A Utah court recently refused to dismiss a breach of fiduciary duty cause of action against a third party administrator after mental health treatment benefits for a child covered by a parent’s self-insured health plan were denied.
In the case — Daniel R. v. UMR — Daniel R. was a participant in a self-insured health plan in which his child, I.M., was a beneficiary. I.M. entered treatment at New Haven Residential Treatment Center for mental health issues on the recommendation of therapists. The plan administrator, UMR, denied benefits for I.M., citing limitations in the plan for acute treatment. UMR stated that I.M. “did not have acute changes in signs and symptoms or psych-social and environment factors that cannot be assessed and treated in a less intensive setting” and therefore residential care was not medically necessary.
Plaintiff Daniel R. sued the plan and UMR as third party administrator, alleging that the claim for I.M.’s residential treatment was evaluated using acute care criteria, which the plaintiff said constituted a breach of fiduciary duty under ERISA and violated the federal Parity Act. UMR filed a motion to dismiss, arguing that the third party administrator was an improper party to the suit and that the facts were insufficient to seek a mental health parity claim.
In general, monetary judgments are enforceable only against a plan under ERISA, not third party administrators. UMR asserted that under ERISA, it could not be held liable for a monetary award based on unpaid benefits. In its decision, the court acknowledged this general principle, but noted that while recovering unpaid benefits may have been the plaintiff’s primary objective, other forms of relief may be available.
For example, if the court found that the claim review process had not followed ERISA rules, it could order UMR to reprocess the claim. Since the court could grant other forms of relief that would be enforceable against UMR, it ruled that releasing UMR at this point in the case would be premature.
When asserting a mental health parity claim, a plaintiff is required to show a disparity between coverage of mental health benefits and medical or surgical benefits. UMR and the plan asserted that the plaintiff had failed to meet this requirement. However, the court found that the plaintiff had a credible argument that treatment at a rehabilitation or skilled nursing facility is analogous to I.M.’s sub-acute residential care at New Haven, and that the acute treatment standards used by UMR would not have been applied to sub-acute care when assessing medical or surgical benefits. The court concluded that this finding was enough to support the plaintiff’s mental health parity claim. Therefore, the court denied UMR’s motion to dismiss.
The experienced, responsive ERISA attorneys at Hall Benefits Law help plan administrators understand what regulations and rulings are relevant to them and how best to apply these rulings in practice. Learn more by calling 678-439-6236.
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