The 2nd U.S. Circuit Court of Appeals has ruled that health insurance claims administrators who exercise “total control” over health plans may be sued for violating mental health parity law under the Employee Retirement Income Security Act of 1974.

The decision, made Aug. 20, states that the New York State Psychiatric Association ( NYSPA ) is authorized to sue third-party administrators of Employee Retirement Income Security Act (ERISA)-regulated health plans on behalf of its members and their patients for violations of the mental health parity law .

This is the first time a federal court has ruled on enforcement of the Mental Health Parity and Addiction Equity Act of 2008 , Meiram Bendat, Ph.D., a California attorney and licensed psychotherapist who argued on behalf of the plaintiffs in the case, said in an interview. “There’s no free pass around complying with parity. This [decision] puts teeth into the law.”

In 2013, the NYSPA filed a class-action suit on behalf of its members and their patients against UnitedHealthGroup for not covering mental health–related claims, citing as examples different algorithms; preauthorization; and concurrent review procedures than for medical claims, often resulting in denial of coverage. The U.S. District Court for the Southern District of New York agreed that violations had likely occurred, but dismissed the case, finding that NYSPA did not have associational standing in this instance and noting that the association itself was not harmed. United also argued that employers should be the defendants, not the third-party claims administrators, since employers were the official plan administrators.

The appellate court’s decision to overturn that ruling further clarifies who can sue and be sued in cases of mental health parity violations that might occur under ERISA-regulated plans. The discrete lines place pressure on claims administrators to make transparent the bases for their algorithms claims review procedures, Dr. Bendat said.

In a statement, NYSPA’s executive director and general counsel, Seth P. Stein, said: “The decision … is particularly important because it removes a technicality that plan administrators might raise to avoid being responsible when they make determinations that run afoul of federal parity laws.”

Because ERISA regulates only about 50% of commercial plans in the United States, Dr. Bendat said remedies for mental health parity law violations that might occur in the administration of plans purchased through exchanges created by the Affordable Care Act have yet to be tested, although he thought the recent ruling might strengthen any legal theories plaintiffs in those situations might employ.

wmcknight@frontlinemedcom.com

On Twitter @whitneymcknight

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