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(Article from Insurance Law Alert, May 2016)

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The Second Circuit ruled that psychiatrists and professional medical associations lacked standing to bring claims against health insurers based on allegedly discriminatory reimbursement practices.  American Psychiatric Assoc. v. Anthem Health Plans, Inc., 2016 WL 2772853 (2d Cir. May 13, 2016).

Two psychiatrists and three professional organizations sued health insurance companies alleging that the insurers’ reimbursement practices discriminate against patients with mental health and substance abuse disorders in violation of ERISA and the Mental Health Parity and Addition Equity Act (“MHPAEA”).  The psychiatrists brought suit on behalf of themselves and their patients, while the associations sued on behalf of their members and their members’ patients.  A Connecticut federal district court dismissed the suit on several bases, including lack of standing.  The Second Circuit affirmed.

The Second Circuit held that the psychiatrists did not have a cause of action under ERISA based on the health insurers’ alleged MHPAEA violations.  The court explained that ERISA unambiguously provides that civil actions may be brought by a “participant, beneficiary or fiduciary.”  Because the psychiatrists did not fall within any of these categories, they did not have standing to sue.  The court rejected the psychiatrists’ assertion that they were entitled to “stand in the shoes of their patients” for the purposes of bringing suit.  The court acknowledged that policy reasons might support allowing physicians to sue on behalf of patients with mental disorders, but concluded that it was not authorized to apply its own judgment to recognize a cause of action that Congress has denied.  The court also rejected the psychiatrist’s standing argument based on the principle of assignment (i.e., that patients had assigned their right to sue to the psychiatrist).  In order to confer an ERISA cause of action upon  a provider, an assignment must be made in exchange for consideration, in the form of the provision of health care services.  Because such consideration did not exist here, there was no valid assignment of the right to sue.  Finally, the court held that the associations lacked constitutional standing because their individual members lacked standing.