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Fiduciaries lose class action suit

A federal court in California has sided with plaintiffs in a class action suit concerning payment for behavioral health costs. The court ruling and rationale for the decision should make ERISA plan trustees and administrators in Washington, D.C., a little more mindful of accepted methods for treatment.

The suit related to behavioral health claims submitted to a self-insured carrier over a seven-year period. The case fell under ERISA jurisdiction as the health benefits were employer-sponsored. Plaintiffs provided evidence in the form of expert testimony to identify generally accepted treatment methods for substance abuse and mental health cases. The standards originate from a large national organization of mental health professionals.

The expert testimony asserted that plan guidelines fell below generally accepted methods in a number of areas. In one area, the plan failed to provide for treatment in the least restrictive means possible. In another, the plan failed to seek treatment of the underlying condition rather than merely treating symptoms.

After evidence was received, the court determined the plan guidelines prioritized cost savings over patient benefits. In particular, the court noted that there were no exceptions in plan guidelines when the good of the patient is at stake. Is further found the refusal to adopt the national treatment standards was due to costs involved rather than the well-being of plan participants.

Originally thought of as merely pension regulation, ERISA can cover a number of other employee benefits. ERISA rules are geared toward the benefit of the worker. They can also be very complex and provide substantial penalties for violations. For those who believe an employer may be violating this law, a consultation with an employee benefits attorney may be helpful.

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