This Week At The Ninth: ERISA And FERC

• Published date: 29 August 2023
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Retirement, Superannuation & Pensions, Class Actions, Trials & Appeals & Compensation
• Law Firm: Morrison & Foerster LLP
• Author: Joel F. Wacks

This week, the Ninth Circuit considers ERISA claims alleging that a plan administrator unlawfully utilized internal guidelines more stringent than the terms of plaintiffs' plans and the statute of limitations for an action by the Federal Energy Regulatory Commission.

WIT v. UNITED BEHAVIORAL HEALTH

The Court reverses in part the district court's judgment following a bench trial that United Behavioral Health ("UBH") unlawfully denied insurance claims based on internal guidelines more stringent than the terms of plaintiffs' ERISA plans.

The panel: Judges Christen, Forrest, and Anello [S.D. Cal.], with Judge Anello writing the opinion.

Key highlight: "In sum, on this record Plaintiffs have fallen short of demonstrating that all class members were denied a full and fair review of their claims or that such a common showing is possible. An individual plaintiff who demonstrated an error in the Guidelines would not be eligible for reprocessing without at least some showing that UBH employed an errant portion of the Guidelines that related to his or her claim. Because the classes were not limited to those claimants whose claims were denied based only on the challenged provisions of the Guidelines, Rule 23 was applied in a way that enlarged or modified Plaintiffs' substantive rights in violation of the Rules Enabling Act." (Internal citations omitted).

Background: UBH administers insurance benefits for mental health conditions and substance abuse disorders. As the plan administrator, it must determine whether the treatment plan members seek is covered by their plans. To make that determination, UBH developed internal guidelines that applied across plans, regardless of each plan's specific terms. For some plans, UBH is both the administrator and the insurer, meaning it both determines what benefits are owed and pays those benefits.

Plaintiffs, members of plans administered by UBH, allege that using those guidelines violated ERISA because the guidelines were more stringent than the terms of plaintiffs' plans or criteria imposed by state law. Specifically, plaintiffs allege that certain guidelines provisions required denying treatment that is consistent with generally accepted standards of care ("GASC"). Plaintiffs brought a class action suit, alleging UBH violated ERISA by (1) breaching its fiduciary duties and (2) wrongly denying benefits.

Plaintiffs sought certification of three classes: (1) plan members whose claims for residential treatment were denied based on guideline provisions contrary to their plans' terms; (2) members whose claims for outpatient treatment were denied based on guideline provisions contrary to their plans' terms; and (3) members whose claims were denied...