Ryan S. v. UnitedHealth Group, Inc., No. 22-55761 (9th Cir. 2024)
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The plaintiff, Ryan S., filed a class action lawsuit against UnitedHealth Group, Inc. and its subsidiaries (collectively, “UnitedHealthcare”) under the Employee Retirement Income Security Act of 1974 (“ERISA”). He alleged that UnitedHealthcare applies a more stringent review process to benefits claims for outpatient, out-of-network mental health and substance use disorder (“MH/SUD”) treatment than to otherwise comparable medical/surgical treatment. Ryan S. asserted that by doing so, UnitedHealthcare violated the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (“Parity Act”), breached its fiduciary duty, and violated the terms of his plan.
The district court granted UnitedHealthcare’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) based primarily on its conclusions that Ryan S. failed to allege that his claims had been “categorically” denied and insufficiently identified analogous medical/surgical claims that he had personally submitted and UnitedHealthcare had processed more favorably.
The United States Court of Appeals for the Ninth Circuit reversed in part and affirmed in part the district court’s judgment. The panel concluded that Ryan S. adequately stated a claim for a violation of the Parity Act. The panel explained that an ERISA plan can violate the Parity Act in different ways, including by applying, as Ryan S. alleged here, a more stringent internal process to MH/SUD claims than to medical/surgical claims. The panel also concluded that Ryan S. alleged a breach of fiduciary duty. However, as Ryan S. failed to identify any specific plan terms that the alleged practices would violate, the panel affirmed the dismissal of his claims based on a violation of the terms of his plan. The case was remanded for further proceedings.
Court Description: ERISA The panel reversed in part and affirmed in part the district court’s judgment, and remanded for further proceedings, in a case in which Ryan S. brought a putative class action under the Employee Retirement Income Security Act of 1974 (“ERISA”) against UnitedHealth Group, Inc. and its subsidiaries (collectively, “UnitedHealthcare”). * The Honorable Edward R. Korman, United States District Judge for the Eastern District of New York, sitting by designation. Ryan S. alleged that UnitedHealthcare applies a more stringent review process to benefits claims for outpatient, out-of-network mental health and substance use disorder (“MH/SUD”) treatment than to otherwise comparable medical/surgical treatment. Ryan S. asserted that by doing so, UnitedHealthcare has violated the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (“Parity Act”), 29 U.S.C. § 1185a, in the process also breaching its fiduciary duty and violating the terms of his plan.
The district court granted UnitedHealthcare’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) based primarily on its conclusions that Ryan S. (1) failed to allege that his claims had been “categorically” denied and (2) insufficiently identified analogous medical/surgical claims that he had personally submitted and UnitedHealthcare had processed more favorably.
The panel concluded that Ryan S. adequately stated a claim for a violation of the Parity Act. The panel explained that an ERISA plan can violate the Parity Act in different ways, including by applying, as Ryan S. alleged here, a more stringent internal process to MH/SUD claims than to medical/surgical claims. A plaintiff presenting that type of contention may be able to allege a plausible claim without having to allege a categorical practice or differential treatment for his or her medical/surgical claims. It is enough for such a plaintiff to allege the existence of a procedure used in assessing MH/SUD benefit claims that is more restrictive than those used in assessing medical/surgical claims under the same classification, as long as the allegation is adequately pled. By alleging a systematic denial of those MH/SUD benefit claims and citing a California state agency report concluding that certain UnitedHealthcare entities were applying a more stringent review process to such claims, Ryan S. plausibly alleges that UnitedHealthcare was applying an improper internal process in violation of the Parity Act.
Citing ERISA language suggesting that a violation of 29 U.S.C. § 1185a is a breach of fiduciary duty, the panel concluded that Ryan S. also alleged a breach of fiduciary duty.
The panel therefore reversed the dismissal of Ryan S.’s claims based on the Parity Act and for breach of fiduciary duty. As Ryan S. failed to identify any specific plan terms that the alleged practices would violate, the panel affirmed the dismissal of his claims based on a violation of the terms of his plan.
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