Mental health parity or illusory reform. Psychodynamic Psychiatry, 42(3), 353-375. doi.org/10.1521/pdps.2014.42.3.353

ix Appelbaum, P. S., & Parks, J. (2020). Holding insurers accountable for parity in coverage of mental health treatment. Psychiatric Services, 71(2), 202-204. doi:10.1176/appi.ps.201900513

x Bendat, supra note viii.

xi Plakun, E. M. (2018). Clinical and insurance perspectives on intermediate levels of care in psychiatry. Journal of Psychiatric Practice, 24(2), 111-116. doi:10.1097/PRA.0000000000000291

xii Plakun, E. M. (2021). Improving access to psychotherapy: Implications of Wit versus United Behavioral Health. Journal of Psychiatric Practice, 27(3), 199-202. doi:10.1097/PRA.0000000000000541