98 F.4th 965
9th Cir.2024Background
- Ryan S., a beneficiary of a UnitedHealthcare-administered ERISA health plan, brought a putative class action alleging violations of the Mental Health Parity and Addiction Equity Act ("Parity Act"), ERISA fiduciary duties, and plan terms.
- He claimed UnitedHealthcare used more restrictive internal review processes for outpatient, out-of-network mental health/substance use disorder (MH/SUD) claims than for analogous medical/surgical claims, resulting in the denial of substantial benefit claims.
- The argument was supported by a 2018 California Department of Managed Health Care report finding UnitedHealthcare used the ALERT algorithm, leading to more stringent review exclusively for MH/SUD claims.
- The district court originally dismissed the case for lack of standing; the Ninth Circuit reversed on that point and remanded. UnitedHealthcare then renewed its motion to dismiss for failure to state a claim.
- The district court again dismissed, reasoning the complaint failed to allege categorical denials or sufficient comparator medical/surgical claims.
- On appeal, the Ninth Circuit found the Parity Act and fiduciary duty claims to be plausibly pled, reversed in part, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the complaint plausibly alleges a Parity Act violation | UnitedHealthcare used more restrictive internal processes on MH/SUD claims | Plaintiff failed to allege categorical denials or proper comparators | Allegations plus agency report are sufficient—reversed |
| Whether breach of fiduciary duty is stated | Violation of Parity Act breaches fiduciary duty | No actionable violative practice alleged | Sufficiently pled—reversed |
| Whether violation of plan terms is alleged | Practices necessarily violated plan terms | Plaintiff did not identify any specific violative plan provision | Not sufficiently pled—affirmed |
| Standard for alleging Parity Act internal process violations | Need only plausibly allege discriminatory process, not all possible comparators | Need personalized examples of more favorable med/surg processing | Plaintiff's standard accepted—reversed |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (establishes plausibility pleading standard under Rule 12(b)(6))
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (sets out plausibility requirements for federal complaints)
- Varity Corp. v. Howe, 516 U.S. 489 (1996) (Section 1132(a)(3) as a catchall provision for equitable ERISA relief)