Insights From Encore Fiduciary on Fiduciary Liability & Other Risk Exposures of Employee Benefit Plans


Insights From Encore Fiduciary on Fiduciary Liability & Other Risk Exposures of Employee Benefit Plans

Supreme Court Case: When is Residential Treatment Medically Necessary?

doctors desk

By Daniel Aronowitz, Encore Fiduciary

KEY POINTS:  (1) UBH is asking the Supreme Court to validate its ability to ignore physician-recommended treatment plans in order to deny paying for residential treatment.  Even if UBH is right on this specific legal rule, it does not change UBH’s arbitrary and capricious denial of long-term residential treatment for a girl with a history of suicidal ideation and repetitive personal harm.

(2) The stakes are high:  If the extraordinarily acute claim presented in the A.K. case is not medically necessary, then claim administrators will have unfettered license to deny virtually any future claim for residential treatment.  It may be what health care companies want, but is that the result plan sponsors want for their employees and plan participants?

United Behavioral Health (UBH) has petitioned the Supreme Court for the right to deny doctor-recommended residential treatment of adolescent patients with serious mental health issues when interpreting what is “medically necessary” under health plan documents.  In United Behavioral Health and Alcatel-Lucent Medical Expense Plan for Active Management Employees v. David K., Kathleen K and Amy K [the “AK Family Case”], No. 23-586, UBH seeks to overturn the ruling by the Tenth Circuit Court of Appeals that, on behalf of a Nokia-owned employee health plan, it improperly denied a teenage girl’s mental health treatment at a Utah residential treatment center.  The petition argues that the Tenth Circuit imposed onerous new burdens on health plans by requiring benefit plans to explain in their decisions why they disagree with the claimant’s doctors.  They also argue that the Tenth Circuit improperly ruled, under the plan’s deferential “arbitrary-and-capricious” standard, that reviewing courts should focus just on the decision letters sent to the claimants and improperly refused to consider other evidence from the record.

The ERISA Industry Committee and the U.S. Chamber of Commerce filed a joint amicus brief urging the Supreme Court to review the case, arguing that the Tenth Circuit deferred to the Department of Labor’s amicus brief position that did not follow DOL’s own regulations.  The amicus brief argued that Supreme Court precedent has held that DOL medical plan regulations do not require plan administrators to “accord special deference to the opinions of treating physicians.”  The amicus brief complained that “unaccountable federal bureaucrats” tried to change the law through an amicus brief without proper administrative rulemaking required by the Administrative Procedures Act.

We agree with UBH and the industry’s amicus brief that the DOL health claim regulations do not require special deference to the medical recommendations of treating physicians.  But while they are correct on this technical point of law, we still believe that the denial of residential treatment in the AK Family Case was arbitrary and capricious.  The claim denial was handled improperly, and the decision was unfair and wrong.  There is also a difference between deference, which is not required under DOL regulations, and a blatant refusal to consider medical recommendations, which appears to have happened in the AK Family Case.  The petition and the industry amicus brief conveniently leave out the critical facts of the case that are essential to properly evaluating whether the residential treatment was medically necessary, including:  five successive UBH denial letters with different and inconsistent denial rationales – the first two of which were just plain incorrect interpretations of the plan; that the evidence outside of the cursory denial letters excluded by the Tenth Circuit was not given to the claimants; and most importantly, the record showed that the mentally-ill girl had been hospitalized multiple times and had a serial pattern of harming herself when she was prematurely released from the hospital after UBH repeatedly pulled coverage.  The plan’s “why now” criteria for meeting the “medically necessary” definition – a requirement found in most health plans – was easily answered by the long track record of repeated incidents of self-harm following hospital discharges. While multiple doctors persuasively recommended long-term treatment to prevent relapses, UBH did not need to defer to these opinions, because the record screams out that this was a unique patient that needed a long-term solution.

We will provide the facts from the district court’s opinion that are missing from the Supreme Court petition filings, and then you can decide for yourself whether twelve months (or more) of residential treatment was medically necessary in this case.  Then I will conclude with a personal story of our family’s experience with the exact same hospital at issue in this case, and how UBH handled our health claim as medically unnecessary under our company’s health plan.  While you should make up your own mind as to how health plans should respond to mental health challenges facing America’s youth in a post-COVID world, we believe that the country needs to relook at the role of in-patient and residential treatment for mental health issues, as most of these claims are being denied in whole or in substantial part.  Residential treatment is crucial to help restore long-term mental health for adolescents with acute mental health issues.  Nevertheless, UBH and other claim administrators routinely deny these claims as medically unnecessary.

