Mental Health Insurance Reimbursement Lawsuit

In a sign of increased enforcement of the Mental Health Parity and Addiction Equity Act (MHPAEA), recent settlement agreements provide that United Healthcare Insurance, United Behavioral Health, and Oxford Health Insurance will together pay over $15 million to settle allegations that they violated the federal mental health parity law.

Each year, the Department of Labor (DOL) engages in dozens of investigations of health plans regulated under the Employee Retirement Income Security Act (ERISA). Most investigations focus on the health plan policies and processes that are designed and operated by an insurer or third party.

Existing federal regulations require that health plans and issuers that apply non-quantitative treatment limitations (including out-of-network reimbursement methods, management strategies, and prescription drug benefit design) to mental health and substance use disorder treatment benefits do so in a manner that is comparable to medical-surgical benefits.

But United, for example, applied a discount of 25 percent for psychologists and 35 percent for master’s- level counselors as compared to the physician rate for the same service. Further, the company did not impose a discount for most non-physician medical/surgical providers like nurses or occupational therapists.

DOL’s complaint also alleges that due to an unfair algorithm, United’s outlier management strategy was disproportionately applied to mental health benefits. United applied the algorithm to identify and potentially deny medically unnecessary services to almost all outpatient psychotherapy services.

As a result, UnitedHealth Group will pay over $13 million to resolve federal, state and private litigation alleging violations of federal and state mental health parity laws. The companies will pay $2.5 million to resolve the Labor Department claims, $1.1 million to resolve state claims, and $10 million to resolve the private class action claims.

The Lyon Firm is investigating health insurance fraud claims due to biased algorithms and improper health insurance reimbursement. Consumer rights violations deserve to be addressed for the well-being of all individuals, and health insurance companies may be held accountable for mental health parity violations. Contact Joe Lyon for a free and confidential case review.