Major Health Insurer Forced to Amend Claim Processing Guidelines Due to Violation of Fiduciary Duties Under ERISA

Written by: Brittany H. Cone, Esq. and Jordan Johnson, Esq.

The Northern District of California recently handed down remedies against United Behavioral Health (“UBH”), a subsidiary of UnitedHealth Group, related to violations of its fiduciary duties owed to its insureds. In 2014, a group of UBH’s insureds filed a class action lawsuit alleging that UBH violated fiduciary duties owed to them under the Employee Retirement Income Security Act (“ERISA”) in the Northern District of California. In March 2019, the Court ruled in favor of the insureds, holding that UBH utilized a narrower scope of coverage and overly restrictive guidelines, as compared to generally accepted standards, in adjudicating claims for payment. Specifically, the Court found that UBH prioritized financial gain over patient care by placing excessive emphasis on addressing acute symptoms and stabilizing crises instead of effective treatment for the underlying mental health conditions.

The Court recently ordered several remedies to address UBH’s violation of its fiduciary duties under ERISA, including: (1) the use of independent guidelines developed by professional mental health associations, instead of UBH’s guidelines, to adjudicate claims; (2) reprocess more than 50,000 claims; (3) oversight by a special master; and (4) new training  for employees reviewing claims. Not only is this a wonderful outcome for the patients and providers at issue in the suit, but may also be indicative of a major shift in the industry and how health insurers adjudicate claims of all types.