Finally, the argument that it is somehow burdensome for claims administrators to engage in a meaningful and robust dialogue with parents of children with acute mental health benefits is frankly insulting.  These claims are not frequent, and should be handled with more dignity and grace, even if involves more effort.  ERIC and the Chamber should rethink its positions on this sensitive mental health issue.

The Facts of the A.K. Claim Denial

The facts of the case are from the district court’s decision.  The minor A.K. was a member of the Nokia plan where her father D.K. worked.  The plan, which is administered by UnitedHealth, covers medically necessary treatment that conforms to plan requirements.  A particular service is medically necessary if “medically appropriate for the diagnosis or treatment of an Illness, Pregnancy or accidental injury.”

Beginning in sixth grade in 2010, A.K. began issues with her mental health.  A.K. struggled with fairly typical bouts of anxiety, Attention Deficit Disorder (ADD), and depression.  A.K.’s symptoms escalated quite quickly, however, and she began secretly cutting herself with razor blades.  A.K.’s parents did not discover that she had been cutting herself until February 2012, when she cut herself so severely that she was frightened into showing her parents.  That some month, A.K. began seeing a therapist.  Despite the therapy, A.K. attempted suicide by cutting herself on March 4, 2012.

The same day that A.K. attempted suicide, she was admitted to an inpatient hospital where she received treatment for her mental health disorders for nine days.  She then attended ten additional days of outpatient therapy and was discharged on March 23, 2012.

On March 31, 2012, A.K. ran away from home.  After the police found her, she was readmitted to the hospital.  After two weeks at the hospital, she was discharged to a sub-acute inpatient facility.  While at the sub-acute facility, she was diagnosed with major depressive disorder, severe and recurrent.  On May 21, 2012, A.K. was discharged from the inpatient facility.

After several months of therapy with a psychiatrist and attending a day program at the hospital until September 2012, A.K. started cutting herself again in an escalating and recurring pattern.  Some of these cutting events required visits to the emergency department.  A month later, A.K. became upset with her parents and ran away from home.  When she returned home, A.K. threatened, and then attempted to commit suicide by strangulation.  That same evening, A.K. was again admitted to an inpatient facility.  A.K. only stayed a few days at the in-patient unit.

From October 18, 2012, to December 13, 2012, A.K. received treatment at Meridell Achievement Center, a residential treatment center in Liberty Hill, Texas.  After discharge from Meridell, A.K. transitioned to a day patient program.  Things were seemingly improving for A.K. until she failed an exam in March 2013.  After failing her exam, A.K. began engaging in self-harming behaviors again.

On March 8, 2013, A.K. was admitted to the University Behavior Center for major depressive disorder and suicidal ideation.  A.K.’s stay at University lasted only one month.  The day after being discharged, A.K. was readmitted to the hospital due to suicidal ideation.  Following her discharge from the hospital, A.K. continued to cut herself until she was readmitted to the University facility on May 4, 2013.  After a week-long stay at University, A.K. restarted the program at Meridell for residential treatment.

In May 2013, with A.K. was at Meridell, the treating professionals began suggesting to A.K.’s parents that A.K. would need long-term residential treatment to treat her mental health disorders.  A.K.’s parents then contacted a care advocate at Optum Healthcare, a UnitedHealth subsidiary.  The Optum care worker counseled the parents to identify long-term treatment programs in order to request coverage.  While A.K.’s parents searched for a long-term treatment program, UBH announced that they were stopping coverage at Meridell on July 30, 2013.  Three days after leaving Meridell [because coverage had been cut off], A.K. cut herself again – this time severing her femoral artery and requiring twelve stitches.  This self-harm incident required that A.K. be readmitted to the inpatient program at the previous hospital.

On August 31, 2013, A.K. was transferred from the hospital, and back to Meridell for a third time.  Again, the Meridell treatment team recommended that A.K. be placed in a structured, long-term residential treatment program.  The Meridell medical professionals recommended “a long-term residential treatment center placement to accomplish the goals necessary for her to succeed and have a chance at sustaining a healthy life.”

