In Wit, et al. v. United Behavioral Health, Nos. 20-17363, 21-15193, 20-17364, 21-15194 (9th Cir. Mar. 22, 2022), a stunningly brief unpublished memorandum, the Ninth Circuit reversed Magistrate Judge Joseph Spero’s thorough and lengthy findings of facts and conclusions of law following a 10-day bench trial that United Behavioral Health (UBH) violated its ERISA fiduciary duties and wrongfully denied benefits for treatment of mental health and substance use disorders.
First, the Ninth Circuit found that Plaintiffs did have Article III standing to bring their claims. Plaintiffs alleged that UBH developed Guidelines that were not consistent with the terms of their insurance plans, and they were entitled to Guidelines that would result in the fair adjudication of their claims. They also alleged that they suffered injury because UBH failed to develop Guidelines that were consistent with generally accepted standards of care (GASC). ERISA’s core function is to protect contractually defined benefits. Plaintiffs’ alleged harm includes the risk that their claims will not be administered to provide full benefits under their plans and that they cannot make informed decisions about whether to purchase alternative coverage. The court found Plaintiffs sufficiently alleged a concrete injury. Even though Plaintiffs did not seek individual determinations of benefits, the court also found that the alleged injury was sufficiently particularized because the Guidelines are applied to each class member and Plaintiffs showed that UBH’s actions resulted in uncertainty about their benefits and material risk of harm to their contractual rights. Plaintiffs did not have to demonstrate that they were, or will be, denied benefits to allege a concrete injury.
Second, UBH challenged the district court’s certification of a class that requires individualized determinations. The court found that the district court did not abuse its discretion by concluding that the fiduciary duty claim is capable of being resolved on a class-wide basis. The court did not decide whether certification of the ERISA denial-of-benefits claim under 29 U.S.C. § 1132(a)(1)(B) seeking “reprocessing” of claims overextended Rule 23 because this claim fails on the merits.
Lastly, the court found that the district court misapplied the abuse of discretion standard by substituting its interpretation of the Plans for UBH’s. The court found that it was not unreasonable for UBH to decide that the Plans do not require consistency with the GASC. The Plans exclude coverage for treatment inconsistent with the GASC, but Plaintiffs did not show that the Plans require coverage for all treatment consistent with the GASC. Even if UBH has a conflict of interest, the court found that it would not change the outcome. The court reversed the district court’s judgment and declined to reach UBH’s argument that unnamed plaintiffs failed to comply with the Plan’s administrative exhaustion requirement.
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