The Mental Health Parity and Addiction Equity Act (MHPA) requires health plans to treat mental health and physical health benefits in much the same manner and precludes restrictions on mental health benefits that are not also found to apply to physical health benefits. The regulations enforcing those provisions are technical and complicated. A recent Second Circuit decision does not get into the details of whether particular plan provisions violated the MHPA, but instead addresses who can be held responsible if the plan treats mental and physical health claims differently.
The plan in question was a self-funded medical plan and the entity being held responsible was the third party claims administrator. The third party administrator was responsible for deciding claims and so was the entity ultimately determining whether a particular benefit would be covered by the plan. Of course, because the plan was self-funded, the third party administrator did not actually fund the payment; instead, the employer was required to pay the claims.
The court found that the third party claims administrator could be responsible for a failure to comply with the MHPA because it was the one ultimately deciding the claims. In that regard, it acted as a fiduciary and its failure to comply with the MHPA could be a breach of that fiduciary duty.
Although the third party administrator may be found liable for violating the MHPA, the employer might be the one ultimately paying the bill. In many cases, the contract between the third party administrator and the employer requires the employer to indemnify the third party administrator if the third party administrator is required to pay a claim and may also indemnify the third party administrator for its legal fees in a suit brought to challenge a claim. To protect itself, an employer should make certain that its plan design meets the requirements of the MHPA.