Just in case you were losing track, the district court sums up the hospital admissions in the twenty months between her first suicide attempt on March 4, 2012 and her admission to the Discovery residential treatment center:  11 psychiatric emergency room visits; five in-patient hospitalizations (totally 58 days); four stints of residential treatment centers lasting 38 days, 57 days, 63 days, and 79 days (totaling 237 days); six enrollments into partial hospitalization programs (totaling 69 days); weekly individual therapy; family therapy; medication management from a psychiatrist; and some DBT therapy.  According to the district court, “[n]one of this-or the sum of all these forms of treatment-had proven sufficient to keep A.K. from regressing to her self-harming ways.”  The district court concluded that “Discovery and long-term residential treatment were the professionals’ recommended – and obvious – next steps.”  [emphasis added by Euclid].  Obvious to everyone but the claim reviewers at UBH.

Meridell’s treating doctor recommended long-term residential treatment, because, despite her improvement, she had a high risk of relapse and “is precariously balanced and quickly regresses to self-injury and suicidal thoughts and/or behaviors when not in a monitored 24-hour a day therapeutic setting.”  Multiple treatment professionals reported that A.K. would need long-term residential treatment to address her underlying mental disorders.  These professionals uniformly noted that A.K. short-term and day treatment were inadequate for A.K.  The doctor from Children’s Medical, for example, noted that A.K. is part of “a small subset of children that cannot make the needed changes unless they are in a single, consistent program that will keep them until they can develop the needed skills to be safe.”

The medical director of Meridell concurred:  while she was responding to Meridell’s residential treatment, she tended to “decompensate[] upon discharge [] due to her not having been able to internalize and consolidate gains.”  He advised that A.K. “needs a long-term residential treatment center placement to accomplish the goals necessary for her to succeed and have a chan[c]e at sustaining a healthy life.”

Near the end of the 90-days at Discovery, UBH informed A.K.’s parents that they would be denying coverage for treatment at Discovery beginning on February 9, 2014.  The purported rationale for the denial was that “coverage is not available under your child’s benefit plan for the requested services of long-term residential treatment.” The next sentence of the denial, however, admitted that “[b]ased upon current clinical member appears to require Mental health Residential Treatment Center long term Level of Care” [grammar mistake in original], “but due to excluded service a denial will be submitted.”

A.K’s parents requested additional information for this denial for lack of coverage under the plan, because they had received prior approval for treatment at discovery.  UBH responded by stating that the service was not covered due to the provision titled “Alternative treatment facilities accessed or Out-of-Network is excluded.”  But the plan had retroactively eliminated this provision from the Plan.

On June 25, 2014, A.K.’s parents appealed the first denial of coverage, pointing out that the provision that Defendants relied on to deny coverage had been removed from the plan.  On August 1, 2014, UBH responded, affirming their initial denial of coverage.  This second denial, from a different UBH claims reviewer, stated that:  “Based upon current medical records, the member appears to require Mental Health Residential long term level of care but due to excluded service, a denial will be resubmitted.”  This second denial is nearly identical to the first denial decision letter.

On September 25, 2014, A.K.’s parents appealed the second denial, reminding UBH that the exclusion for “Alternative Treatment facilities Accessed or Provided Out-of-Network” had been deleted from the Plan.  UBH acknowledged that the first two denials were erroneous.  After admitting that the first two denials were incorrect, UBH conducted yet a third review of the submitted claims.

On December 10, 2014, UBH submitted a third denial letter after conducting a new medical necessity review.  In this denial letter, UBH stated that they had reviewed medical records, letters from the parents, and the plan’s guidelines, and concluded that the coverage would be denied because the treatment was not medically necessary.  The denial letter asserted that the residential treatment did not show evidence of active treatment because the attending psychiatrist only met with A.K. twice a month, and not twice as required by the plan.  The plan required an answer to the “why now” reason for admission.  The purpose of the admission was to consolidate her gains because she had a history of regressing when not in a structured environment.  But the denial letter concluded that the admitting psychiatrist found little evidence of active psychiatric illness, and that the treatment record showed no evidence of ongoing self-injurious behavior in the three months of admission at Discovery, or in the most recent treatment at Meridell.  UBH thus concluded that this was “objective evidence of significantly improved ability to control self-injurious behavior.”  The letter also made a brief mention that Discovery was mainly “focused on her personality issues” that UBH considered “custodial” and not residential treatment.

