Judge dims hope for proposed class action against UnitedHealth subsidiary over alleged 'profit-driven' coverage guidelines

A federal judge in California has reduced the chances of a proposed class action moving forward from drug abuse and mental health treatment providers against United Behavioral Health for allegedly denying coverage for medically necessary treatments.

The plaintiffs, Fort Lauderdale, Fla.-based Meridian Treatment Services, Los Angeles-based Harmony Hollywood Treatment Services and Scottsdale, Ariz.-based Desert Cove originally sued United over claims that the payer decided whether certain treatments were "medically necessary" using "profit-driven" guidelines that were not supported by industry medical standards.

The U.S. District Court for the Northern District of California dismissed all claims from the plaintiffs over health plans covered by the Employee Retirement Income Security Act and said they were preempted by federal law. For non-ERISA plans, the judge dismissed misrepresentation and concealment claims over lack of evidence and wrote that plaintiffs "may face an uphill battle" with the other claims. 

The court ruling did not dismiss implied-in-fact and oral contract breach claims, but the judge said it may be a challenge to prove that communications between the payer and plaintiffs had led to any contracts that could be breached in the first place.

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