Mental Health Parity: Recent Ninth Circuit Ruling Bolsters MHPAEA and ERISA Protections, Clarifying Pleading Standards

Plan Coverage Terms and Disputed Benefit Restrictions

As background, UnitedHealth Group, Inc. and its subsidiaries (United) administered the plaintiff’s benefit plan, which covered 70% of the costs for outpatient, out-of-network MH/SUD treatments up to an out-of-pocket maximum and thereafter provided 100% coverage. Despite these coverage provisions, the plaintiff alleged that he faced multiple claim denials when he sought reimbursement for outpatient substance use disorder treatments he completed between 2017 and 2019. United, exercising its authority as the plan administrator, denied many of the patient’s claims, citing reasons such as non-coverage under the plan, insufficient documentation, and inadequate detail in the submitted documents. These denials left the plaintiff personally responsible for hundreds of thousands of dollars in charges. Accordingly, the plaintiff filed a putative class action against United, alleging three types of claims: violations of MHPAEA, fiduciary duty breaches under ERISA, and a failure to follow plan terms as required by ERISA.

Proceedings in the District Court

In the district court, the crux of the plaintiff’s complaint turned on the assertion that United’s denials were part of a broader, more stringent review process applied exclusively to MH/SUD claims. In addition to his own denied claims, the plaintiff cited as support for his arguments a 2018 report by the California Department of Managed Healthcare that had concluded that United applied a more stringent review process for MH/SUD claims. Specifically, that report had concluded that United used an algorithmic process called the Algorithms for Effective Reporting and Treatment (ALERT) to assess treatment frequency and progress for MH/SUD claims, triggering additional reviews that led to denials. Crucially, United did not use this specialized scrutiny for M/S claims. The plaintiff contended that these facts suggested not only a violation of MHPAEA, which mandates that limitations placed on MH/SUD benefits be no more restrictive than those on M/S benefits, but also a breach of United’s fiduciary duties under ERISA. The plaintiff alleged that United failed to act solely in the interest of plan participants and beneficiaries.

The district court disagreed and dismissed the case, concluding that the plaintiff had not adequately alleged that his claims had received categorical denials based on this more stringent process nor had he identified analogous M/S claims that received more favorable processing. In the district court’s view, the plaintiff needed to provide more specific comparative evidence to plausibly claim unequal treatment between MH/SUD and M/S benefits under the health plan.

The Ninth Circuit’s Reversal

On appeal, the Ninth Circuit reversed the dismissal of both the MHPAEA and ERISA fiduciary duty claims. The Ninth Circuit held it sufficient for the plaintiff to allege that the plan applies a more restrictive process to MH/SUD claims than to M/S claims, without needing to demonstrate a categorical denial practice or to identify specifically analogous M/S claims. This interpretation, the court held, better aligned MHPAEA’s core protection — to ensure that MH/SUD benefits are not subjected to more restrictive conditions or processes than M/S benefits. The Ninth Circuit further clarified that the critical issue in analyzing MHPAEA claims at the pleading stage is whether the alleged discriminatory process impacts the parity between MH/SUD and M/S benefits under the same classification. Applying this framework, the court reasoned that the plaintiff had adequately pled that such a discriminatory process was in place by citing specific instances of denied claims and referencing the state agency report, which included findings about the use of specific algorithms that assessed MH/SUD treatment differently than M/S treatment. Similarly, the Ninth Circuit also held that the plaintiff had sufficiently alleged a breach of United’s fiduciary duty under ERISA, as a violation of MHPAEA on its face suggests an ERISA breach of fiduciary duty.

Notably, however, the Ninth Circuit upheld the district court’s dismissal of the claim that United had violated specific terms of the plaintiff’s benefit plan. While the allegations contained in the plaintiff’s complaint could, the Ninth Circuit noted, establish (if proven) a MHPAEA and related ERISA fiduciary duty violation, such allegations were insufficient to automatically establish a violation of a specific plan term. Rather, the court reasoned, the plaintiff must point to specific plan terms that mandated identical review processes for all types of claims. Here, the plaintiff had failed to identify any such plan term, a pleading failure that was fatal to his claim for violation of plan terms.

Conclusion: Guidance for Future Litigants Seeking to Enforce MHPAEA

The Ninth Circuit’s ruling sets a significant precedent for future litigants seeking to enforce MHPAEA. Initially, it simplifies the proof required to establish a MHPAEA violation, making clear that plaintiffs need not necessarily prove categorical denials or pinpoint favorably treated comparable M/S claims. Instead, demonstrating a more restrictive process for MH/SUD claims versus M/S claims may suffice. Additionally, the case clarifies that when asserting claims that plan administrators have failed to follow plan terms, plaintiffs must clearly link their allegations to violations of specific plan terms. Moreover, the case also comes in the wake of another recent case out of the Tenth Circuit that similarly reversed a district court dismissal of a MHPAEA claim.

Collectively, both cases signal the expanding reach of MHPAEA enforcement, and telegraph key steps plaintiffs should take at the pleading stage. To wit, future plaintiffs would be well-advised to document any process disparities, leverage findings from state agency reports or independent studies where applicable and link any purported MHPAEA and ERISA violations to specific plan terms to satisfy their pleading obligations under those laws.