Psych-Appeal Files Class Action Against HCSC & MCG Health Over Mental Health Guidelines

Psych-Appeal today filed a class-action complaint in the U.S. District Court for the Northern District of Illinois, alleging that the country’s fourth largest insurer, Health Care Service Corporation (HCSC), is denying medically necessary residential mental health treatment based on overly restrictive clinical guidelines developed by MCG Health (MCG).

The complaint, Smith v. Health Care Service Corporation, was filed along with Zuckerman Spaeder LLP and Miner, Barnhill & Galland, P.C., on behalf of a putative class of HCSC insureds. In it, the plaintiff alleges that MCG developed — and HCSC applied — mental health guidelines that were far more restrictive than generally accepted standards of medical practice, and that her daughter’s medically necessary residential treatment was consequently denied.

“In the mental health context, where regulatory oversight is lax, it is all too easy for insurers to discriminate against patients by denying medically necessary care based on clinical guidelines that reference authoritative sources yet distort or omit their content,” said Meiram Bendat, founder of Psych-Appeal and co-counsel for the plaintiff. “Psych-Appeal is committed to exposing and curbing this insidious practice.”

Earlier this year, in another case brought by Psych-Appeal and Zuckerman Spaeder, a federal court found that United Behavioral Health (UBH, operating as Optum) developed and applied defective clinical guidelines to deny coverage for mental health and substance use treatment to more than 50,000 individuals.

In Wit v. United Behavioral Health, a federal court found that, to promote its own bottom line, UBH illegally denied claims based on internally developed criteria that were far more restrictive than generally accepted standards for behavioral health care. Specifically, the court found that UBH’s criteria were skewed to cover “acute” treatment, which is short-term or crisis-focused, and disregarded chronic or complex mental health conditions that often require ongoing care, including residential treatment.

Health Care Service Corporation (HCSC) is the fourth-largest health insurance administrator in the United States, withe more than 16 million members. The company issues and administers health insurance plans in five states (Illinois, Texas, Oklahoma, New Mexico, and Montana).