Mrs. O’Leary’s Cow Just Kicked United Healthcare

It is believed by many that the Great Chicago Fire of 1871, which caused millions of dollars in property damage and believed to have claimed the lives of 300 people started when a cow owned by a Mrs. O’Leary kicked over a lantern. This started the blaze that would prove so catastrophic. This fire lead to changes and improvements in the manner in which fire suppression in urban areas were to be conducted.

On March 5, 2019, Magistrate Judge Joseph C. Spero of the United States District Court for the Northern District of California [San Francisco] issued a 106 page Findings of Fact and Conclusions of Law in the case of David Wit, Individually and on Behalf of Others Similarly Situated, et al v. United Healthcare Insurance Co., et al, Civil Action No. 3:14-cv-02346. So too, the ramifications from this decision could be tantamount to Mrs. O’Leary’s cow.

On May 21, 2014, David Wit, along with 10 other people filed a class action lawsuit against United Healthcare (“United”). In most cases similar to the Wit case, the plaintiff employs a local attorney in that jurisdiction. The defendant ordinarily also enlists attorneys local to the jurisdiction in which the case is filed for cost reduction and because it does not regard the case as having much significance. The Wit case from the start, was different. The plaintiffs employed a law firm with offices in Washington, D.C., New York City and other cities. United responded in kind. It utilized its “A-List” counsel from a law firm with offices in Washington, D.C., Los Angeles and San Francisco. Attorneys from some of the most powerful law firms were engaged to fight this battle. And from the start, one could tell that this case would be different.

Each of the plaintiffs alleged that their request for coverage of treatment to address mental health issues had been wrongfully denied by United. If this was the main issue in the lawsuit, then both parties may have merely employed local counsel and a negotiated resolution would have been more likely. But, the plaintiffs not only attacked United for the manner in which it processed claims under its guidelines, policies and procedures, but the very manner in which it formulated those guidelines. Battle lines were drawn and the long, drawn out process of discovery and pretrial maneuvering started. United filed its usual Motion to Dismiss it files in every case. It also attempted to have the venue of the case changed.

The Court’s docket showing the types of motions and responses filed is a blueprint for the manner in which skilled attorneys prosecute and defend complex cases. There could be no allegation of incompetent attorneys involved in this case. It would stand or fall on its own merits and the strategies devised by each side.

In September 2016, the Court heard oral arguments on class certification. The first cracks in the defense of the Wit case began to show on September 19, 2016, when the Court granted the Motion for Class Certification. In past similar cases, courts generally denied class certification because they held that individual issues predominated over class issues. This in essence means the courts would have been required to conduct individual reviews of each claim to determine medical necessity or whether the individual plaintiff’s claims met the criteria set forth by the insurance providers under its own guidelines.

The Wit case was different. The plaintiffs in Wit alleged that United’s guidelines themselves did not adhere to generally accepted medical standards and/or state law. Therefore, the Court could review the guidelines, review what the generally accepted medical standards were and then determine, on a class basis, whether United’s guidelines fell short. And if one person was damaged as a result, all people in the class were damaged.

In a meticulous 55 page decision, Judge Spero granted class certification. The Court went through each issue raised by both the Wit attorneys and United attorneys, thoughtfully addressed the issues and rendered its decision. And yet, the battle was far from over. The plaintiffs still needed to prove that United’s conduct was wrongful. But, if that wrongful conduct could be proven, it would be applied on a class-wide basis. A jury trial was set for October 2017 in San Francisco.

Settlement conferences were conducted unsuccessfully. United filed a Motion for Summary Judgment seeking to have the case dismissed on legal grounds stating that as a matter of law, it was entitled to judgment. While this motion was pending, both parties decided to waive a jury and have the judge decide all issues in the case. For the defense, this decision was curious since on the one hand, insurance companies know that they are rarely sympathetic parties to a jury and a judge is much more likely to take emotion out of the equation. But, this judge had already denied its motion to dismiss and granted the motion for class certification. United also knew that in all likelihood, the judge would not grant its summary judgment especially if that very judge was going to be the final arbiter.

With regard to the summary judgment motion, the Court granted the motion to the limited extent that it dismissed the plaintiffs’ claims for “disgorgement of profits” by United. Otherwise, all other aspects of plaintiffs’ claims were going to be determined at trial.

Finally, the trial began on October 16, 2017. The total trial time would be approximately 10 days. Post trial briefs were filed and finally, on March 5, 2019, Judge Spero issued his decision. It was set forth in a 106 page Findings of Fact and Conclusions of Law in which he found for the plaintiffs.

