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

The Mental Health Matters Act, passed in the US House of Representatives on September 29, significantly expands the US Department of Labor’s authority to enforce or file civil litigation with respect to mental health parity violations and eliminates discretionary clauses, potentially dismantling the administrative process of the Employee Retirement Income Security Act of 1974.

The Mental Health Matters Act (HR 7780) is sponsored by Representative Mark Desaulnier and has three co-sponsors. Although the bill faces lower odds of passing in the Senate, the possibility exists that certain provisions might be enacted as part of a year-end spending deal.

While the bill is aimed at expanding access to mental health and substance abuse services for children and young adults through a series of grant programs and expanded funding, the enforcement provisions are what are concerning for group health plan sponsors, and insurers and administrators of Employee Retirement Income Security Act (ERISA)-governed plans.

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

• identify and implement the best interventions;
• build pipelines to mental health resources;
• employ mental health professionals in high-need schools; and
• increase transparency in the university setting for students requesting mental health support.

Titles VI and VII propose changes that could alter 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 the DOL’s enforcement of group health plan compliance with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which requires group health plans to impose no stricter limitations on mental health and substance use disorder benefits than those for medical/surgical benefits.

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

In addition to the enforcement provisions, Title VII also would invalidate forced arbitration provisions, class action waivers, and representation waivers for the purposes of ERISA Section 502 claims and common law claims associated with a plan or benefits under a plan when brought by a participant or beneficiary. This could lead to a flurry of litigation, including class action claims. To the extent a non-forced arbitration provision comes into question, the act proposes that a court, rather than an arbitrator, would decide enforceability. Opponents of the bill expect these changes to undermine protections against frivolous lawsuits that currently can be resolved quickly and efficiently in private arbitration.

Title VII is also expected to increase the overall costs of ERISA litigation and lead to duplicative actions. This is because Title VII would invalidate single-employer plan provisions that give discretionary authority relating to benefit determinations or interpretations of the plan. This would turn decades of ERISA jurisprudence on its head and could undermine the traditional ERISA concepts that claims for benefits under 502(a)(1)(B) are to be resolved based on the administrative record alone. The door would open up to broader discovery to get at the heart of plan interpretation and benefit determinations in these cases.

If the act is passed in the Senate, plans will have one year from the date of enactment to ensure that their plan documents are in compliance.