In Ryan S. v. UnitedHealth Group, Inc., No. 20-56310, 2022 WL 883743 (9th Cir. Mar. 24, 2022), Plaintiff-Appellant Ryan S. brought a putative class action under ERISA and the MHPAEA against Defendants for engaging in six practices that allegedly created barriers to accessing substance use disorder care and wrongfully denied payment for treatments under his health plan. The district court dismissed the third amended complaint for lack of standing. The Ninth Circuit affirmed in part and reversed in part.
The court evaluated standing based on each of the alleged unlawful practices. First, “Ryan S. challenged United’s alleged policy of requiring a patient to obtain pre-authorization for out-of-network outpatient substance use disorder treatment while not imposing the same requirement for other medical care.” The court found he did not have standing to challenge this practice because he has no injury linked to the pre-authorization requirement that would be redressed by his requested relief of disgorgement of profits, a re-evaluation of his claims, and a declaration that the pre-authorization requirement is unlawful. “There was no allegation that United profited from any delay in treatment. Similarly, a re-evaluation of the claim would not remedy a delay that has already occurred. And a declaration that the pre-authorization requirement violates ERISA would not redress such delay unless Ryan S. alleged that he was likely to be subject to the requirement again. He made no such allegation.”
Second, Ryan S. alleged that United impermissibly refused to cover outpatient treatment for substance use disorder which left him with hundreds of thousands of dollars in unpaid medical bills. His requested injunction that would require United to re-evaluate all benefits determinations and pay wrongfully denied claims would redress his injury. The court reversed the district court as to this claim.
Third, Ryan S. challenged United’s alleged practice of cross-plan offsetting, claiming that United refused to pay his providers for his treatments to recoup purported overcharges to United for the providers’ care to other patients. The court affirmed the district court’s finding of no standing because Ryan S. does not allege any facts that explain why cross-plan offsetting would cause his bills to fall to him.
Fourth, Plaintiff alleged that United refused to pay for certain treatments for substance use disorders that it pays in other contexts such as cancer or chronic disease treatment. The court found that Ryan S. has standing to challenge this alleged practice because he alleged that United refused to pay for any such services during his first treatment episode and after his second treatment episode which left him with unpaid bills. He did not need to allege that there was a categorical practice of denying certain treatments. At this early stage it is sufficient for Ryan S. to allege that United failed to cover some treatment he thinks he is entitled to under his plan or the law.
Fifth, Plaintiff alleged that United used the “ALERT system” or some other similar protocol to limit or exclude claims for clinical laboratory services. The court found that Ryan S. does not have standing to challenge the alleged practice of seeking refunds from providers for clinical laboratory services since that practice did not cause him any purported harm, but he does have standing to challenge that practice to the extent United denied or limited coverage for certain clinical laboratory services which left him with medical bills. The court reversed the district court’s denial of standing to challenge this practice in part.
Lastly, Ryan S. challenged United’s alleged practice of paying substance use disorder treatment claims at inapplicable Medicare rates. The court found he lacks standing to challenge this practice for the same reason it rejected standing as to the cross-plan offsetting. There’s no link between the purported payment of inapplicable Medicare rates to his providers and his unpaid medical bills.
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