Language from the Court’s Decision

The decision eviscerated United and its policies and procedures. Some of the more poignant language from the Court’s ruling includes the following:

“While some of Dr. Triana’s testimony was credible, his testimony that UBH does not consider benefit expense (sometimes referred to as “benex” or “Ben Ex”) when it develops the Guidelines was not credible in light of evidence and testimony introduced at trial, discussed below, showing that financial considerations have played a significant role in the development of the Guidelines throughout the relevant class periods.”

“Although Dr. Martorana’s testimony was credible on some issues, his testimony about the meaning of the Guidelines was not always credible because in several instances he ignored the plain meaning of the words used in the Guidelines. See, e.g., Trial Tr. 974:23-976:13 (Martorana testimony that the words “safely managed” in the Guidelines mean the same thing as “effectively treated”); Trial Tr. 1054:12-17 (Martorana testimony that “Why Now” factors referenced in the Guidelines call for an assessment of the “whole person” or the patient’s entire multi-dimensional history). Further, Dr. Martorana’s testimony that clinicians were trained to apply the Guidelines in a manner that was inconsistent with their plain meaning was not supported by other evidence introduced at trial. See, e.g., Trial Tr. 978:11-12 (Martorana).”

“Mr. Gerard Niewenhous was trained as a social worker and has been employed by UBH since 2003. Trial Tr. 1732:7-10 (Triana); Trial Tr. 297:4-5 (Niewenhous). He was responsible for maintaining the Level of Care Guidelines from 2003 to the middle of 2016 and for drafting the Coverage Determination Guidelines from 2010 to the middle of 2015. Trial Tr. 297:4-9, 297:12-15 (Niewenhous). He offered extensive testimony addressing the process UBH used to draft and update the Guidelines, factors that were considered in creating them, and the meaning of the words used in the Guidelines. While Mr. Niewenhous’s testimony was credible on some issues, his testimony that the Guidelines were developed solely to reflect generally accepted standards of care was not credible. As discussed further below, internal UBH communications involving Mr. Niewenhous make it crystal clear that the primary focus of the Guideline development process, in which Mr. Niewenhous played a critical role, was the implementation of a “utilization management” model that keeps benefit expenses down by placing a heavy emphasis on crisis stabilization and an insufficient emphasis on the effective treatment of co-occurring and chronic conditions.”

“Dr. Allchin’s testimony was only partially credible. As discussed further below, his testimony that UBH’s Guidelines are consistent with generally accepted standards of care with respect to the treatment of children and adolescents, which he based primarily on the “clinical best practices” in the Guidelines, was not persuasive in light of his admission that the unique factors that relate to the placement of children and adolescents are absent from the coverage criteria in the Guidelines. See Trial Tr. 1377:13-20 (Allchin) (testifying that the clinical best practices section contains “sufficient detail to tease out aspects that are developmentally related” to make up for the lack of coverage criteria tailored to young people).”

“In particular, the Court finds that Dr. Alam’s testimony on the subject of whether the Guidelines cover certain lower levels of residential treatment set forth in the ASAM Criteria, and his testimony about Mr. Shulman’s conclusions on this subject, was evasive and at times untruthful. His testimony at trial also revealed that he had misrepresented material facts in his expert report when he stated that UBH contracts with “few, if any” providers of lower-intensity residential treatment, namely, at the 3.3 and 3.5 levels under ASAM; at trial, in contrast, he conceded that UBH does contract with such providers. Trial Tr. 1575:10-21 (Alam); 1642:21- 1644:10 (Alam). Dr. Alam also repeatedly offered interpretations of the Guidelines that were inconsistent with their plain meaning and dismissed changes to the Guidelines proposed by Mr. Shulman as “just changing words.” Trial Tr. 1651:3-8. The Court places no weight on the testimony offered by Dr. Alam that UBH Guidelines are consistent with generally accepted standards of care.”

