Ryan S. v. UnitedHealth Group, Inc., __ F.4th __, No. 22-55761, 2024 WL 1561668 (9th Cir. Apr. 11, 2024)
Ryan was a beneficiary of an ERISA group health plan through UnitedHealthcare (UHC). He completed outpatient, out-of-network substance use disorder programs, but UHC did not cover most of those costs. Ryan sued, alleging UHC violated the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the Parity Act) (29 U.S.C. § 1185a) by using improper internal processes to determine whether outpatient, out-of-network mental health and substance use disorder (MH/SUD) treatment is covered, and violated its fiduciary duty under ERISA, 29 U.S.C. § 1104. Ryan cited a California Department of Managed Healthcare (CDMH) report that concluded UHC imposed a more stringent review process on MH/SUD treatment claims than it used for medical/surgical claims. The district court dismissed the lawsuit and Ryan appealed.
The Ninth Circuit reversed. The Court explained that the Parity Act prohibits an ERISA plan from imposing more restrictive limitations on MH/SUD treatment than on medical/surgical treatment. To bring a Parity Act claim based on improper internal processes, a plaintiff need not allege a “categorical” practice. “Handling MH/SUD treatment claims more stringently violates the Parity Act regardless of whether such differential treatment leads to the uniform denial of all claims.” A plaintiff must allege the challenged process is specific to MH/SUD claims and does not apply to analogous medical/surgical claims but need not identify the analogous category of medical/surgical claims with precision. Here, the complaint alleged an actionable Parity Act claim because UHC subjects MH/SUD claims to an additional review process that is not applied to medical/surgical claims. Because the complaint sufficiently alleged a violation of the Parity Act, it also sufficiently alleged a breach of UHC’s fiduciary duty.