On February 5, 2015, A.K.’s parents filed another appeal.  On March 6, 2015, UBH provided a fourth and final internal denial letter.  The letter states that the claims administrator reviewed the medical record, case management notes, appeal letter, and the Level of Care Guidelines before addressing why UBH was denying coverage.  The main reason for denial, which was almost identical to the third denial for lack of medical necessity, was the lack of evidence of self-injurious behavior.  When this was achieved, the residential care “become custodial,” which is not a covered service.

Having exhausted their internal appeal obligations, the A.K. family requested an independent, external review.  The external reviewed upheld the third and fourth denial rationale that medical necessity was not met.  The denial stated that A.K. had improved and no longer required “an acute residential school.  The external review concluded that A.K. could manage her symptoms at a therapeutic school with intensive outpatient behavioral supports for the individual and family.  The court noted that the external review justification for denial was different than the third and fourth review, because it concluded that A.K.’s remainder in a residential setting was not the “safest and most effective level of care.”  The reasoning was that her conditions could have been managed at a therapeutic school with intensive outpatient behavioral supports.

The District Court Decision

The A.K. family filed suit against UBH and the plan on December 29, 2017.  They asserted a cause of action under ERISA for recovery of benefits under 29 U.S.C. ¶1132(a)(1)(B), and a second cause of action for violation of the Mental Health Parity and Addiction Act.  The Mental Health Parity claim was abandoned, and the parties filed cross motions for summary judgment.  The A.K. Family Plaintiffs argued that the “why now” reasons for admission had not been addressed properly, because the purpose of admission was not to ensure that A.K. stopped self-harming behavior while just at Discovery, but rather to provide long-term care until she had developed the tools to break the cycle of relapsing into self-harming behavior upon leaving inpatient care.

The district court acknowledged that the “why now” criteria “is a particularly hard issue.  But ultimately, the court accepted the evidence that “A.K. had improved in important ways,” and at some point during long-term residential treatment, a patient must be discharged to a lower level of care to see if the treatment helped stop self-harming behavior.  The court reasoned that “there is no sure way to tell if discharge would be appropriate after three months, or six months, or a year.”  The court thus ruled that the final three reviewers did not abuse their discretion on the issue of “why now.”

Plaintiffs next argued that the third and fourth denial letters arbitrarily concluded that because the “why now” factors of A.K.’s admission had been addressed, her care had become “custodial.”  According to plaintiffs, the mere fact that A.K. was no longer exhibiting self-injurious behavior does not demonstrate that her care, for example, “could be rendered . . . by a person not medically skilled” or was “designed to mainly help the patient with daily living activities.”  The Court stated that the UBH defendants failed to rebut this argument in their summary judgment motion, and thus was persuaded by plaintiffs that UBH had abused its discretion in finding that A.K.’s care had become custodial under the plan.

Next, the court addressed the issue of whether UBH had abused its discretion with respect to the opinions of A.K.’s treating professionals.  The court started by quoting two sentences from the seminal Supreme Court decision in Black & Decker Disability Plan v. Nord, 538 U.S. 822, 831 (2003):  (1) “[n]othing in [ERISA] itself . . . suggests that plan administrators must accord special deference to the opinions of treating physicians.  Nor does [ERISA] impose a heightened burden of explanation on administrators when they reject a treating physician’s opinion.”; (2) However, “[p]lan administrators . . . may not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinion of a treating physician.”  The district stated that the Tenth Circuit phrases this rule as a “narrow principle that fiduciaries cannot shut their eyes to readily available information when the evidence in the record suggests that the information might confirm the beneficiary’s theory of entitlement and when they have little or no evidence in the record to refute that theory.  Gaither v. Aetna Life Ins. Co., 394 F.3d 792, 807 (10th Cir. 2004).

Plaintiffs claim that UBH’s decisions were arbitrary because they disregarded and failed to engage with the opinions of A.K.’s treating professionals.  The court disagreed, finding that the UBH claims administrators “clearly reviewed the treating professionals’ opinions.”  The court found specific examples of UBH reviewing doctor recommendations from A.K.’s doctors in the third denial letter.  The fourth denial letter was less detailed according to the court, but it still stated that the administrator reviewed the medical record and case management notes.   The court also found that the fifth letter, although less clear, appeared to review A.K.’s treating professional’s opinions as part of the medical information referenced in the denial.   The court thus concluded that the evidence showed that UBH claim administrators “did not disregard the treating professionals’ opinions.”  But “[w]hether Defendants engaged with those opinions is an entirely different matter.”

