The latest development in the Wit v. United Behavioral Health case has reignited debates over mental health parity and insurance coverage. On January 26, the 9th U.S. Circuit Court of Appeals issued a ruling that significantly altered a landmark 2019 district court decision. This appellate decision effectively gave insurers more latitude in adjudicating behavioral health insurance claims while ordering United Behavioral Health to reprocess nearly 70,000 claims.
Behavioral health advocates, legal experts, and policy analysts have expressed concern that this ruling could undermine decades of progress in ensuring equitable access to mental health and addiction treatment.
Origins of the Case
The Wit case began as a class-action lawsuit in 2014, challenging United Behavioral Health (UBH) for its policies on determining the medical necessity of behavioral health services. Plaintiffs alleged that UBH ignored generally accepted standards of care (GASC), instead using internally devised rules that prioritized cost savings over patient needs.
The lawsuit argued that UBH’s practices led to widespread denials of coverage for mental health and addiction treatment services, denying individuals the care necessary for recovery and stabilization. This case became a landmark for those monitoring behavioral health insurance claims, highlighting the systemic issues in insurer decision-making.
The 2019 district court decision marked a major victory for advocates, ruling broadly in favor of the plaintiffs and calling for sweeping reforms in how insurers handle behavioral health insurance claims. The court’s approach, however, was challenged by UBH, leading to the current appellate ruling.
The Appellate Court’s Decision
The appellate court’s January 2025 decision effectively overturned the district court’s expansive approach. While it acknowledged that UBH’s medical necessity criteria may have been influenced by financial interests, it did not require insurers to strictly adhere to generally accepted standards of care (GASC) when evaluating behavioral health insurance claims.
This ruling is particularly significant for ERISA-covered health plans. Under ERISA, courts typically apply one of two standards when evaluating plan decisions:
- Abuse of discretion – courts give deference to the plan administrator’s decisions
- De novo review – courts independently evaluate the merits of a claim without deference to the insurer
The district court had applied a de novo standard, essentially substituting its own judgment for UBH’s. The appellate court rejected this approach, ruling that the abuse of discretion standard should have applied, making it more challenging for plaintiffs to succeed in court and manage their behavioral health insurance claims.
Legal and Advocacy Concerns
The ruling has raised alarms among behavioral health advocates because it could weaken enforcement of mental health parity principles, even though parity laws were not the central focus of this case. According to David Lloyd, senior policy advisor for the Kennedy Forum:
“The appellate court essentially held that individuals denied mental health and addiction coverage have no right to the processing of their claims, which is deeply problematic. It could severely damage Americans’ rights not only to mental health coverage but to other benefits under ERISA, including behavioral health insurance claims.”
Mark DeBofsky, shareholder at Chicago-based DeBofsky Law Ltd., emphasized the importance of the original district court decision, calling it “the most important health insurance decision of the last 25 years” and likening it to Brown v. Board of Education of health insurance cases. The appellate decision, by contrast, limits courts’ ability to intervene when insurers set self-serving rules for behavioral health insurance claims.
Key Findings of the Appellate Court
Despite siding with insurers in many respects, the appellate court upheld certain critical aspects of the district court’s ruling:
- Financial Conflict of Interest: The court recognized that UBH’s medical necessity criteria were “infected” by financial self-interest, emphasizing that insurers cannot make coverage decisions purely to save money
- State Law Violations: UBH’s criteria were found to violate state laws in Connecticut, Illinois, Rhode Island, and Texas, which require coverage decisions to align with generally accepted standards of care
David Lloyd noted:
“It’s a positive decision to say that insurers cannot make medical necessity criteria based just on their financial self-interest, but there’s no requirement that these criteria align with generally accepted medical standards. This directly impacts how behavioral health insurance claims may be evaluated moving forward.”
The Human Impact
One of the most concerning elements of this ruling is its potential impact on individuals seeking mental health and addiction treatment. By reinforcing the abuse of discretion standard, the court makes it more difficult for patients to challenge coverage denials, potentially affecting thousands of behavioral health insurance claims nationwide.
DeBofsky explained:
“For the population who has to deal with behavioral health issues, it was insulting to them because the court decision made it harder for them to get the care they need — not just to stabilize a crisis, but to actually get better.”
This decision underscores a broader tension in U.S. health care: balancing insurer discretion with patient needs in managing behavioral health insurance claims.
What Happens Next?
Although the appellate court ruling favors insurers, legal experts note that the case is far from over. Options for the plaintiffs include seeking an en banc hearing with all nine judges of the 9th Circuit or returning to the district court for further proceedings.
David Thornton, ERISA attorney, observed that the appellate opinion largely ignored the detailed factual record of the case:
“This case has so many factual attributes that were never really part of the opinion; it was more legal analysis as opposed to what the underlying facts really show. I don’t think this is over.”
The ongoing litigation highlights the high stakes of behavioral health insurance claims for both insurers and patients, as well as its broader implications for mental health parity and ERISA enforcement.
Broader Implications for Behavioral Health Parity
While Wit v. United Behavioral Health is not directly a federal parity case, it touches on several parity principles, including equitable access to mental health care and adherence to clinical standards. Advocates worry that if the appellate ruling stands, it could weaken the ability of patients to challenge denials of behavioral health insurance claims, potentially undermining parity protections across the health care system.
Lloyd summarized the stakes:
“The decision leaves patients in a difficult situation, but not an impossible one. Continued advocacy and legal action are critical to ensuring that behavioral health insurance claims are handled fairly and in accordance with medical standards.”
Conclusion
The Wit v. United Behavioral Health case remains one of the most consequential legal battles in behavioral health coverage. While the 9th Circuit’s recent ruling favors insurers, the ongoing litigation offers advocates and plaintiffs potential avenues for appeal. The outcome will have far-reaching implications for behavioral health parity, ERISA claims, and the ability of individuals to secure medically necessary care for mental health and addiction.
Behavioral health advocates and legal observers will be watching closely as this case continues to unfold, highlighting the ongoing struggle to balance insurer discretion with patient rights in the United States.
