A federal judge in San Francisco has found that an affiliate of UnitedGroup Inc., the nation’s largest health insurer, breached its fiduciary duty to policyholders by following guidelines that emphasized cost-savings and addressing acute problems rather than treating underlying mental health and substance abuse issues.
U.S. Magistrate Judge Joseph Spero of the Northern District of California issued a 106-page ruling Tuesday finding that the guidelines that United Behavioral Health used when making coverage decisions in cases of mental illness and substance abuse didn’t provide for generally accepted standards of care outlined in the plaintiffs’ policies.
“In every version of the Guidelines in the class period, and at every level of care that is at issue in this case, there is an excessive emphasis on addressing acute symptoms and stabilizing crises while ignoring the effective treatment of members’ underlying conditions,” Spero wrote. Although the specific guidelines used to make a coverage decision varied within the class period from 2012 to 2017, Spero concluded that emphasis was “pervasive and result[ed] in a significantly narrower scope of coverage than is consistent with generally accepted standards of care.”
The decision is a major victory for lawyers at Zuckerman Spaeder and Psych-Appeal Inc., a law firm based in West Hollywood, California, that focuses on mental health insurance coverage.
UnitedHealth is represented by a team at Crowell & Moring. Partner Jennifer Romano passed along a request for comment to a company spokeswoman.
“We look forward to demonstrating in the next phase of this case how our members received appropriate care,” said UnitedHealth communications director Maria Gordon Shydlo. “We remain committed to providing our members with access to the right care for the treatment of mental health conditions and substance use disorders.”
Spero’s decision comes after he held a 10-day bench trial in October 2017 to determine whether United Behavioral Health’s coverage guidelines led to coverage determinations that were more restrictive than those generally accepted. Spero found that the evidence at trial showed United Behavioral Health’s emphasis on cost-cutting “tainted the process, causing UBH to make decisions about Guidelines based as much or more on its own bottom line as on the interests of the plan members, to whom it owes a fiduciary duty.”