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From Health Law Daily, August 24, 2015

Who, me? TPA with control of claims process must defend ERISA action against health plan

By Michelle L. Oxman, J.D., LL.M.

The Mental Health Parity and Addiction Equity Act of 2008 (the Parity Act) is enforceable by a beneficiary of a health plan in an action against the third party administrator to enjoin alleged violations under section 502(a) of the Employee Retirement Income Security Act (ERISA), and the third party administrator (TPA), which exercised total control over the claims process, is the proper defendant. In addition, the New York Psychiatric Association (NYPA) has standing to enforce the claims of its members against a health plan for violation of the Parity Act (P.L. 110-343) (New York State Psychiatric Association v. United Health Group, August 20, 2015, Lohier, R.).

The parties. United Health Group and its affiliates (United) acted as the TPA of the CBS Medical Plan. Jonathan Denbo was an employee of the CBS Sports Network, insured through the CBS Medical Plan (the Plan). United initially covered his claims for weekly psychiatric services. After Denbo’s psychiatrist submitted claims for 12 psychotherapy visits in six weeks, however, United notified Denbo that his psychotherapy was not medically necessary and would no longer be covered. Denbo, the NYPA, and a psychiatrist who treated beneficiaries of plans administered by United sued, seeking declaratory and injunctive relief.

Requirements of the Parity Act. The terms of the Plan incorporated the ERISA and the Parity Act. The Parity Act provides that group health plans may not apply any financial requirements or treatment or coverage limitations to mental health and substance abuse treatment that are more restrictive than the requirements or limitations applied to medical services. Denbo contended that United, as the TPA, violated the Parity Act and the terms of the plan performing concurrent utilization review and limiting coverage of his psychotherapy solely based on the frequency of his visits, a standards that it did not apply to medical services; in addition, he claimed that requiring preauthorization for psychotherapy, but not for medical services, violated the Parity Act.

United’s ERISA arguments. United contended that it was not subject to suit for violation of the Parity Act under ERISA sec. 502(a)(1)(B) or 502(a)(3) because it was neither the plan nor the issuer of the group health plan. The trial court had dismissed Denbo’s claims on this ground. The court of appeals rejected United’s argument. Section 502(a)(1)(B) does not prohibit lawsuits against claims administrators. Both it and sec. 502(a)(3) allow beneficiaries to sue to stop practices that violate ERISA, including the Parity Act. Sec. 502(a)(3) is a “catch-all” provision, written broadly in order to provide complete relief.

Section 502(a)(1)(B) provides that a plan beneficiary may sue to recover benefits due under the plan or to enforce or clarify his or her rights under the plan. Because United retained complete control over the claims process, including authorizations and appeals, it was responsible for any unlawful practices in the claims and authorization processes. In fact, it was the most logical defendant because only a court order involving it could redress the alleged violations of the law.

The statute does not prohibit lawsuits against claims administrators. Both it and sec. 502(a)(3) allow beneficiaries to sue to stop practices that violate ERISA, including the Parity Act. Sec. 502(a)(3) is a “catch-all” provision, written broadly in order to provide complete relief. The court could apply either provision, though it could not award separate relief under both provisions.

NYPA’s standing. United conceded that the NYPA had standing to assert the rights of its members and that helping its members and their patients enforce their rights to mental health treatment was a proper basis for the NYPA to act. The district court had based its dismissal of the NYPA’s claims on the need to establish violations through the claims of individual members. The court found that declaratory and injunctive relief could possibly be awarded on grounds that would apply to all members. It was too early in the litigation to decide that the NYPA could not participate because of the need to prove individual claims.

The district court also had dismissed the claims of an individual psychiatrist who treated beneficiaries of United plans. She had alleged only that the plans paid her less and denied claims more frequently than they denied claims for medical services. She did not make allegations about any specific plan. The court affirmed dismissal of those claims because they were not sufficient to allege a violation of ERISA.

The case is No. 14-20-cv.

Attorneys: Meiram Bendat (Psych-Appeal, Inc.), Jason S. Cowart (Zuckerman Spaeder LLP) and Anthony F. Maul (The Maul Firm, PC) for New York State Psychiatric Association, Inc. Andrew J. Holly (Dorsey & Whitney LLP) and Catherine Emily Stetson (Hogan Lovells U.S. LLP) for UnitedHealth Group, United Healthcare Ins. Co., United Healthcare and United Behavioral Health.

Companies: New York State Psychiatric Association; United Health Group; UHC Insurance Co.; United Healthcare Insurance Co. of New York; United Behavioral Health

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