The court found that “the evidence shows that administrators did not engage with A.K.’s treating physicians’ opinions.”  The court noted that A.K. received extensive out- and in-patient treatment in the 20 months leading up to her admission to Discovery.  “None of that treatment was sufficient to keep A.K. from reverting to self-harming behavior.”  During that time, several physicians recommended that A.K. should receive long-term care.  “All of A.K.’s medical history and her treating professional’s opinions stand in stark contrast to the denial letters’ scant reasoning.”

The court found that “[t]here is no more acknowledgement of A.K.’s serious mental health history.”  The court concluded that “this strikes the court as an instance where the Defendants ‘shut their eyes to readily available information when the evidence in the record suggests that the information might confirm the [Plaintiffs’ theory of entitlement].”  The district court thus found that the UBH Defendants abused their discretion by not fairly engaging with A.K.’s treating professionals’ opinions.

The court also found that the UBH denial letters were arbitrary because they lack any analysis, let alone a “reasoned analysis.”  Instead, the denials were “nothing more than conclusory statements.”  Finally, the court also found that UBH’s “shifting and inconsistent denial rationale” was arbitrary and capricious.   The court concluded that the denials were arbitrary because Defendants gave inconsistent denial rationales and erroneously interpreted and applied the Plans’ terms.  The court ordered Defendants to pay for A.K.s treatment at Discovery with an outright reward of benefits [i.e., not requiring remand to the benefit committee appeal process].

The district court found UBH acted arbitrarily and capriciously for four independent reasons : (1) UBH abused its discretion in classifying A.K.’s care as custodial; (2) UBH did not fairly engage with the medical opinions of A.K.’s treating professionals; (3) UBH’s denials did not contain reasoned analysis or specific citations to the medical record; and (4) UBH demonstrated a shifting and inconsistent rationale for denying benefits.  As we noted above, UBH was not found to have acted arbitrarily with respect to the medical necessity evaluation.

The Tenth Circuit Appellate Decision

On appeal to the Tenth Circuit Court of Appeals, UBH alleges that it did not arbitrarily and capriciously fail to engage with the opinions of A.K.’s treating physicians.  First, UBH claims that it was not required to engage with treating physicians.  But second, UBH claimed that the district court erred in only looking for proof of engagement with treating physician opinions in the denial letters provided to the claimant.  UBH argues the district court should have considered the internal notes of reviewers, which would have showed it engaged with the treating physician opinions.

The appellate court held that the readily available opinions from multiple treating physicians would have confirmed A.K.’s theory of entitlement to coverage for her care – all unanimously recommending long-term residential treatment to prevent continued relapses – and that UBH was required to engage with and address them.  By not providing an explanation or rejecting or not following these opinions, the appellate court ruled that “[UBH] effectively ‘shut its eyes’ to readily available medical information.”  The court thus held that UBH acted arbitrarily and capriciously.

UBH argued that its actions were not arbitrary and capricious because it met certain ERISA requirements.  Specifically, it argued that there is a textual difference:  the requirement to engage with medical opinions applies to ERISA disability plans, but not to medical plans.  The appellate court recognized the textual difference in ERISA disability and medical regulations, but “disagree[d] that the dialogue absolves United from its duty to engage in meaningful dialogue that includes a full and fair review of the insured’s claim.”  To the court, the parents had requested justification for the denial with reference to the opinions of treating physicians, and deserved a response that addressed these opinions.   The court believed that this would have forced UBH to “wrestle” with the Meridell doctor’s opinions.  It would also have forced UBH to confront the opinions of Dr. Lowe of Discovery, who stated that early discharge carried high risks because A.K. “has not learned to regulate her mood outside a structured therapeutic facility and would return to old pattens of self-harm as evidenced by her recent poor relationship[] choices, increased anxiety, emotional reactivity, refusal to use healthy coping skills, resulting in increased depression, suicidal thoughts and cutting herself.”

