California Regulator Sued over Delayed Mental Health Appeals

Let’s say you have a son who develops a drug problem or becomes suicidal. His doctor says he needs extensive treatment at a residential mental health center. But your insurance company denies the coverage.

Consumers can appeal those decisions to California’s Department of Managed Health Care, which will review the insurance company’s decision and either uphold it or overturn it.

Under law, the agency has six days to complete an urgent review, upon receipt  of a complete application.  A lawsuit filed late Tuesday alleges that the agency routinely violates review deadlines, sometimes taking weeks or longer to render a decision.

“The consequences of not receiving a timely decision can be devastating," says Meiram Bendat, an attorney for the plaintiffs and president of Psych-Appeal, a mental health advocacy law firm. "Patients must decide whether to pay for costly treatments out of pocket, with the very real possibility of not getting reimbursed – or simply say ‘no’ and forego the care they desperately need."

The Department of Managed Health Care regulates health insurance plans that cover 25 million Californians. The number of people affected by the urgent review process addressed in the lawsuit is relatively few. Last year, the agency reviewed 1,789 insurance denials for care; 508 were handled on a expedited basis; and 15 percent of those (78 cases) were for mental health conditions.

The department would not comment on the lawsuit directly, but said its top priority is to protect the health care rights of consumers.

“We take our responsibility very seriously in assisting health care consumers to receive medically necessary care when they need it," said Rachel Arrezola, deputy director of communications.

The lawsuit was filed in Los Angeles Superior Court on behalf of Evolve Growth Initiatives, which operates adolescent mental health and substance abuse treatment facilities in California and New York.

Evolve CEO Mendi Baron says delays in rendering appeal decisions put mental health providers in an awkward position.

“Mental health providers often delay or terminate care instead of taking on the risks associated with these delayed appeals” Baron says. “While Evolve does not discharge patients pending appeals, we find that if they can’t pay for treatment themselves, many patients simply won’t stay in treatment.”

The lawsuit filed against the Department of Managed Health Care is unusual. Consumer health advocates recently applauded the agency for taking a hard line on enforcing mental health parity regulations –- which require health insurers to provide mental health benefits equal to medical care. The agency fined Kaiser Permanente $4 million in 2013 for not providing patients timely access to mental health appointments and for effectively dissuading individual therapy. In 2014, Kaiser agreed to pay the fine.

“DMHC may tout mental health parity,” Baron said, “but its practices are making a mockery of actual mental health care.”