Court Finds Plausible Parity Violations by United but Requires Claims To Be Brought Against Plan Sponsors

On October 31, 2013, United States District Judge Colleen McMahon dismissed a class action mental health parity lawsuit brought by four patients, a psychologist, a psychiatrist, and NYSPA (on behalf of its members and their patients) against UnitedHealth Group

and its subsidiaries, including United Behavioral Health and Optum.  Although the Court acknowledged that “plaintiffs have pleaded facts that, if proven, demonstrate violations of the Parity Act,” it ruled the claims must instead be brought against the companies that hired United to administer their self-funded health plans.  

Although several courts have held that ERISA complaints can be brought against claims administrators rather than plan sponsors, i.e., employers paying the benefits, Judge McMahon declined to follow this line of cases or the position taken by the U.S. Department of Labor as articulated in an amicus brief recently submitted in another class action case against United as claims administrator.  The Court’s ruling would effectively shield claims fiduciaries such as United from liability for violating antidiscrimination laws

The Court also held that NYSPA did not have standing to sue United because NYSPA asserted the rights of its members’ patients and not of its individual members, and that the lawsuit requires participation by individual psychiatrists to assert individual claims.  Again, NYSPA’s attorneys cited cases that reached the opposite conclusion regarding NYSPA’s standing to sue on behalf of its members and their patients.

This ruling will not defeat, but will only delay, our efforts to challenge parity law violations by United and other health plans.  We are  evaluating our next steps including filing an appeal from the Court's decision and filing new lawsuits against United.  With the issuance of the final Parity Rule, our case against United has only been strengthened.