“There is an excessive emphasis onaddressing acute symptoms and stabilizing crises while ignoring theeffective treatment of members' underlying conditions,” wrote U.S.Magistrate Judge Joseph Spero. (Photo: Jason Doiy/ALM)

A federal judge in San Francisco has found that an affiliate ofUnitedHealthcare, the nation's largest healthinsurer, breached its fiduciary duty to policyholders by followingguidelines that emphasized cost-savings and addressing acuteproblems rather than treating underlying mental health andsubstance abuse issues.

U.S. Magistrate Judge Joseph Spero of the Northern District ofCalifornia issued a 106-page ruling Tuesday finding that theguidelines that United Behavioral Health used when makingcoverage decisions in cases of mental illness and substance abusedidn't provide for generally accepted standards of care outlined inthe plaintiffs' policies.

Related: UnitedHealth sued for underpayment of mental healthservices

“In every version of the Guidelines in the class period, and atevery level of care that is at issue in this case, there is anexcessive emphasis on addressing acute symptoms and stabilizingcrises while ignoring the effective treatment of members'underlying conditions,” Spero wrote. Although the specificguidelines used to make a coverage decision varied within the classperiod from 2012 to 2017, Spero concluded that emphasis was“pervasive and result[ed] in a significantly narrower scope ofcoverage than is consistent with generally accepted standards ofcare.”

The decision is a major victory for lawyers at Zuckerman Spaederand Psych-Appeal Inc., a law firm based in West Hollywood,California, that focuses on mental health insurance coverage.

United Healthcare is represented by a team at Crowell & Moring. Partner Jennifer Romanopassed along a request for comment to a company spokeswoman.

“We look forward to demonstrating in the next phase of this casehow our members received appropriate care,” saidUnitedHealtcare communications director Maria GordonShydlo. “We remain committed to providing our members with accessto the right care for the treatment of mental health conditions andsubstance use disorders.”

Spero's decision comes after he held a 10-day bench trial inOctober 2017 to determine whether UBH's coverage guidelines led tocoverage determinations that were more restrictive thanthose generally accepted. Spero found that the evidence attrial showed UBH's emphasis on cost-cutting “tainted theprocess, causing UBH to make decisions about Guidelines based asmuch or more on its own bottom line as on the interests of the planmembers, to whom it owes a fiduciary duty.”

In particular, the judge pointed out that the company decidedagainst adopting the widely used clinical criteria issued by theAmerican Society of Addiction Medicine even though all of thecompany's own clinicians recommended adoption. “The only reason UBHdeclined to adopt the ASAM Criteria was that its Finance Departmentwouldn't sign off on the change,” Spero wrote. “This evidenceestablishes that UBH has a conflict of interest that has had asignificant impact on decision-making as to the development of theGuidelines.”

Meiram Bendat of Psych-Appeal, who aside from being a lawyer isa clinician with a background in mental health, said the case willnow move from the liability phase to the remedy phase. He and hisco-counsel at Zuckerman Spaeder were still analyzing the court'sdecision and considering the next step Tuesday afternoon.

“Up until this lawsuit, UBH denied patients access to care onthe false premise that crisis should be the benchmark forcoverage,” Bendat said. “The ruling today sends a clear messagethat insurers need to adhere to the generally accepted professionalstandards when making coverage decisions.”

In a statement, Zuckerman Spaeder partner D. Brian Hufford, whoheads the firm's health care practice, called the decision “amonumental win for mental health patients.”

“For the first time, an insurer was forced to stand trial fordenying thousands of mental health and substance use disorderclaims, and the court delivered a strong message: what you're doingis harmful and illegal, and it must end,” he said.

Read more:

• Employer-sponsored benefits and the fight toimprove mental health
• Mental health parity enforcementlags
• Lawyers battle insurers' disparate treatment ofmental health claims