Class Action Against Blue Shield For Wrongfully Miscalculating Health Insurance Deductibles
Scott Glovsky Files Class Action Against Blue Shield of California for Wrongfully Miscalculating Health Insurance Deductibles
On July 2, 2021, the Law Offices of Scott Glovsky filed a class action lawsuit against California Physicians’ Service doing business as Blue Shield of California. The case relates to Blue Shield health insurance deductibles. It alleges that Blue Shield is wrongfully and intentionally miscalculating the amount a subscriber must pay to meet his/her deductible for out-of-network services. The Class Representative received out-of-network treatment that she paid for out of pocket. When she submitted a claim, Blue Shield wrongfully applied a reduced amount to her out-of-network deductible. Because of this, the Plaintiff had to pay more than her agreed upon out-of-network deductible before receiving coverage. The complaint alleges violations of Business & Professions Code Section 17200. It also alleges declaratory relief and breach of contract. Finally, the suit alleges breach of the implied covenant of good faith and fair dealing. You can read the class action complaint here.
How Does This Impact You?
What does this mean for members of Blue Shield? It means you may be spending more for health care services than you signed up for. And if we win, you could be compensated. You may be a part of this class if you are:
- A resident of California
- A member of any Blue Shield individual or family health plan or individual and family health insurance policy; and
- You met your out-of-network deductible in 2019, 2020, or 2021
- Blue Shield applied an amount less than the full amount incurred for out-of-network covered services to the out-of-network deductible.
If you are a Blue Shield member and purchase your insurance directly, contact the Law Offices of Scott Glovsky. We will evaluate your situation and determine if you can participate in this class action lawsuit.
What Are Health Insurance Deductibles?
Health insurance deductibles are the amount of money that an insurance policyholder must pay for medical services before the insurance company begins to pay. When the coverage year begins, the deductible normally resets. The plan member or policyholder must pay for all medical costs out of pocket until they have reached the deductible amount. Once they have met the deductible amount, the insurance plan will begin paying for covered medical services for the remainder of the coverage year. Many policyholders are still required to pay a flat-rate copay or coinsurance amount for medical services once their deductible is met.
How Are Health Insurance Deductibles Calculated By Insurers?
A policyholders’ deductible will depend on the plan that they enroll in. The pricing of each policy depends on several factors, such as the extent of covered services, the price of copays, the types of providers a member can visit, etc. The more extensive the coverage, the more expensive the policy will be. A monthly premium is the amount a plan holder must pay each month for their policy coverage.
The dollar amounts of the deductible and the monthly premium are typically correlated. The higher a plan’s deductible, the lower the monthly premium will most likely be, and vice versa. If one opts for a policy with a low deductible, the monthly premium will most likely be higher than for a plan with a high deductible. When selecting a plan to enroll in, one must decide whether they would rather pay more each month with less out-of-pocket healthcare costs, or lower monthly payments with more out-of-pocket expenses.
Many insurance policies have an in-network deductible, an out-of-network deductible, and deductibles for each person covered.
What Is An “In-Network” Vs. “Out-Of-Network” Deductible and Why Do Both Exist?
Most health insurance companies have a contracts with a “network” of doctors. The insurer provides patients, and in return, the healthcare providers theoretically offer discounted prices for services. In an area where most people are covered by one or two major insurers, healthcare providers often contract with these insurers so that they can treat their local patient population.
Healthcare providers that do not have a contract with a specific insurer are considered “out-of-network” by that insurer. Because they do not have a contract with the insurance company, these providers often do not offer discounted prices. Ultimately, visiting an out-of-network provider is almost always significantly more expensive for the policyholder. And it is always more expensive for the insurance company – if they will cover it.
Having an out-of-network deductible that is separate from an in-network deductible is a way that health insurance companies discourage plan holders from seeking out-of-network, and therefore more expensive, care. This works in a few different ways. Firstly, out-of-network deductibles are almost always higher than in-network deductibles. To receive coverage, a plan holder must spend more money on out-of-network care than they would have to if they were receiving in-network care. In addition, keeping the two deductibles separate means that these out-of-pocket expenses don’t contribute to their in-network deductible, ultimately increasing the amount of money they would have to spend before their coverage benefits kicked in.
What Types Of Practitioners Are Often “Out-Of-Network”?
There are no specific types of practitioners that are always out-of-network, but we can look at why a practitioner would decide not to contract with health insurance companies. If the relationship is not mutually beneficial, healthcare providers typically won’t contract with insurance companies.
