Wit v. UnitedHealthcare Insurance Company

Background

United Behavioral Health (UBH) moved under Federal Rule of Civil Procedure 62(d) to stay enforcement of specified parts of the court’s remedies order while its appeal was pending. The requested stay concerned portions of the order requiring reprocessing of class members’ claims. The opinion also identifies a related case involving Gary Alexander and other plaintiffs against UBH.

UBH argued that it had raised serious questions about the court’s treatment of causation and its use of the abuse-of-discretion standard. It also argued that reprocessing would cost approximately $30 million, require hiring and training additional employees, and potentially require UBH to pay benefits that might not be recoverable if UBH later prevailed on appeal. UBH contended that class members would not be seriously harmed by waiting because the claims were years old and the remedy was retrospective. It also argued that a stay would serve the public interest by preserving resources during the COVID-19 pandemic.

Legal standard

The court explained that a stay pending appeal is discretionary rather than automatic. The court considers four factors: whether the applicant has a strong or substantial case on appeal, whether it will suffer likely irreparable harm without a stay, whether a stay would substantially injure other interested parties, and where the public interest lies. The court stated that the first two factors are the most important and that a stay cannot issue without a threshold showing of likely irreparable harm.

Court’s analysis

The court found that UBH satisfied the likelihood-of-success factor because it had raised serious legal questions, including issues of first impression. But the court rejected UBH’s claim of irreparable injury. Although UBH estimated that reprocessing would cost approximately $30 million, the court noted that UBH did not argue the cost would threaten its business and concluded that the expense did not constitute irreparable harm in light of UBH’s overall financial position.

The court also rejected UBH’s argument that benefits paid during reprocessing might not be recoverable. It stated that the parties, with help from the Special Master if necessary, could create procedures to protect UBH from that result. The court was also not persuaded by evidence concerning the financial strain of reprocessing and the difficulty of hiring and training staff.

Regarding harm to other parties, the court concluded that a stay could substantially harm at least some class members. The court explained that reprocessing could do more than provide reimbursement for treatment class members paid for themselves: it could correct the record of past coverage decisions and help some class members pursue other remedies. The court further stated that proper adjudication of past requests could benefit people whose requested treatment was not obtained because UBH considered past treatment and coverage decisions in later determinations. The court found that the potential consequences of denied mental-health or substance-use-disorder treatment could include life-or-death consequences that prejudgment interest could not remedy.

The court concluded that the public-interest factor did not strongly favor either side. It found UBH’s assertions about diverting resources from COVID-19-related work unsupported by evidence and its predictions about self-funded employer plans reducing coverage or increasing premiums speculative. The court also found that the plaintiffs had not persuasively explained why the requested stay would significantly impair the public interest.

Disposition

The court denied UBH’s motion to stay the specified portions of the remedies order. It vacated the motion hearing scheduled for January 8, 2021, and continued the further case-management conference to January 29, 2021, at 2:00 p.m. Judge Joseph C. Spero signed the order.