The appellate court made a critical distinction:  UBH reviewers were not required to defer to the treating physician opinions provided.  But their duties under ERISA required them to address medical opinions, particularly those which may contradict their findings.  The court said that this is the core of a meaningful dialogue in a claim review.  After UBH had repeatedly moved A.K. to lower-levels of care upon stabilization or slight improvement, scaling down A.K.’s treatment for a twenty-month period of self-harm, and this had prevented her from developing the skills she needed outside of a 24-hour setting.  The appellate court thus upheld the district court’s finding that UBH’s denial of residential treatment was arbitrary and capricious.

Petition of Writ of Certiorari

UBH and the Plan filed a petition for writ of certiorari to the Supreme Court of the United States, arguing that the Tenth Circuit’s decision imposes significant new burdens on health benefit plans that “cannot be squared” with Supreme Court precedent, DOL’s implementing regulations for ERISA, and Congress’s intent.  The petition first argues that the Tenth Circuit’s holding that plans that deny benefits claims must explain, in their decision letters, why they disagree with the claimant’s treating providers “flatly contradicts” the Supreme Court’s decision in Black & Decker Disability Plan v. Nord.  UBH argues that the Supreme Court rejected this “judicial innovation.”  They continue that “[i]f DOL wishes to require health benefit plans to discuss treating provider opinions in their decision letters, then it should undertake notice-and-comment rulemaking, just as it did to add that requirement to disability benefit regulations in 2016.  Second, UBH argued that the Tenth Circuit’s “extreme narrowing” of the scope of judicial review to the decision letters sent to claimants is inconsistent with fiduciary principles that require deference to the administrator’s assessment of the record.  The limited scope of review is also inconsistent with other circuit courts that either allow or require courts to consider the whole administrative record.

Amicus Brief of the ERISA Industry Committee and U.S. Chamber of Commerce

The amicus brief by the two industry trade groups posed the rhetorical question whether a court, at the invitation of an agency in an amicus brief, can effectively amend regulations by judicial fiat, providing the agency with an “end-run” around the APA’s notice-and-comment rulemaking procedures.  The brief argues that the Tenth Circuit decreed new regulatory requirements for health-benefit denials that DOL expressly considered in dual 2015 and 2016 rulemakings, but chose only to adopt for disability-benefit denials and not for health-benefit denials.  “If not corrected by this Court, the decision below will stand as an invitation to agencies to file amicus briefs in the courts of appeals, advocating for substantive changes to their regulations without the bother (or transparency) of APA rulemaking.”  The brief continues that “[i]n today’s day and age, when so much lawmaking is undertaken by unaccountable federal bureaucrats, that is a deeply troubling prospect.”

The Encore Perspective

UBH and the industry amici are correct that the current law does not require claim administrators in medical claims to give special deference to doctor recommendations.  DOL had the opportunity in 2015 and 2016 to make this requirement, but did not.  UBH is right about that.  But that does not mean that they made the correct decision in the A.K. case.  It also does not shield them from liability for acting arbitrarily and capriciously.  The facts of case provide an obvious justification for covering the long-term residential treatment.  Every time that A.K. lost coverage for inpatient treatment, she regressed and engaged in self-harm.  The doctors were persuasive and unanimous in recommending long-term residential help to stop the regressions.  But you don’t need the doctors’ recommendation.  The record of continual relapse when A.K. left a structured environment is enough to justify this health claim.

If the A.K. record of self-harm and pattern of relapses isn’t enough, then what would be enough for coverage of long-term residential care?  We recognize that even the district court found that it was not arbitrary to justify a three-month stay because every patient has to go home eventually.  But the district court was wrong.  The record showed a pattern of relapsing every time that A.K. left a structured environment.  If this case is not enough to justify long-term residential care under a standard health plan, then virtually no adolescent in America can ever get coverage for long-term residential treatment.  That is what this case is about.  Either we allow coverage for residential treatment for acute cases, or we are giving UnitedHealth, CIGNA, Blue Cross, and every other major health company a pass on paying for residential care.  This case is that acute and dramatic:  either residential care is potentially covered, or we are declaring that residential care can never be covered under a company-sponsored health plan.  The stakes are high.

