ERIC lawsuit challenges mental health parity law

APA Services, Inc. is deeply disappointed, but not surprised, to report that the ERISA Industry Committee (eric) representing the interests of several large employer health plans, has filed a lawsuit against the three federal agencies responsible for implementing the Mental Health Parity and Addiction Equity Act, or Parity Rule. The three federal agencies are the U.S. Departments of Labor, Health and Human Services, and Treasury (the Tri-Agencies). The lawsuit was filed on January 17, 2025, and specifically challenges the recently finalized Parity Rule (“Final Parity Rule”) that aims to strengthen parity enforcement and ensures equitable access to mental health and substance use disorder (MH/SUD) treatment. Here’s an overview of the main points in the ERIC complaint.

Overstepping authority

Eric’s primary claim is that the Tri-Agencies overstepped their authority when crafting the Final Parity Rule, which they argue is impermissibly vague and violates the Administrative Procedure Act that governs federal regulations. This vagueness, they argue, makes it difficult for plans to understand and comply with the requirements and could lead to inconsistent enforcement.

Outcome measures/material differences in access standards

One area APA Services believes is a particularly important part of the Final Parity Rule is outcome measures. APA Services successfully pushed the administration to make sure that the Final Parity rule requires health plans to address “material differences” in access to mental health and substance use disorder benefits compared with medical/surgical (M/S) benefits shown by outcomes data that plans would be required to collect. 

• The complaint argues that the outcomes measures and the material differences in access standard are vague, impose undue burdens on plans, and fail to define key terms like “material differences” and “access.”
• The complaint also argues that the reliance on outcomes measures is arbitrary and capricious because differences in access to MH/SUD benefits may result from factors outside a plan’s control, such as provider shortages, state laws, or patient preferences. This argument overlooks the systemic barriers, such as lower reimbursement rates and burdensome administrative requirements, embedded within plan design and administration that can contribute to these disparities.

Meaningful benefits

The Final Parity Rule mandates that plans provide “meaningful benefits” for MH/SUD in all classifications where M/S benefits are provided. The eric complaint claims this is an unauthorized benefits mandate that goes beyond the scope of the Parity Rule.

Applicability date

Eric also challenges the January 1, 2025, applicability date for many provisions of the Final Parity Rule. They claim this timeframe is too short for plans to make the necessary changes to comply. In addition, they argue that the Final Parity Rule’s requirements are so burdensome that they might force plans to drop mental health coverage altogether. (APA Services notes that the outcomes measures provisions to which eric objects will not be enforced until January 1, 2026.)

Coincidentally, on the same day that eric filed its lawsuit (January 17, 2025), the Tri-Agencies released their third annual report to Congress on enforcement and implementation of the Parity Rule (PDF, 6.15MB)opens in new window, detailing their enforcement activities and findings for the period from generally August 1, 2022, to July 31, 2023. Key findings in the report include a continued focus on network adequacy (addressing disparities in the availability of MH/SUD providers), scrutiny of exclusions of key MH/SUD treatments, and an emphasis on examining provider reimbursement rates. The report also noted that utilization management tools, especially prior authorization, continue to be the most common area of noncompliance. While the number of enforcement actions was lower than in previous years, the report signals a commitment to continued and potentially deeper scrutiny of plan practices to ensure compliance with the Parity Rule.

While the new administration’s approach to mental health parity and the use of necessary funding for its enforcement remain unclear, it is important to remember that parity in the coverage of mental health and addiction treatment insurance has generally been a bipartisan goal, gaining significant bipartisan support in recent years. While this lawsuit challenging the Parity Rule poses a challenge to hard-won gains in parity enforcement, there is no immediate threat to the rule’s implementation, as no parity is seeking an injunction. In addition, the case was filed in the U.S. District Court for the District of Columbia, a court generally considered to be more balanced in its approach to cases involving federal regulations and known for its extensive experience handling matters involving federal agencies and regulations. 

APA Services will continue to monitor this case and provide updates. Direct questions via email.