By Lauren Weber

A group representing 100 large employers sued the Labor Department over Biden administration rules aimed at ensuring mental-health treatment is covered like conditions such as cancer and heart disease.

Filed in federal court Friday, just days before Donald Trump's inauguration, the suit seeks to block the regulations. It argues the Biden-era rules overstep a 2008 law requiring health plans to cover mental-health and addiction care on par with other medical care.

The lobbying group behind the suit -- the Erisa Industry Committee, or ERIC -- hopes that stopping enforcement now will give the new Trump administration room to revise or issue new regulations, said Tom Christina, executive director of the ERIC Legal Center. Unlike an executive order, which can be rescinded with the stroke of a pen, agency-issued regulations must go through a lengthy process to be revoked or revised.

ERIC's lead lawyer in the case is Eugene Scalia, who served as Secretary of Labor in Donald Trump's first presidential term and is now an attorney with Gibson Dunn. The approximately 100 companies it represents, which include brands such as PepsiCo, Comcast and L'Oréal USA, are subject to the regulations because they sponsor health-insurance plans for their employees.

Despite the 2008 law, so-called mental-health parity has remained elusive as Americans struggle to access and pay for treatment, a problem amplified during the pandemic when millions more people experienced depression, anxiety, substance addiction and other conditions. After soliciting public feedback, the Biden administration issued a rule in September to improve compliance with the law and remove some of the barriers to care.

The new regulations were issued by the Departments of Health and Human Services, Labor, and Treasury and went into effect at the start of this year. The ERIC lawsuit argues the rules are too ambiguous and burdensome to allow for meaningful compliance and names all three departments as defendants.

The agencies didn't immediately comment on the lawsuit. In a progress report released Friday, they said insurers' failure to comply with the 2008 law and to accurately document their efforts was consuming the agencies' resources and requiring complex reviews. The 2024 rules, the report said, were partly intended to improve how insurers and employer health plans report their efforts. They also said enforcement of the law had led to better healthcare access for more than 7.6 million Americans since 2021.

"In many ways the rules create more streamlined processes," said Lauren Finke, senior director of policy for the Kennedy Forum, an organization that advocates for mental health and substance use care. Part of the framework for the new regulations was adopted during the first Trump administration, she said.

ERIC's lawsuit comes at a time of intense anger toward insurers over issues like coverage denial and steep out-of-pocket costs. The fatal shooting of UnitedHealthcare's chief executive officer in December unleashed outrage at the cost-driven methods that lead insurers to deny insurance claims.

Around 60 million American adults suffered from mental illness in 2023, according to government data, and 48.5 million people over the age of 12 experienced a substance use disorder that year.

The 2008 law, called the Mental Health Parity and Addiction Equity Act, was designed to curtail arbitrary annual limits imposed by insurance plans on mental-health coverage. Insurers aren't supposed to limit psychotherapy appointments, for example, if they don't also have similar limits on doctor visits for a chronic condition like asthma. The law also prohibits them from imposing higher copayments and deductibles or more restrictive prior-authorization requirements for mental-health care.

The reasons mental-health disparities still persist are complex: There is a shortage of mental-health clinicians, with an estimated 340 individuals for every one mental-health provider, according to Mental Health America, an organization that promotes mental health. And therapists often won't accept insurance because reimbursement rates tend to be low and dealing with insurers can be time-consuming.

Mental Health America also found that one in four adults who experienced frequent mental distress couldn't see a doctor last year because of the cost of treatment, and 10% of adults still have private insurance that doesn't cover mental health.

ERIC's members support the goals of 2008 law and recognize America's mental-health and substance-abuse crises, Christina said. But the group believes the latest rule crosses the line into mandating mental-health benefits. Connie Garner, a former Senate policy director who helped draft the 2008 law, said new efforts to improve upon it should give priority to boosting the quality of care and the size of the mental-health workforce rather than focusing on analysis and compliance requirements.

Write to Lauren Weber at Lauren.Weber@wsj.com

(END) Dow Jones Newswires

January 17, 2025 14:33 ET (19:33 GMT)

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