The main thrust of the UBH’s petition is that it is somehow a burden to engage with physician opinions in acute mental health cases.  What burden? It is not a burden to require a more robust dialogue for residential treatment claims.  Residential treatment requests are not common.  UBH can give better statistics, but they didn’t bother.  They gave no perspective as to how it is a so-called burden to engage more meaningfully with parents in their claim denials of residential treatment.  If this was a routine health benefit claim, then maybe they would have a potential argument.  But it is not.  It is more like a disability claim in which DOL has ordered that claim administrators must provide a higher level of evidence.  Real families are affected in these complex, extraordinary claims.  They deserve to be treated with dignity and humanity.  Cursory denial letters with inconsistent and sometimes wrong reasons do not meet any standard of dignity.

It is also not a burden to plan sponsors because they outsource the claim review to companies like UBH.  How is it a burden to UBH?  It is their business.  They can get more money for the work.  There may be an argument that it is more expensive to the health plan, but the burden has been outsourced.

Finally, this petition and result may be what UnitedHealth wants, but what do plan sponsors want?  Do they want to deny residential treatment for acute cases?  As noted above, the burden argument rings hollow when plan sponsors can – and do – delegate the responsibility.  We do not believe this is what quality plan sponsors of health care plans want for their employees.  If you poll a plan sponsor, they will want to act in the best interest of their employees.  The A.K. case is not the in best interest of the A.K. family.  This issue requires a complete rethinking, because the perspective of this particular claims administrator cannot possibly be what plan sponsors want for their health plan participants.

My Personal Perspective – Let the Bread Bake in the Oven

Normally I give just our company’s perspective, but I want to give my personal perspective as well.  If you have never received a denial letter from United Behavioral Health informing you that your child’s treatment plan from their doctor is not medically necessary, consider yourself lucky.  My wife and I have received several such letters from our prior health carrier UnitedHealth and our current carrier Blue Cross.  We unfortunately have personal experience with what we considered arbitrary and capricious interpretations of what is medically necessary under our company’s health plan.  Our experience is that UBH routinely rejects the medical recommendations of competent doctors, and makes the appeal process as complex and difficult as possible.  They limit your appeal rights, and your appeal will be rejected irrespective of the merits.  UBH is biased against residential hospital and treatment centers as – in their words – “extreme” and unnecessary medical care, and the company to extraordinary lengths to avoid paying for these medical services, even when recommended in good faith by competent doctors.  As you have seen, they are willing to invest significant money in lawyers – more than the cost of the care – to appeal to the Supreme Court of the United States to avoid paying for doctor-recommended residential treatment.  This is a high-dollar issue for health plans, but it is a recurrent example in which health plans are openly disagreeing with good faith medical recommendations.

One of our children was admitted to the same Meridell Achievement Center in Liberty Hill, Texas to which A.K. in this case was a three-time patient.  I have visited the place twice, and participated in three months of group therapy with my son’s therapist Jonathan.  Jonathan will remain as one of the most cherished health professionals in our lives, as he set my son on the path to a valued life.  We learned to listen and believe in every professional at Meridell because they have serious experience and wisdom.

We admitted our son to Meridell when he was experiencing serious mental health issues.  It is a drastic step, but one parents take when there is no other choice.  It is a last option.  We admitted our son without knowing whether UnitedHealth would pay.  The cost is about $1,500 a day – $45,000 a month.  After about two weeks, United Health informed us that they would pay for initial treatment, and reassess every seven days.  They paid for the first forty-two days.  Then we received a letter from UBH on the forty-ninth day that the treatment was no longer “medically necessary” because that our son no longer needed 24-hour nursing care.  He was doing better and was no longer a risk of harm to himself.  The letter was retroactive by seven days, and refused to cover the prior seven days.  The timing of the letter does not give you advance notice to plan for next steps, particularly if the doctor’s recommendation is that next steps are not to come back home because further treatment is necessary.  It forces you to self-pay or immediately take your child home, even if they are 1500 miles away.

We asked to appeal UBH’s denial, but were told that Meridell’s call with UBH explaining why additional days were necessary constituted our appeal.  So we were denied a personal appeal.  For us, a key point was never addressed in the so-called appeal, which is that we needed our son to get comprehensive mental health testing to help us understand his mental health challenges.  We had tried to conduct that testing at home and at our own expense, but our son could not handle it.  The reason for additional hospitalization was to finalize the testing in a medical environment in which the testing could be successful.  The testing had not been completed in the first forty-two days because he contracted COVID once he was stabilized.  UBH did not allow us to introduce this evidence because they had already moved on.  The appeal was over, and that was that.

