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What Are Your Rights if Your Mental Health or Addiction Treatment Claims Are Denied By Your Insurance Company?

Has your insurance company denied coverage or reimbursement of you or your family member's mental health or substance abuse service claims? In light of the recent New York Attorney General settlements with insurance companies for violations of the federal and New York state mental health parity laws, insurance companies need to take a hard look at their mental health and substance abuse service claims review processes to be sure they comply with these laws.

New York's mental health parity law (known as Timothy's law) requires insurance policies for groups with 50 or fewer participants to provide certain minimum benefits for mental health and requires policies with more than 50 participants to provide mental health coverage at least equal to coverage provided for other health conditions. The federal Mental Health Parity and Addiction Equity Act requires parity between mental health or substance abuse disorder benefits and medical and surgical benefits by prohibiting insurance companies from imposing greater financial requirements or treatment limitations on mental health or substance use disorder benefits than on medical or surgical benefits1. Under these laws, insurance companies must cover mental health services the same way they would cover physical health services.

The New York Attorney General announced in March 2015 a settlement with Beacon Health Options (formerly ValueOptions) with respect to violations of the mental health parity laws by Beacon Health. The Attorney General found during its investigation that Beacon Health denied behavioral health claims twice as much as other medical or surgical claims and four times as often for addition recovery services. The investigation also found that utilization review for behavioral health services occurred more often and more rigorous than for other medical services. Beacon Health was required to reform its behavioral health claims review process and pay a $900,000 penalty.

Also in March 2015, the New York Attorney General reached a settlement with Rochester-based Excellus Health Plan, requiring Excellus to cover residential treatment for behavioral health and reform its procedures for evaluation of behavioral health claims. The investigation revealed that Excellus's inpatient substance abuse disorder rehabilitation denials were because of its requirements that members fail outpatient treatment multiple times before being eligible for inpatient care. The investigation also revealed that some of these denials appeared to be arbitrary and wrongfully decided.

The New York Attorney General reached a settlement with EmblemHealth in July 2014 following an investigation for violations of the mental health parity laws. The investigation revealed that ValueOptions (now Beacon Health), its behavioral health administrator, denied 64% more claims for behavioral health than for physician health. The investigation found that EmblemHealth's more scrutinous review of behavioral health claims than medical and surgical claims lead to thousands of its members not receiving coverage for services requested by their doctors or therapists. The settlement required EmblemHealth to change its behavioral health claims review process, cover residential treatment, charge the lower, primary care co-payment for outpatient visits to mental health and substance abuse treatment providers and pay a $1,200,000 penalty.

The New York Attorney General reached a settlement with MVP in March 2014 after an investigation also revealed violations of the mental health parity laws. Through MVP's behavioral health subcontractor, ValueOptions, MVP issued 40% more denials for behavioral health than for medical cases. The settlement required MVP to cover residential treatment for behavioral health, including eating and substance abuse disorders and to designate $1,500,000 for reimbursement of members' past denied residential treatment claims.

You have the right to fight a wrongful denial of a mental health or substance abuse claim. Your attorney will have to decide whether the case should be brought in federal or state court. If your health insurance is provided to you through your private employer, then you will need to bring your case in federal court under the Employment Retirement Income Security Act (known as ERISA). Your case should be brought in state court if either (1) you pay for your insurance yourself (rather than through your private employer) or (2) if your insurance policy is a "government plan". ERISA section 1002(32) defines a "government plan" as:

"a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing. The term "governmental plan" also includes any plan to which the Railroad Retirement Act of 1935, or 1937 [45 U.S.C.A. § 231 et seq.] applies, and which is financed by contributions required under that Act and any plan of an international organization which is exempt from taxation under the provisions of the International Organizations Immunities Act [22 U.S.C.A. § 288 et seq.]. The term "governmental plan" includes a plan which is established and maintained by an Indian tribal government (as defined in section 7701(a)(40) of Title 26), a subdivision of an Indian tribal government (determined in accordance with section 7871(d) of Title 26), or an agency or instrumentality of either, and all of the participants of which are employees of such entity substantially all of whose services as such an employee are in the performance of essential governmental functions but not in the performance of commercial activities (whether or not an essential government function)."

You should consult with an attorney if you feel you or your family member's mental health or substance abuse service claims have been wrongfully denied by your insurance company. An attorney will be able to assess your case and advise you of your potential causes of action. You can contact our office if you have any questions about your rights.

1 The Mental Health Parity and Addiction Equity Act does not apply to group health plans sponsored by an employer with 50 or fewer employees.

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