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May 13 —Three physician associations and two psychiatrists couldn't persuade a federal appeals court that they have standing to bring fiduciary breach claims against Anthem Health Plans Inc. and Wellpoint Inc. for alleged violations of mental health parity laws.
In the May 13 opinion, the U.S. Court of Appeals for the Second Circuit affirmed a district court's decision dismissing a lawsuit accusing the insurance companies of discriminating against patients with mental health and substance abuse disorders in violation of the Mental Health Parity and Addiction Equity Act and the Employee Retirement Income Security Act.
The appeals court seemed to agree with part of the associations' arguments when it acknowledged “that policy reasons might support allowing physicians to bring lawsuit on behalf of patients with mental health and substance use disorders in the absence of statutory authorization for such an action.”
However, the court ultimately declined to apply an independent policy judgment to recognize a cause of action that Congress hadn't authorized.
“We disagree with this ruling because, it means the patients, who are already disenfranchised, have to fight on a claim-by-claim basis,” Renee Binder, M.D. and president of the American Psychiatric Association told Bloomberg BNA May 13.
Three associations, led by the APA, on behalf of their members and their members' patients and two psychiatrists brought the lawsuit challenging the insurers' allegedly discriminatory reimbursement practices.
In dismissing the lawsuit, the district court held that the psychiatrists lacked a cause of action for fiduciary breach under ERISA and that the associations lacked constitutional standing to sue (190 PBD, 10/1/14).
In affirming the district court's decision, the appeals court held that since the psychiatrists weren't among those expressly authorized to sue for fiduciary breach under ERISA Section 502(a)(3), they lacked a cause of action under the statute.
The appeals court also rejected the associations' and psychiatrists' argument that they had standing under the court's recent decision in N.Y. State Psychiatric Ass'n, Inc. v. UnitedHealth Group, 798 F.3d 125 (2nd Cir. 2015) ( 162 PBD, 8/21/15).
In ruling this way, the appeals court said that in N.Y. State Psychiatric Ass'n, there was no dispute that the association's members had standing to sue in their own right, both as assignees of ERISA benefits and to prevent interference with their provision of mental health care. While here, the associations and psychiatrists claimed a cause of action on behalf of their members and patients, rather than on their own behalf.
The court also rejected the psychiatrist's argument that since she had an assignment of claims she could bring a claim on behalf of her patient. In doing so, the court held that for purposes of conferring an ERISA cause of action on a provider, an assignment must be made in exchange for consideration, in the form of providing medical care.
Providers may bring claims under ERISA Section 502(a) to recover benefits based on a valid assignment from a patient. But simply asserting that a fiduciary breach claim for violation of the parity act has been assigned by the patient to the provider is insufficient to transfer a cause of action under the statute. Rather, the assignment must be in exchange for health-care benefits.
As to the association's standing, the court held that while its members could assert injuries related to the restrictions imposed on their ability to provide care, none were plaintiffs and the lawsuit failed to plead facts to show that they had a cause of action for ERISA fiduciary breach.
Binder told Bloomberg BNA the APA will continue to advocate for the patients' interests and explore options for appeals.
Counsel for Anthem and Wellpoint didn't immediately respond to Bloomberg BNA's request for comments.
The opinion was written by Judge John M. Walker Jr. and joined by Judge Reena Raggi. Judge Robert. D. Sack recused himself from the case.
Kellogg Huber Hansen Todd Evans & Figel PLLC represented the associations and the psychiatrists. Hogan Lovells US LLP represented Anthem.
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Text of the opinion is available at http://www.bloomberglaw.com/public/document/AMERICAN_PSYCHIATRIC_ASSOCIATION_on_behalf_of_its_members_and_the.
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