Tenth Circuit Decision Emphasizes Mental Health and Substance Use Disorders as Independent Reasons for Potential Coverage under ERISA Plans
Rob Thomas, Of Counsel
On December 5, 2023, the Court of Appeals for the Tenth Circuit found that an employee benefit plan administrator failed to satisfy the relatively lenient arbitrary and capricious standard of review when it denied residential treatment benefits for mental health and substance use disorders under the Employee Retirement Income Security Act of 1974 (“ERISA”). The Tenth Circuit’s decision in Ian C. v. United Healthcare Insurance Company[1] underscores the importance for plan administrators to provide independent considerations of both mental health and substance use disorders when a dual diagnosis is present, and the relevant benefit plan provides coverage for both conditions.
Ian C. v. UnitedHealthcare Insurance Co. - Background
Plaintiff Ian C. was a participant in United Healthcare’s (“United’s”) group health insurance plan, and filed a claim for residential treatment benefits at Catalyst Residential Treatment (“Catalyst”) for his child, “A.C.,” who had transferred to Catalyst from an 11-week inpatient wilderness program for both mental health and substance use disorders (which United had covered).
A.C. was admitted to Catalyst with diagnoses of, among other things, “severe” alcohol/cannabis use disorder, anxiety, and depression. During his treatment, A.C. had substance use cravings and flashbacks of drinking, notwithstanding having several weeks of sobriety. United initially approved treatment but, after approximately two weeks of treatment at Catalyst, and upon Ian C.’s claim for an additional 30 days of treatment, United denied any additional residential treatment moving forward because it determined that residential treatment for A.C.’s anxiety disorder was not consistent with generally accepted standards of medical practice.
In its initial denial, United noted that A.C. had “made progress” and that his mental health condition (anxiety) no longer met medical necessity guidelines, while also stating that while A.C. had also been admitted for substance use, he did not have serious withdrawal or post-acute withdrawal symptoms that justified continued coverage. Ian C. appealed internally, submitted additional medical records, and requested that United refer to its own substance use guidelines for medical necessity (which were separate and independent of its own mental health guidelines), which supported A.C.’s continued treatment for substance abuse. United denied the appeal, noting in its denial letter that A.C. was no longer eligible under United’s mental health guidelines given A.C.’s progress in treating his anxiety, without mention of A.C.’s substance use-related diagnoses.
Tenth Circuit Reverses the District Court for the District of Utah, Finding that United’s Denial was Arbitrary and Capricious.
The Tenth Circuit, after determining that United’s denial of benefits should be evaluated under the arbitrary and capricious standard (rather than de novo), determined that United failed to satisfy this standard and reversed the lower court’s grant of summary judgment in favor of United.
The court heavily criticized the appellate reviewer’s complete lack of any substantive mention of A.C.’s substance abuse diagnoses as an independent ground for coverage, the “bevy of evidence” submitted by Ian C. which supported continued coverage for substance use disorder, or United’s substance abuse guidelines when it issued its second denial of the claim. The court noted that previous attempts to treat A.C.’s substance use at an outpatient level had failed, and that when United denied the claim, A.C. was still exhibiting acute symptoms of substance use disorder, including cravings, flashbacks, and other relapse triggers. Therefore, the court stated that United was unjustified in “shutting its eyes” to the possibility that A.C. was entitled to benefits based on substance use, and that its lack of consideration of a possible independent ground for coverage alone was enough to fail the arbitrary and capricious standard of review.
United also attempted to argue that the reviewing physicians did not need to review A.C.’s substance abuse diagnoses because mental health (anxiety) was the “primary driver” for treatment. The court quickly dismissed such arguments, noting that it was irrelevant whether A.C.’s substance use was the primary or subordinate reason for treatment, so long as substance use constituted an independent ground for coverage. The court also criticized United’s application of its own substance use guidelines, noting that the guidelines themselves accounted for coverage in situations where a beneficiary’s mental health conditions might be improving or stabilizing, but remaining signs and symptoms of substance use relapse are present and which are likely to undermine treatment in less restrictive settings.
Employer Considerations
Employers, insurers, and their ERISA benefit plan administrators should take heed that, to the extent employee benefit plans provide benefits for both mental health and substance use disorders, the two concepts are not interchangeable. Plan administrators should carefully evaluate claims involving both mental health and substance abuse diagnoses, and ensure that such claims receive a full and fair review under ERISA’s requirements before denying coverage for both conditions. Importantly, the rationales for such benefit denials should be clearly and specifically articulated in any denial letters, or else courts may be more inclined to find that a full and fair review did not take place.[2] As always, Campbell Litigation is available to assist with ERISA benefit denial questions and issues for employers and their benefit plans.
[1] Ian C. v. UnitedHealthcare Insurance Company, --- F.4th ----, 2023 WL 8408199 (10th Cir. Dec. 5, 2023).
[2]See also D.K. v. United Behavioral Health, 67 F.4th 1224, 1242-43 (10th Cir. 2023) (rejecting the premise that courts may refer to a plan administrator’s claim review notes when determining whether the plan sufficiently explained its denial rationale, and holding that whether a denial was sufficiently explained an analyzed depends on the claim denial letters themselves).