Kaiser to Pay $28M in Mental Health Care Settlement With DOL

Kaiser Foundation Health Plan Inc. will pay at least $28 million to reimburse members for out-of-network mental health and substance use disorder services under a settlement announced Tuesday by the Department of Labor.

The agreement resolves multiple investigations into allegations that Kaiser failed to provide adequate access to mental health and addiction treatment services for millions of California members who receive coverage through their employers.

Under the terms of the settlement with the department’s Employee Benefits Security Administration, Kaiser will:

• Pay more than $28 million to reimburse members who incurred out-of-network costs;
• Pay a penalty of more than $2.8 million to the federal government; and
• Establish a claims process for covered members to seek reimbursement for certain out-of-network expenses.

The settlement affects California members who participated in employer-sponsored Kaiser plans after January 1, 2021.

The DOL alleged that Kaiser did not maintain adequate provider networks for mental health and substance use disorder care, forcing many members to seek treatment outside the insurer’s network at higher out-of-pocket costs.

Investigators also found that Kaiser used patient responses to questionnaires to improperly prevent patients from receiving care, according to the department.

Beyond the financial payments, Kaiser has agreed to implement reforms to its mental health and substance use disorder services, including reducing appointment wait times; improving care review processes to ensure members receive medically necessary treatment; and monitoring network adequacy to ensure appropriate access to mental health and substance use disorder providers and facilities

According to the release, Kaiser has begun notifying eligible California members who may qualify for reimbursement. Eligible members can submit claims through the reimbursement process established under the settlement agreement.

Following a lawsuit by the ERISA Industry Committee filed in January 2025, the Justice Department announced In May 2025 that President Donald Trump’s administration would pause enforcement of parts of the Mental Health Parity and Addiction Equity Act rule implemented under former President Joe Biden.

The Departments of Labor, Health and Human Services and the Treasury have stated they intend to reconsider the rule, including whether to issue a notice of proposed rulemaking, to rescind or to modify the regulation.

Kaiser, headquartered in Oakland, California, has more than 12.6 million combined members between the Kaiser Foundation Health Plan, Inc.; Kaiser Foundation Hospitals; and its subsidiaries, the Permanente Medical Groups.

“This settlement does not involve current practices or issues,” a Kaiser spokesperson said in a statement. The spokesperson added that surging demand for mental health care doubled behavioral health visits and the pandemic intensified that demand amid a nationwide provider shortage and clinician burnout. Kaiser is committed to reimbursing affected members, the spokesperson said.

The Kaiser Foundation Health Plan Inc. had more than 141,000 plan participants at the end of 2024, according to its most recent Form 5500 filing.