House Passes Mental Health Matters Act: What Employers, Insurers, and ERISA Plan Administrators Need to Know – Publications

LawFlash

06 October 2022

The Mental Health Issues Act, passed by the US House of Representatives on September 29, significantly expands the US Department of Labor’s authority to enforce or bring civil actions regarding mental health parity violations and removes discretionary clauses, potentially eliminating administrative process of the Employee Retirement Income Security Act of 1974.

The Mental Health Issues Act (HR 7780) is sponsored by Representative Mark Dessaulniers and has three co-sponsors. While there is less chance of the bill passing the Senate, there is a possibility that some provisions could be passed as part of a spending deal at the end of the year.

While the bill aims to expand access to mental health and substance abuse services for children and young people through a series of grant programs and expanded funding, the implementation provisions are what concern sponsors of group health plans, as well as insurers and administrators of employee retirement plans governed by the Income Security Act (ERISA).

Titles I through IV of the proposed legislation provide that these resources will be used to:

  • identifying and implementing the best interventions;
  • building pipelines to mental health resources;
  • hiring mental health professionals in high-need schools; and
  • increasing transparency in the university environment for students seeking mental health support.

Titles VI and VII propose changes that could change the landscape of ERISA litigation and significantly expand the Department of Labor’s (DOL) enforcement capacity in this space. Title VI allocates $275 million over 10 years to support DOL’s implementation of group health plan compliance with the Mental Health and Addiction Equity Act of 2008 (MHPAEA), which requires group health plans not to impose more stringent limitations on mental health and substance use disorder benefits than those for medical/surgical benefits.

The bill also proposes to amend ERISA and give the DOL authority to impose civil monetary penalties for mental health parity violations. This is important given the DOL’s recent enforcement activity and reluctance to offer guidance on what constitutes parity compliance under the MHPAEA. Opponents are concerned that the current bill does not provide sufficient due process for an employer or insurer facing such penalties.

In addition to the enforcement provisions, Title VII would also nullify the mandatory arbitration provisions, class action waivers, and representation waivers for purposes of ERISA section 502 claims and common law claims related to a plan or plan benefits when are submitted by a participant or beneficiary. This could lead to a flurry of litigation, including class action lawsuits. To the extent that a non-binding arbitration provision is questioned, the law proposes that a court, not an arbitrator, decide enforceability. Opponents of the bill expect these changes to undermine protections against frivolous lawsuits that can currently be resolved quickly and efficiently in private arbitration.

Title VII is also expected to increase the overall cost of ERISA litigation and lead to duplicative actions. This is because Title VII would invalidate single-employer plan provisions that grant discretionary authority related to benefit determination or plan interpretation. This would overturn decades of ERISA jurisprudence and could undermine traditional ERISA concepts that claims for 502(a)(1)(B) benefits should be decided solely on the basis of the administrative record. It would open the door to broader discovery to get to the heart of plan interpretation and benefit determinations in these cases.

If the act passes the Senate, plans will have one year from the effective date to ensure their plan documents are in compliance.

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