On
Specifically, the court held that an allegation that a defendant applied a different review process for mental health claims than for medical claims is sufficient to state a plausible claim of a violation of the Parity Act, even if the process does not result in a denial of a mental health benefit.
Quick Hits
- The Ninth Circuit recently set a broad pleading standard to allege a violation of the
Paul Wellstone andPete Domenici Mental Health Parity and Addiction Equity Act of 2008. - The Mental Health Parity and Addiction Equity Act requires that any limitations on “mental health or substance use disorder benefits” in an ERISA plan be “no more restrictive than the predominant treatment limitations applied to substantially all [covered] medical and surgical benefits.”
- The broader standard may make it more difficult to challenge claims under the act at the pleading stage.
The standard established in Ryan S. makes it difficult to challenge a Parity Act claim at the pleading stage, which will open up Parity Act lawsuits to discovery. The Ninth Circuit's opinion also makes it easier to bring a putative class action based on a Parity Act violation, as the Ryan S. matter is an alleged putative class action.
Background
Ryan S. brought a putative class action under the Employee Retirement Income Security Act of 1974 (ERISA) against
Ryan S. alleged that his mental health benefit claim had been denied in violation of the Parity Act, and he cited a 2018 report by the
According to the report, claims submitted for outpatient mental health treatment were evaluated using a process called Algorithms for Effective Reporting and Treatment (ALERT). ALERT identified how often an enrollee received outpatient, out-of-network treatment and whether the enrollee made progress in the program. If ALERT determined that certain criteria were not met, a claim was not denied, but it was referred for peer review, which could result in a denial of services.
The Ninth Circuit's Decision
A key fact was that
Even if all those denials were independently valid, the mere fact that the reasons to deny coverage were identified only because the [mental health/substance use disorder] claims were subjected to an additional layer of scrutiny could violate the Parity Act.
In other words, according to the Ninth Circuit, even a process that results in a correct decision can still be a basis for a Parity Act violation.
Conclusion
There is some good news for group health plans. This is a pleading standard. A plaintiff still must prove the existence of a violation of the Parity Act. However, given the pleading standard, the Ryan S. opinion opens the door to putative class actions based on alleged Parity Act violations and likely will result in situations in which discovery and class certification litigation will be more common.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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