“Research has demonstrated that patients with mental health and substance use disorders who receive treatment at a lower level of care than is clinically appropriate face worse outcomes than those who are treated at the appropriate level of care. See Trial Tr. 74:14-75:13 (Fishman) (describing research findings regarding adverse consequences of mismatching to a lower level of care in the area of substance use disorder treatment); Trial Ex. 673-004 (Alam/Martorana Article) (noting that improper placement at less intensive level of care for substance use disorder may result in relapse). On the other hand, there is no research that establishes that placement at a higher level of care than is appropriate results in an increase in adverse outcomes. Trial Ex. 673-004 (Alam/Martorana Article) (stating that “[t]here is no research evidence to the existence of a consequence to choosing a more intensive level of care than necessary”); Trial Tr. 1674:9-11 (Alam) (testifying that “there’s no research saying if you choose a higher level of care, whether it’s bad for you”). Consequently, it is a generally accepted standard of care that where there is uncertainty as to the likely effectiveness of different proposed levels of care, practitioners treating patients for mental health and substance use disorders should exercise caution by selecting the higher level of service intensity. See Trial Ex. 653-0007 (LOCUS) (stating that when there is “ambiguity” with respect to the appropriate level of care practitioners should assign the “highest score in which it is more likely than not that [at] least one criterion has been met should generally be assigned” so that “errors [regarding the appropriate level of service] will be made on the side of caution”)”

“Having reviewed all of the versions of the Guidelines that Plaintiffs challenge in this case and considered the testimony of the witnesses addressing the meaning of the Guidelines, the Court finds, by a preponderance of the evidence, that in every version of the Guidelines in the class period, and at every level of care that is at issue in this case, there is an excessive emphasis on addressing acute symptoms11 and stabilizing crises while ignoring the effective treatment of members’ underlying conditions. While the particular form this focus on acuity takes varies somewhat between the versions, in each version of the Guidelines at issue in this case the defect is pervasive and results in a significantly narrower scope of coverage than is consistent with generally accepted standards of care.”

“The overemphasis on treatment of acute symptoms is found not only in the admission criteria of the challenged Guidelines but also in the continued service and discharge criteria that apply to all levels of care. Under these Guidelines, coverage of services at a given level of care may be terminated if the member either does not meet the continued service criteria or does meet the discharge criteria.”

“Nor does a denial of coverage at one level of care automatically lead to authorization of coverage at a lower level of care under the Guidelines. Rather, with respect to all challenged versions of the Guidelines, the member must qualify again under the admissions criteria for the lower level of care. See Trial Tr. 1104:14-1104:16, 1424:14-1424:19 (Martorana). Where coverage at a particular level of care has been denied or terminated on the ground that the member’s acute symptoms have been alleviated, services even at a lower level of care may not be covered because of the focus on acute symptoms in the admissions criteria for all levels of care.”

“The criteria in the Guidelines that actually govern coverage determinations with respect to the treatment of co-occurring conditions, however, are not consistent with generally accepted standards of care. Instead, in all relevant years the Guidelines instruct that determination of the appropriate level of care for the purposes of making coverage decisions should be based only on whether treatment of the current condition is likely to be effective at that level of care whereas treatment of co-occurring conditions need only be sufficient to “safely manage” them or to ensure that their treatment does not undermine treatment of the current condition. Conversely, the Guidelines omit any evaluation of whether a member’s co-occurring conditions can be effectively treated in the requested level of care, or whether those conditions complicate or aggravate the member’s situation such that an effective treatment plan requires a more intensive level of care than might otherwise be appropriate.”

“As discussed above, it is a generally accepted standard of care that patients should be placed at the least restrictive level of care that is both safe and effective and that practitioners should err on the side of caution when there is uncertainty by placing patients at the higher level of care. Further, the fact that a lower level of care may be less restrictive does not justify moving the patient to that level of care if it is also likely to be less effective in treating the patient’s overall condition – including the underlying condition and any co-occurring conditions – even if movement to the lower level of care may be safe. UBH’s Guidelines do not adhere to these principles. Instead, they actively seek to move patients to the least restrictive level of care at which they can be safely treated, even if a lower level of care may be less effective for that patient.”

“The Court finds that the financial incentives discussed above have, in fact, infected the Guideline development process. In particular, instead of insulating its Guideline developers from these financial pressures, UBH has placed representatives of its Finance and Affordability Departments in key roles in the Guidelines development process throughout the class period.”

“In any event, the record is replete with evidence that UBH’s Guidelines were viewed as an important tool for meeting utilization management targets, “mitigating” the impact of the 2008 Parity Act, and keeping “benex” down. See, e.g., Trial Ex.768-0009 (2014 presentation describing “[c]ontinued use of concurrent review to ensure appropriate utilization” as the “Mitigation Strateg[y]” for Parity’s “[r]emoval of day and visit limits on IP, Intermediate and OP”); Tr. 307:4-24 (Niewenhous).”

