On March 22, 2022, the U.S. Court of Appeals for the Ninth Circuit reversed the judgment of a district court that had ordered United Behavioral Health (UBH) to reprocess over 50,000 mental health and substance use disorder treatment claims that the district court concluded were improperly denied as not in compliance with generally accepted standards of care. Although the Ninth Circuit agreed with the district court that the plaintiffs had standing to bring the lawsuits and that the class actions had been properly certified, the Ninth Circuit held that the district court did not give UBH’s interpretation of the underlying ERISA plan documents sufficient deference, as it was required to do. The Ninth Circuit found that UBH’s interpretation of the ERISA plans—that the plans did not require compliance with generally accepted standards of care—was reasonable. The Ninth Circuit did not certify its opinion for publication, meaning that this decision will not have precedential effect. The plaintiffs may appeal the decision to the U.S. Supreme Court.

The appeal stems from two related class actions against UBH from the U.S. District Court for the Northern District of California. The plaintiffs in each class action were beneficiaries of ERISA-governed health plans administered by UBH. The plaintiffs alleged that UBH improperly denied them benefits for treatment of mental health and substance use disorders because UBH’s Level of Care Guidelines and Coverage Determination Guidelines did not comply with the terms of their insurance plans. The plaintiffs alleged their health plans provided for coverage of treatment consistent with generally accepted standards of care. They further claimed that UBH breached the fiduciary duty it owed the members and arbitrarily denied their claims in violation of ERISA by developing guidelines inconsistent with generally accepted standards of care and prioritizing cost savings over members’ interests. UBH disagreed, contending that under its interpretation of the ERISA plan documents, the plans did not require consistency with all generally accepted standards of care; they simply excluded from coverage care not in compliance with generally accepted standards of care.

After a ten-day bench trial, the district court agreed with the plaintiffs and found that UBH breached its fiduciary duty to the plaintiffs and arbitrarily denied claims in violation of ERISA. The district court determined that UBH’s internal guidelines for mental health and substance abuse coverage ignored generally accepted standard of care by focusing too narrowly on only covering acute symptoms and crises and excluding from coverage the effective treatment of members’ underlying conditions. In a subsequent order addressing the remedies of UBH’s ERISA violations, the district court enjoined UBH from using its defective guidelines when making coverage determinations and required UBH to reprocess over 50,000 mental health and substance use disorder treatment claims in compliance with generally accepted standards of care.

In reversing the district court, the Ninth Circuit held that the district court improperly substituted its own interpretation of the ERISA plan documents for UBH’s. The Ninth Circuit said UBH’s interpretation that the plans did not require consistency with generally accepted standards of care was not unreasonable. The Court’s theory was that the plans excluded coverage for treatment inconsistent with generally accepted standards of care—they did not mandate coverage for all treatment that is consistent with the generally accepted standards of care. Because the decision is unpublished, the Ninth Circuit’s holdings are limited to the facts of this case and cannot be applied to future cases.

The Ninth Circuit’s March 22, 2022 order is here. The district court’s February 28, 2019 order following the bench trial is here, and the district court’s November 3, 2020 remedies order is here.