Our therapist disagreed with UBH’s assessment and recommended that we keep our son admitted, and that we self-pay so that he could continue his treatment.  The Meridell therapist told us that many patients are released prematurely when health care companies cut off payment, often to bad consequences, including tragic outcomes that lead to readmission back in the hospital.  Meridell then recommended that we send our son to a residential treatment center for the school year to lock-in and cement his mental health care gains and prevent regression which happens in almost every patient who leaves mental hospital care.  The key point is that it takes time to find an arrange for proper residential placement and treatment.  Doctors are emphatic that a mental health patient should not come home in the interim, because the highest chance of success is to go directly to residential treatment.  UBH doesn’t care about all that – it falls into the wide definition of medically unnecessary.  They didn’t pay.  UnitedHealth never paid a dime of the ten months of the ensuring residential treatment.  You guessed it – medically unnecessary.  Doctor recommendations are not relevant.

This is not our full story.  We have stories about a child being admitted to the Huntsman mental hospital and Blue Cross pulling its authority midstream as not medically necessary.  We have other residential treatment that we paid out-of-pocket – hundreds of thousands of dollars.  Needless to say, our family has enough experience to have an informed opinion as to how UBH and other claim administrators handle hospital and residential treatment for mental health issues.  We also have an informed opinion as to whether residential treatment is an “extreme” decision as UBH characterizes this type of treatment, as they argue that children should remain at home whenever possible.  We do not pretend that our situation was as bad as the A.K. in the case before Supreme Court.  But we believe that too many mental health claims for hospitalization and residential treatment are being denied unfairly and prematurely after a resident has even a few days without self-harm.

We have another experience with a child at New Haven Residential Treatment Center in Utah.  The treatment book provided to all parents has twelve habits for effective parents of New Haven residents.  The fourth habit is to “Let the bread bake – Your daughter will likely look better on the outside before she is better on the inside.  You will feel stronger on the surface before sufficiently stable internally.  Let the bread bake all the way through.”  Residential treatment is not designed for just 3 months.  It is designed for 10-14 months.

It takes time to cure mental health challenges.  Parents of children with mental health challenges need time for their children to heal.  Three months is usually not enough to lock in mental health cures and changes.  The current mental health system is not functioning properly when claim TPAs like UBH are allowed to callously deny legitimate claims.  The case before the Supreme Court gives the health community an opportunity to reassess whether we are getting the issue right.  UBH reached the wrong outcome in the A.K. case.  Seeking Supreme Court review of such an egregious case only exacerbates their callous and improper handling of the claim.  Hopefully we all can learn from this case, and give better outcomes for future cases.

My message to UBH:  let the bread bake in acute mental health cases.  You pulled the bread out of the oven prematurely at least ten times in the A.K. case.

Disclaimer:  The Fid Guru Blog is intended to provide fiduciary thought leadership and advocacy for the plan sponsor community in areas of complex fiduciary litigation.   The views expressed on The Fid Guru Blog are exclusively those of the author, and all of the content has been created solely in the author’s individual capacity.  It is not affiliated with any other company, and is not intended to represent the views or positions of any policyholder of Euclid Fiduciary, or any insurance company to which Euclid Fiduciary is affiliated.  Quotations from this site should credit The Fid Guru Blog.  However, this site may not be quoted in any legal brief or any other document to be filed with any Court unless the author has given his written consent in advance.  This blog does not intend to provide legal advice.  You should consult your own attorney in connection with matters affecting your legal interests.

Disclaimer:  The Fid Guru Blog is intended to provide fiduciary thought leadership and advocacy for the plan sponsor community in areas of complex fiduciary litigation.   The views expressed on The Fid Guru Blog are exclusively those of the author, and all of the content has been created solely in the author’s individual capacity.  It is not affiliated with any other company, and is not intended to represent the views or positions of any policyholder of Encore Fiduciary, or any insurance company to which Encore Fiduciary is affiliated.  Quotations from this site should credit The Fid Guru Blog.  However, this site may not be quoted in any legal brief or any other document to be filed with any Court unless the author has given his written consent in advance.  This blog does not intend to provide legal advice.  You should consult your own attorney in connection with matters affecting your legal interests.

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