UnitedHealthcare gets much of lawsuit over denial of mental health coverage tossed

The corporate logo of the UnitedHealth Group appears on the side of one of their office buildings in Santa Ana, California, US, April 13, 2020. REUTERS/Mike Blake

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  • RICO, misrepresentation claims dismissed while contract claims survive
  • Ruling follows 9th Circuit reversal of patients’ victory in similar case

(Reuters) – A federal judge has sharply narrowed a proposed class action by addiction and mental heath treatment providers accusing a UnitedHealthcare unit of denying coverage for medically necessary treatments.

US District Judge Jeffrey White in Oakland, California, on Wednesday tossed all claims over health plans governed by the federal employee benefits law and wrote that plaintiffs “may face an uphill battle” with the remaining claims.

UnitedHealthcare and its attorney did not immediately respond to a request for comment.

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“We are looking forward to pursuing our claims regarding the state law plans,” said Matthew Lavin of Arnall Golden Gregory, a lawyer for the providers, adding that he and his clients were continuing to review the decision.

In their 2019 lawsuit, the providers – Florida-based Meridian Treatment Solutions, California-based Harmony Hollywood and Arizona-based Desert Cove Recovery – said UnitedHealthcare determined what treatment was “medically necessary” using “profit-oriented” internal guidelines that were not based on generally accepted medical standards.

Their lawsuit is similar to a case brought against the insurer by patients, who faced a setback last month when the 9th US Circuit Court of Appeals reversed a district judge’s ruling that UnitedHealthcare’s guidelines were unreasonable. The patients, who have the backing of the federal government, have said they plan to seek an en banc rehearing in the case.

White found Tuesday that all claims stemming from plans governed by the Employee Retirement Income Security Act (ERISA) were preempted by federal law. He also narrowed the claims stemming from non-ERISA plans, tossing misrepresentation and concealment claims for lacking sufficiently detailed support, though plaintiffs will have a chance to replead them.

Dismissing another claim under California’s Unfair Competition Law, the judge said it “depends heavily” on the findings in the patients’ case recently rejected by the 9th Circuit.

The ruling left in place breach of implied and oral contract claims, though White said that, based on previous cases, it could be difficult to establish that communications between providers and the insurer had created any contracts that could be breached.

The case is Meridian Treatment Services et al v. United Behavioral Health, US District Court, Northern District of California, No. 4:19-cv-05721.

For plaintiffs: Matthew Lavin and Aaron Modiano of Arnall Golden Gregory and David Lilienstein and Katie Spielman of DL Law Group

For UnitedHealth: Geoffrey Sigler and Nicole Matthews of Gibson Dunn Crutcher

Read more:

DOL, California back mental health patients against UnitedHealth

UnitedHealth unit must reprocess more than 50,000 denied mental health claims

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Brendan Pierson

Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.

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