The behavioral health industry is awaiting a landmark decision from the 9th U.S. Circuit Court of Appeals in the long-running and closely watched case of Wit v. United Behavioral Health. This federal appeals court ruling will have a significant impact on how behavioral health services are reimbursed and administered, especially in the context of insurer practices and behavioral health parity laws. No matter the outcome, Wit v. United Behavioral Health promises to reshape the landscape for behavioral health advocates and payers alike, influencing policy and enforcement around mental health care access for years to come.
Background of Wit v. United Behavioral Health
The origins of Wit v. United Behavioral Health date back to May 2014 when plaintiffs David Wit, Natasha Wit, and Brian Muir filed a class-action lawsuit against United Behavioral Health (UBH), a major health plan administrator. The lawsuit alleged that UBH violated the Employee Retirement Income Security Act (ERISA) by implementing overly restrictive internal guidelines that dictated which behavioral health services would be covered, ignoring generally accepted medical standards of care.
The plaintiffs argued that UBH’s clinical criteria for determining medical necessity were developed with the company’s financial interests in mind, rather than being aligned with accepted clinical practice. These guidelines were used to systematically deny behavioral health claims, effectively limiting access to care for thousands of patients covered under ERISA-governed health plans.
In February 2019, the U.S. District Court for the Northern District of California sided with the plaintiffs in Wit v. United Behavioral Health, ruling that UBH’s use of overly stringent and internally developed guidelines was a violation of ERISA. The court found that these guidelines were inconsistent with generally accepted standards of care and ordered UBH to reprocess tens of thousands of claims, potentially benefiting over 50,000 enrollees across states like Connecticut, Illinois, Rhode Island, and Texas.
The Appeals Court Reversal and Its Implications
In a dramatic turn, a three-judge panel of the 9th U.S. Circuit Court of Appeals reversed the district court’s decision in March 2022 in Wit v. United Behavioral Health. The appellate court ruled that the district court had misapplied the appropriate legal standard for reviewing ERISA cases and failed to give proper deference to UBH’s discretion in administering benefits. Specifically, the appeals panel stated that the standard of review in these cases is “arbitrary and capricious” or an “abuse of discretion,” and found that the district court had applied the wrong standard.
This reversal was met with concern from behavioral health advocates, who see the appeals court ruling in Wit v. United Behavioral Health as a setback for efforts to hold insurers accountable for denying medically necessary mental health and addiction treatment. According to Tom Britton, CEO of American Addiction Centers, the ruling effectively puts payers on notice that they may continue to use financial considerations in clinical decisions without violating ERISA, potentially perpetuating barriers to care.
Stakeholder Reactions: Advocates vs. Insurers
The case has sharply divided stakeholders in the behavioral health space. Advocates argue that the district court’s original ruling in Wit v. United Behavioral Health was a crucial step toward enforcing parity and ensuring that behavioral health treatment decisions are made based on clinical evidence rather than cost-saving motives. They view the use of non-evidence-based clinical guidelines as a widespread problem contributing to the ongoing mental health crisis by limiting access to necessary care.
On the other side, United Behavioral Health, supported by industry groups such as the American Health Insurance Plans (AHIP) and the U.S. Chamber of Commerce, maintain that the appeals court ruling preserves the essential discretion insurers need to manage and administer benefits effectively. AHIP contends that requiring plans to strictly follow clinical guidelines without flexibility would interfere with employer-sponsored health plans’ ability to offer affordable and sustainable coverage.
The Possibility of a Rehearing and Supreme Court Review
Given the importance of Wit v. United Behavioral Health and the broad nature of the appeals court’s ruling, the plaintiffs have petitioned the 9th Circuit to rehear the case, either before the original three-judge panel or en banc, meaning with the participation of all active judges on the court. Legal experts view this as an unusual but viable path forward, especially because the appeals court did not delve deeply into the facts of the case and issued a relatively brief and generalized opinion.
Moreover, legal analysts widely anticipate that Wit v. United Behavioral Health will eventually reach the U.S. Supreme Court, where the justices may clarify the standards for insurer discretion in behavioral health claims and how ERISA and parity laws intersect.
Wit v. United Behavioral Health in the Broader Context of Parity Law
Though the case primarily addresses ERISA standards, it is tightly connected to the ongoing struggle to achieve true behavioral health parity in the United States. The Mental Health Parity Act of 1996 and the Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 were landmark federal laws intended to ensure that mental health and substance use disorder benefits are no less favorable than medical and surgical benefits in health plans.
However, for years behavioral health providers, advocates, and patients have reported widespread insurer noncompliance with parity requirements. Investigations and reports from organizations like the Kaiser Family Foundation and Milliman Inc. reveal persistent disparities in reimbursement rates, coverage limits, and utilization management between behavioral health and physical health services.
A 2019 Milliman report found that disparities between behavioral health and physical health services actually deepened between 2013 and 2017. Additionally, a joint federal report from the Departments of Labor, Health and Human Services, and Treasury in early 2023 criticized insurers for failing to provide adequate information to assess compliance with MHPAEA, highlighting enforcement gaps.
The Need for Legislative and Policy Reform
Even if the plaintiffs ultimately prevail in Wit v. United Behavioral Health, experts stress that judicial rulings alone cannot fully address the entrenched parity challenges. Tom Britton underscores the need for comprehensive legislative and regulatory reforms at both federal and state levels to ensure insurers adhere to parity laws and base coverage decisions on accepted medical science.
A key aspect of this reform involves reinforcing the scientific legitimacy of behavioral health care, especially addiction medicine. Britton noted that payers readily accept ongoing treatment for chronic physical conditions like hypertension, including medications and diagnostic tests, without question. Behavioral health treatments, backed by extensive research, deserve the same recognition and access.
Recently, Congress has shown some interest in strengthening parity enforcement. The Consolidated Appropriations Act of 2021 included provisions requiring health plans to document and compare nonquantitative treatment limitations (NQTLs) applied to behavioral health versus physical health benefits. There were also efforts within the Inflation Reduction Act to establish civil monetary penalties for MHPAEA violations, though this language was ultimately excluded from the final bill signed in August 2022.
What the Decision Means for Patients and Providers
The ruling in Wit v. United Behavioral Health will have direct and indirect effects on millions of patients relying on behavioral health services and the providers who care for them. If insurers retain broad discretion to apply proprietary clinical guidelines, patients may continue to face denials or restrictions for treatments deemed medically necessary by their clinicians. This could exacerbate existing barriers to care during a period of heightened demand for mental health and addiction treatment.
Conversely, a ruling affirming stricter standards based on generally accepted medical practices would reinforce behavioral health parity and potentially increase access to comprehensive treatment. It would also signal to payers that financial incentives cannot override clinical necessity determinations.
Conclusion: A Pivotal Moment for Behavioral Health Advocacy
The ongoing legal battle in Wit v. United Behavioral Health epitomizes the complex challenges facing behavioral health parity in the United States. While the appeals court ruling in 2022 was a setback for advocates, the case remains active, with significant potential for rehearing and further judicial scrutiny.
As mental health and addiction continue to be pressing public health issues, the outcome of Wit v. United Behavioral Health will reverberate through policy, insurance practices, and the everyday lives of millions of Americans seeking behavioral health care.
Behavioral health advocates, insurers, employers, and policymakers must closely monitor developments in this case. Its resolution will shape not only the future of insurer accountability but also the broader movement toward equitable, evidence-based access to mental health and substance use treatment.
