02-17-2026
Kaiser Foundation Health Plan has agreed to pay over $28 million for allegations it failed to maintain adequate provider networks for mental health and substance abuse care in California. The company was also accused of improperly using patient responses to questionnaires to deny mental health care.
The federal Mental Health Parity and Addiction Equity Act requires health plans to cover mental health and substance addiction treatments in the same way insurance covers medical and surgical benefits. Thus, an insurer’s rules must be similar for all benefits, including copays, deductibles, yearly visit limits, prior authorization requirements, and proof of medical necessity. Kaiser said that increased demand for mental health services during the COVID-19 pandemic led to a national shortage of qualified mental health professionals, clinician burnout, and provider turnover. The insurance company stated that these challenges contributed to the difficulty its members faced in getting consistent care when they needed it. Kaiser has made investments over the last couple of years to improve access to these services and has noted that it still has work to do.
California Kaiser Permanente members who paid out-of-network mental health or substance use disorder care from 2021 through 2024 are eligible for settlement funds. Kaiser must pay almost $3 million to the federal government. It must also reform company policies to improve access to care, including reduced appointment wait times, revising care review processes, and tracking the adequacy of its provider network.
Takeaways: This resolution is a reminder for employers that member health insurance policies must cover mental health and substance abuse disorder care in a manner commensurate with coverage for physical and surgical needs, in accordance with the Mental Health Parity and Addiction Equity Act.