Denied Coverage for Inpatient Mental Health? Lawsuit Investigation

Attorneys working with ClassAction.org are looking into whether some insurers are illegally denying coverage for certain inpatient mental health and behavioral health services—and whether class action lawsuits can be filed.

A lawsuit recently filed against Cigna claims the health plan administrator uses “far more restrictive” criteria than generally accepted medical standards when determining if residential mental health and behavioral health services are medically necessary, resulting in patients having their insurance claims wrongfully denied.

The case alleges that the medical necessity criteria used by Cigna were developed by and licensed from a for-profit publisher, and the attorneys believe other insurers could be using the same or similar allegedly flawed guidelines to determine whether to pay or deny insurance claims for inpatient mental health treatment. They’re now looking to speak with more patients who may have been affected as they work to determine whether additional lawsuits can be filed.

Does Insurance Cover Mental Health?

Not all health insurance covers mental health therapy and other types of mental and behavioral health services. However, under a law passed in 2008 called the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act, certain health insurance plans (including employer-sponsored health plans for companies with at least 50 employees) that provide mental health benefits cannot impose more restrictive limits on those benefits than those applied to medical/surgical benefits.

For example, if an insurance company sets a $20 copay for most medical/surgical office visits, it cannot charge a higher copay for visits to a mental health professional. Insurers are also not allowed to limit the number of mental health visits per year under the federal parity law.

Despite these protections, there are still cases where mental health services are not covered by insurance, including when an insurer determines that a certain treatment, or level of treatment, is not medically necessary.

When it comes to inpatient psychiatric care, patients and their families have reported having their claims denied because the insurance company determined that the patient could have been adequately treated at a lower level of care, such as outpatient services. According to a report by nonprofit newsroom ProPublica, insurance coverage for mental or behavioral health inpatient treatment is sometimes dropped mid-stay because the insurer has determined that the patient is making progress and an intensive care setting is no longer medically necessary.

ProPublica found that many insurers base their medical necessity decisions on guidelines they developed themselves or sets of guidelines developed by for-profit companies, one of which is MCG Health. These guidelines have reportedly been the subject of many lawsuits, and ProPublica noted that judges have criticized insurers for relying solely on the guidelines to determine coverage for mental health inpatient treatment.

Inpatient Mental Health Insurance Denial Lawsuits

According to the insurance denial lawsuit filed against Cigna, the insurer and its subsidiary use the MCG guidelines to determine the medical necessity of residential mental health treatment. Per the case, these criteria are much more restrictive than generally accepted standards of medical practice.

The lawsuit claims that Cigna’s application of the MCG guidelines generally results in residential care only being approved to address “acute” symptoms or crisis situations and not the treatment of underlying chronic symptoms or conditions. According to the suit, this is inconsistent with generally accepted standards, which recognize that many behavioral health problems may not be as effectively treated in the short term as they could be in longer-term residential settings.

The case claims Cigna’s restrictions on residential care violate the Mental Health Parity Act given the insurer does not restrict coverage of medical/surgical care to the presence of acute conditions.

Blue Cross and Blue Shield (BCBS) of Texas was hit with a similar lawsuit in April 2022 over alleged violations of the Mental Health Parity Act. The case was filed by a man who said his son received treatment at a residential behavioral health facility for conditions including depression, anxiety, ADHD and substance use. According to the lawsuit, BCBS denied coverage for the plaintiff’s son midway through his roughly eight-month stay at the residential facility based on a determination that his treatment was no longer medically necessary under MCG guidelines.

BCBS allegedly wrote in its explanation for the denial that the plaintiff’s son had begun to improve and could have been treated in a less intensive outpatient setting.

According to the case, BCBS’s coverage restrictions for inpatient mental health are out of parity with the restrictions it applies to medical/surgical services rendered at skilled nursing facilities.

How Could a Lawsuit Help?

A class action lawsuit could help reimburse patients whose coverage for inpatient mental health treatment was improperly denied by their insurer. It could also force the insurer to change how it determines whether treatments are medically necessary.

Denied Coverage for Inpatient Mental Health? Take Action

After you get in touch, an attorney or legal representative may reach out to you directly to ask you some questions about your experience and explain how you may be able to help the investigation. It doesn’t cost anything to fill out the form or speak with someone, and you are under no obligation to pursue legal action if you decide you don’t want to.

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