Zuckerman Spaeder Sues HCSC and MCG Health for Restricting Access to Medically Necessary Mental Health Coverage

Zuckerman Spaeder LLP today filed a complaint in the U.S. District Court for the Northern District of Illinois on behalf of the mother of a young woman who was denied coverage for mental health treatment.  The complaint alleges that Health Care Service Corporation (HCSC) is using overly restrictive clinical guidelines, developed by MCG Health (MCG), to deny medically necessary residential treatment for behavioral health care. This new lawsuit is part of the firm’s ongoing national effort on behalf of clients to hold insurance companies accountable for widespread denials of mental health and addiction treatments.

The complaint was filed by Zuckerman Spaeder partners Caroline Reynolds,  D. Brian Hufford, and Jason Cowart, along with co-counsel George Galland Jr. and David Baltmanis from Miner, Barnhill & Galland, P.C. and Meiram Bendat from Psych-Appeal, Inc., on behalf of an individual insured by HCSC. In it, the plaintiff alleges that MCG created — and HCSC used in administering plan benefits — behavioral health coverage guidelines that were far more restrictive than generally accepted standards of medical practice. These guidelines are alleged to contradict the actual written terms of the plaintiff’s health plan and violated HCSC’s fiduciary responsibilities under the Employee Retirement Income Security Act (ERISA).

In a similar lawsuit also brought by Zuckerman Spaeder and Psych Appeal, a federal judge in California earlier this year found that United Behavioral Health had violated its ERISA obligations in denying behavioral health coverage to more than 50,000 patients. That decision, which was called a “turning point” by a major mental health organization, has put a spotlight on the insurance industry’s pervasive mental health discrimination.

In this case, the plaintiff’s daughter “Jane Smith” suffers from major depression, substance use disorder and borderline personality disorder. Despite the severity of her condition, she was denied coverage for residential treatment by HCSC, which used the MCG-developed criteria in making its decision. The complaint alleges that those criteria, however, were inconsistent with the “accepted standards of medical practice” that Jane was promised in her health and well-being insurance plan.

“In using inferior guidelines to make coverage decisions, an insurer not only ignores its legal responsibility, it risks the health of its customers,” said Ms. Reynolds. “Jane is just one individual who was denied coverage for the care she obviously needed, but this has likely happened to many others insured by HCSC. There is a pattern of behavior among insurers, in which financial considerations strongly influence the development or selection of clinical coverage guidelines.”

“This is an important case, as HCSC is among the largest health insurance administrators in the country, with more than 16 million members,” said Mr. Hufford. “Mental health and substance use disorders are pervasive public health issues, and yet insurers are routinely denying the coverage they are obligated to provide. This lawsuit is an important step in our effort on behalf of clients to hold insurers accountable for this kind of discriminatory behavior.”

Zuckerman Spaeder has developed a national practice representing patients and health care providers such as doctors, hospitals, and medical equipment companies in disputes with health insurance companies. Their groundbreaking application of ERISA and other related federal and state laws has resulted in numerous precedent-setting wins, including the landmark decision issued earlier this year in Wit, et. al. v. United Behavioral Health and Alexander, et al. v. United Behavioral Health. These lawsuits are at the vanguard of the firm’s nationwide effort on behalf of clients to force insurer compliance with their fiduciary duties under federal law.

Psych-Appeal, Inc. is a Los Angeles-based law firm exclusively dedicated to mental health insurance

claims, advocating on behalf of patients, clinicians, and treatment facilities.