ERISA Group’s Lawsuit Seeks to Upend Final Federal Mental Health Parity Rules

The ERISA Industry Committee filed a lawsuit Friday against the U.S. Departments of Labor, Treasury, and Health and Human Services, seeking to invalidate their final rule under the Mental Health Parity and Addiction Equity Act of 2008 and the Consolidated Appropriations Act of 2021. 

The ERISA Industry Committee v. United States Department of Health and Human Services et al. alleges that the final rule is unlawful because it exceeds the departments’ authority under the MHPAEA and the CAA, violates the due process clause in the Fifth Amendment, is “arbitrary and capricious” and violates the Administrative Procedure Act. 

The lawsuit also claims that the January 1 effective date for many of the final rule’s provisions is arbitrary and capricious because it did not leave enough time for plans governed by the Employee Retirement Income Security Act to come into compliance with the new and “vaguely worded” regulations.  

Former Secretary of Labor Eugene Scalia and colleagues at Gibson, Dunn & Crutcher LLP are representing ERIC in the case. 

President Joe Biden’s administration issued the final rules last September, clarifying that employers offering health plans need to evaluate their provider networks, how much they pay out-of-network providers and how often they require—and deny—prior authorizations.  

Under the rules, health plans also cannot use nonqualified treatment limitations that rely on more restrictive prior authorization, other medical management techniques or narrower networks to make it harder for people to access mental health and substance use disorder benefits than to access physical health benefits. In addition, health plans are required to use similar factors in setting out-of-network payment rates for mental health and substance use disorder providers as they would for medical providers. 

“ERIC and its member companies whole-heartedly endorse the goals of the Mental Health Parity and Addiction Equity Act,” said Tom Christina, executive director of the ERIC Legal Center, in a statement. “To be clear, this suit is not about whether there is value in offering mental health and substance use disorder benefits, because ERIC member companies already voluntarily offer those benefits. … But the new regulations issued by the Biden administration exceed the Tri-Departments’ statutory authority under the laws that Congress passed, and threaten the ability of employers to offer high quality, affordable coverage for the mental health and substance use disorder needs of employees and their families.” 

The complaint argues that the parity rule would substantially increase administrative costs—in time and labor, as well as monetary expenditures—taking “valuable resources away from providing mental health/substance use disorder benefits, forcing employers to re-think the type and level of their coverage for those benefits.” 

“Rather than faithfully implementing the statutory requirements of the MHPAEA, much of the Parity Rule upends the regulatory and compliance framework that has evolved over decades pursuant to the limits established by Congress,” the complaint states. “The Parity Rule also imposes entirely new, ambiguous requirements that are so burdensome and unworkable that they will discourage employers from offering MH/SUD benefits at all.” 

Prior to the finalization of the rule, ERIC engaged in efforts to educate regulators about the “unintended consequences” of the rule change .  

The federal departments did not immediately respond to a request for comment.