Kevin J. Malone and David Shillcutt, attorneys in the Health Care & Life Sciences practice, in the firm’s Washington, DC, office, were quoted in Law360, in “DOL Says Employers Struggling with Mental Health Parity Law,” by Kellie Mejdrich. (Read the full version – subscription required.)

Following is an excerpt:

A recent report to Congress from the U.S. Department of Labor and two other agencies gave employers failing grades on complying with a law requiring mental health and substance abuse treatment to be covered as robustly as other health problems.

For years, agencies have struggled to ensure health plans comply with the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, which prohibits coverage limitations on mental health and substance abuse treatment that are more restrictive than limits on medical and surgical benefits.

But that's changing now that Congress provided new enforcement authority in a 2021 appropriations bill. The law requires that group health plans analyze and document their own compliance, and specifies that if agencies deem an employer's compliance to be lacking, the employer must tell plan participants. This could open up exposure to Employee Retirement Income Security Act class actions, experts say.

Tuesday's report from the U.S. Departments of Labor, Treasury, and Health and Human Services said agencies haven't reached a final determination of noncompliance for any group health plan yet. Yet the DOL and HHS in 2021 sent a combined 45 letters with initial determinations of noncompliance, and they're ramping up for more.

"Everyone's failing across the board because they're unable to prove, in the rubric that DOL is asking for, that they are not discriminating. That's the big takeaway — there's a lot of work that needs to be done to prepare the proof documents to establish that proof, and it's super-hard," said Epstein Becker Green attorney Kevin Malone.

Here are three key takeaways from the report. …

Penalties May Be Coming

At the end of its report, the DOL requested new authority from Congress to impose civil monetary penalties on group plans that are not in compliance with the law, in a sign the department wants to go even further.

The DOL also asked for clearer authority to directly go after third-party administrators involved in coverage decisions. Advocacy groups are expected to lobby for those changes as part of any budget reconciliation bill Democratic majorities in the House and Senate try to push out this year ahead of the November election.

Democrats in the House included the civil monetary penalty authority the DOL is asking for in the Build Back Better Act, which passed the chamber back in November. And advocates lobbying on the legislation say they haven't heard about problems with the language in the Senate version, yet it has stalled in the chamber amid resistance from moderate Democrats.

As such, Democrats are expected to take another crack revising the legislation, meaning the language could still be in play. …

But even existing authorities are making plans nervous. A final determination of noncompliance, which the EBSA has not yet issued for any plans, will result in a requirement to notify all enrolled individuals of the deficiency within seven days. That's another major tool given to the department and other federal agencies like CMS enforcing the parity laws in the 2021 appropriations package.

"That's a huge PR liability," said David Shillcutt, an attorney with Epstein Becker Green. Shillcutt and Malone explained in a joint interview that once a letter is mailed to all plan participants, a class action lawsuit could easily come next. "It's a very easy step from there to a class action," Malone said.

"It's definitely reasonable to think that the fines may be less consequential or even preferable to the carrier than the blowback" created by sending a letter to every enrolled individual about parity violations, Shillcutt said.

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