“Perhaps the most telling example of the emphasis UBH placed on financial considerations in its decision making with respect to the Guidelines relates to UBH’s decision not to adopt the ASAM Criteria for making substance use disorder coverage determinations.”

“Despite the clear consensus among UBH’s addiction specialists that the ASAM Criteria were preferable to UBH’s own Guidelines from a clinical standpoint, UBH consistently refused to replace its standard Guidelines with ASAM Criteria without first obtaining approval from the Finance Department. See, e.g., Trial Ex. 524-0002 (moving forward would require “‘green light’ from finance”); Trial Ex. 548-0034 (“BPAC requested that there be a financial review of possible impact of adoption of ASAM [C]riteria prior to moving forward”). But Finance would not approve the change because “a meaningful and valid BenEx modeling of the impact of a move to ASAM [C]riteria . . . [was] not possible due to the paucity of robust and relevant data.” Trial Ex. 548-0034 (original emphasis).”

“Applying the standard of review discussed above, and based on the Findings of Fact related to the challenged Guidelines and UBH’s Guideline development process, the Court finds, by a preponderance of the evidence, that UBH has breached its fiduciary duty by violating its duty of loyalty, its duty of due care, and its duty to comply with plan terms by adopting Guidelines that are unreasonable and do not reflect generally accepted standards of care.”

The Court then held the plaintiffs were entitled to judgment against United and requested scheduling for the remaining aspects of this case.

Next Steps

The case, that war is far from over. The next step in the case will involve determining the remedies (damages) which are available to all plaintiffs and class members and the manner in which the class members will be notified of their rights and remedies. Attorneys’ fees for the plaintiffs’ attorneys, which fees will undoubtedly number in the several million dollar range are yet to be determined.

And United is left with both a public relations nightmare and coming to grips with the reality that its internal practices, policies and guidelines have now been made public. And, these guidelines were determined to be woefully inadequate and did not comply with the generally accepted medical standards. This include the manner in which it implements its guidelines, the manner in which it reviews claims, the manner in which it conducts peer review, and the very manner in which it conducts business. Added to this is the reality that a court has found on a class-wide basis that United violated its duty of good faith and fair dealing with all of its insureds, the class members.

Other Issues with United

The Wit decision follows on the heels of another significant set back for United.

In January of 2019, the California Supreme Court decided not to overturn a California Appellate Court’s decision upholding a $91 million dollar fine rendered against United by the California Insurance Commissioner’s Office.

The Commissioner’s Office found more than 900,000 violations involving patient claims and other issues against UHC subsidiary PacifiCare around the time of their 2005 merger. Those violations were at the heart of the dispute.

The courts held that the Insurance Commissioner does not have to show that an insurance company intended to break the law or engage in a general practice of misconduct. It only needs to show that someone within an insurance company “reasonably should have known that what they were doing violated the state insurance regulations.”

After negotiations, administrative hearings and investigations that lasted years, in 2014, California Insurance Commissioner Dave Jones imposed a record $173 million in fines against United for 908,547 violations of engaging in unfair claims practices and other violations of the insurance code. $91 million of the fines were involved in this appeal with the remaining amounts are involved under a separate appeal.

Whereas this ruling only impacts insurers in the State of California, Insurance Commissioners in other states will undoubtedly attempt to utilize the findings in this case to bolster their own administrative power and oversight of the insurance industry.


So, what are the ramifications of these decisions against United? First, a studied review of the Court’s ruling should be undertaken. It gives incredible insight into the manner in which United’s claim process operates and the deficiencies within their system. Health care providers fighting for their patients can attack United and its peer review process with greater tools now. The Court’s ruling can be used by treatment center and doctors to press for additional life saving treatment.

Since United now has actual notice that its guidelines are woefully deficient and do not comply with the applicable standard of care, arguably, any reliance on those guidelines now would form the basis of many other lawsuits against United. In essence, reliance on defective guidelines which do not comply with the medical standard of care equates to no guidelines at all.

The fight in the Wit case is far from over. Winston Churchill is famously quoted as saying, “This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

As a result of the Great Chicago Fire, Chicago quickly rewrote its fire standards and developed one of the nation’s leading fire-fighting forces. Financial and rebuilding assistance came from all corners of the nation. From tragedy, came a rebirth of newer, better standards and the nation rallying around Chicago.

United … Mrs. O’Leary’s cow just kicked over your lantern.

If you would like a copy of the 106 page opinion, you can contact me at

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