Firstly, for many providers, there is not a large enough incentive. Health insurance companies offer a larger pool of patients, but if a provider is not in need of more patients, or if that specific insurance company cannot provide enough patients, it might not be worth it for healthcare providers to sign a contract.
Sometimes an insurance company won’t accept a provider into its in network pool of practitioners.
There are also many specialists who do not rely on insurance companies to bring them patients. Highly specialized physicians often see patients with severe health issues that only a handful of physicians are qualified to treat. As the competition is low, patients in need of highly specialized care sometimes have limited physician options. These physicians typically don’t have trouble keeping enough patients, and do not need insurance companies’ help in providing more patients.
Sometimes, providers feel the juice is not worth the squeeze. In other words, the amount the insurer agrees to reimburse the provider doesn’t meet their costs or provide enough profit. Or perhaps, the amount of time necessary to complete the required insurance paperwork is overly excessive for the provider.
Additionally, there are certain types of medical services that most insurance companies don’t cover, such as elective plastic surgery. It wouldn’t make sense for these physicians to contract with insurance companies, as their services would not be covered to begin with.
We’ve been told that oftentimes certain mental health providers and dentists are out of network providers.
Why Would A Person Go To An Out-Of-Network Provider Or Facility?
There are several reasons a person might elect to go to an out-of-network provider or facility. For example, many insurance companies only contract with healthcare providers in areas with many insured patients—if a person is out of town when medical care is needed, there may not be any in-network providers in the area.
Further, an insurance company’s contracted healthcare providers may only offer certain types of services. If a needed service cannot be performed by an in-network provider, the patient would have to look for this service out-of-network. This is especially common for people whose conditions require specialist physicians. In some cases, only a handful of physicians offer a treatment, and these physicians often are not contracted with insurers.
How Do Insurance Companies Reimburse Members For Medical Bills?
If a policy includes a deductible, the insured is required to pay for most medical bills out of pocket until the deductible is met. The deductible can be met in one visit, or multiple visits – however long it takes for medical expenses to reach the deductible amount. Once the deductible is met, the insurance benefits will kick in.
Once the deductible is met, the individual policy determines which expenses will be covered by the insurance and which expenses will be paid for by the insured. Oftentimes policy holders will still be responsible for a copay, which is a set rate that policy holders pay for doctor visits, prescriptions, and other services. Some plans include coinsurance, which is a set percentage of costs the policy holder is responsible for after the deductible is met. Regardless of the specific policy details, policy holders are made aware of and agree to all costs that the insurance is responsible for and the costs that they themselves are responsible for. Normally these agreed upon amounts are different for in-network and out-of-network services. For plans that include out-of-network coverage, the insurance company will almost always provide less coverage for out-of-network services than they would for in-network services.
Once a policyholder’s deductible has been met, there are usually two ways that an insurance company provides payment for services. First, many healthcare providers send the bill directly to the insurance company, and the insurance pays it directly, without the involvement of the policy holder. In other cases, especially common for out-of-network providers, the policy holder may need to pay for the services upfront and file a claim for reimbursement.
What Are We Alleging That Blue Shield Did Wrong?
Blue Shield’s policy explicitly states that all amounts paid by policy holders for covered services will be applied directly to the deductible. Blue Shield defines “a Calendar Year Deductible (CYD) as the amount a Member pays each Calendar Year before Blue Shield pays for Covered Services under the Plan.” None of the definitions provided by Blue Shield limit the deductible in any way, and none of them mention that only amounts up to the Allowable Amount will be applied. The language of the Policy explicitly states that any amount paid by the insured will be applied to the deductible.
By applying a reduced amount to members’ Blue Shield health insurance deductibles, Blue Shield has failed to give equal consideration to the interests of members in interpreting its contracts. Therefore, this lawsuit claims that Blue Shield has unreasonably withheld policy benefits. Further, this lawsuit asserts that their practice of wrongfully miscalculation Blue Shield health insurance deductibles constitutes unfair competition in violation of California Business and Professions Code section 17200 et seq. (“17200”) because it is an unfair, unlawful, and fraudulent business practice. By applying a reduced amount to members’ deductibles, this lawsuit alleges that Blue Shield has breached the plan contract, and that it has breached the implied covenant of good faith and fair dealing because of the unreasonable withholding of policy benefits.
The Plaintiff claims that many other Californians who contracted with Blue Shield were similarly harmed by Blue Shield’s improper conduct.
If you have any questions, please contact our offices.
About the Law Offices of Scott Glovsky
The Law Offices of Scott Glovsky has represented injured consumers and victims of wrongful business practices for more than the past two decades. We get justice for our clients and hold the wrongdoers accountable.
If you have an issue with your insurance company, please contact us and we can help.