Wit Is Flipped: The Ninth Circuit Reverses Major ERISA Decision

The Ninth Circuit just reversed decisions from the U.S. District Court for the Northern District of California in Wit v. United Behavioral Health, which had ordered United Behavioral Health (“UBH”) to reprocess thousands of claims for behavioral and mental health treatment.

Wit is an ERISA class action challenging certain guidelines employed by UBH to decide whether claims for certain behavioral and mental health treatment were covered by group health plans. Following a ten-day bench trial in 2019, the Wit court issued a 106-page decision, finding that UBH had violated ERISA by applying “unreasonable” standards allegedly not consistent with generally accepted standards of care (“GASC”). In 2020, the Wit court issued a remedies order that authorized sweeping remedies. Among other things, the court ordered UBH to reprocess over 67,000 benefit decisions.

Yesterday, on March 24, 2022, in an 11-page decision, the Ninth Circuit reversed the district court’s 106-page liability decision and its remedies order. The Ninth Circuit agreed that the plaintiff had standing and that the district court did not abuse its discretion when certifying a class. The Ninth Circuit, however, decided that UBH had properly exercised its discretion in creating its behavioral and mental health guidelines and that the underlying health plans did not require consistency with the GASC, only that they not be inconsistent. This, the Court concluded, mandated reversal of the district court’s finding of liability.

While the Ninth Circuit’s decision in Wit is major in its own right, its impact will be felt in litigation across the country. Plaintiffs raising ERISA benefit claims have been using the Wit court’s conclusions to challenge the application of behavioral and mental health guidelines to individual benefit claims. Many courts have relied upon Wit’s reasoning to deny United any deference in benefit decisions, allow broad discovery, and even award benefits. The Ninth Circuit’s decision will likely bring an end to that.

Nick Bullard

Nick is a trial partner in Dorsey’s office in Minneapolis. His practice focuses on complex and high-stakes commercial litigation at the trial and appellate levels. He has particular expertise in defending clients in ERISA class actions involving both retirement and health and welfare plans. In his ERISA practice, Nick has represented some of the largest companies in the world in industries ranging from banking to healthcare.

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