Capital BlueCross, Magellan Residential Treatment Settlement

A proposed settlement has been reached in two class action lawsuits alleging that Capital BlueCross and Magellan Health Services failed to follow Pennsylvania law requiring coverage and payment for certain non-hospital residential treatment for drug and alcohol addiction.

The two class action lawsuits claim that Capital and Magellan failed to follow the law as set forth in Act 106 of 1989 (codified at 40 P.S. §§ 908-1 to 908-8), requiring coverage and payment for certain non-hospital residential treatment for drug and alcohol addiction, up to the maximum number of days specified by Pennsylvania law, whenever the medical need for that treatment is certified in writing by a patient’s treating physician or psychologist.

The defendants have denied any wrongdoing but agreed to settle the class action lawsuits to avoid the risk and uncertainty of trial. The class action settlement was preliminarily approved on Nov. 14, 2014.

Who’s Eligible

There are two Classes that have been certified for class action settlement purposes: the Subscriber Class and the Provider Class.

Subscriber Class: Includes all Capital subscribers who received non-hospital addiction treatment between Dec. 22, 2004 and Nov. 14, 2014 through the following types of health plans:

• CHIP;
• A non-ERISA Capital ASO group plan for which Capital provides administrative services only for non-hospital residential addiction treatment; or
• A Capital fully insured group plan not subject to ERISA

Also included in the Subscriber Class are all persons who paid for or were legally responsible to pay for such treatment received by another person up to the lesser of (i) the subscriber’s remaining available annual treatment days prescribed by Act 106, had Act 106 precluded medical management, or (ii) the subscriber’s remaining available treatment days prescribed by Act 106’s lifetime maximum, had Act 106 precluded medical management.

NOTE: The Subscriber Class does not include claims for payment for Capital subscribers where the claim for payment arises through the subscriber’s participation in the Federal Health Benefits Program (FEHBP).

Provider Class: Includes all properly licensed Pennsylvania non-hospital residential addiction treatment facilities that provided non-hospital residential addiction treatment between Dec. 22, 2006 and Nov. 14, 2014 to a Capital subscriber through the following types of health plans:

• CHIP;
• A non-ERISA Capital ASO group; or
• A Capital fully insured group plan not subject to ERISA

NOTE: The Provider Class does not include claims for payment for any Capital subscriber where the claim for payment arises through the subscriber’s participation in the FEHBP.

Potential Award

In addition to significant injunctive relief, the class action settlement will provide the following benefits to Class Members: (1) payment for certain costs of non-hospital residential addiction treatment to Capital’s subscribers under (a) non-ERISA fully insured group plan products, (b) non-ERISA ASO group plan products, and (c) CHIP, previously denied in whole or in part on the basis of medical management to the extent payment for additional treatment days would have been available if Act 106 had applied to their treatment; (2) the establishment of a Scholarship Fund for non-hospital residential addiction treatment, to benefit adolescents under 18 years of age in the 21-county area within central Pennsylvania and the Lehigh Valley that Capital Services; and (3) the appointment of an independent Compliance Person to monitor the Defendants’ compliance with the terms of this settlement for a period of five years, funded by the Capital Defendants at up to $10,000 per year.

Proof of Purchase

N/A

Claim Form

Claim Form Deadline

3/16/2015

Case Name

Doe, et al. v. Capital BlueCross, et al., Case No. 2731 and Smith, et al. v. Capital BlueCross, et al., Case No. 2140, in the Pennsylvania Court of Common Pleas, Philadelphia County

Final Hearing

1/30/2015

Settlement Website

www.Act106Settlement.com

Claims Administrator

Questions about the class action settlement should be sent to Act106Settlement@ConsumerSettlement.org.

Class Counsel

Jonathan Auerbach
Jerome M. Marcus
MARCUS & AUERBACH LLC

Gregory B. Heller
YOUNG RICCHIUTI CALDWELL & HELLER LLC

Defense Counsel

Matthew J. Siembieda
Franco A. Corrado
MORGAN LEWIS & BOCKIUS LLP

Jayson R. Wolfgang
Jan. L. Budman II
BUCHANAN INGERSOLL & ROONEY PC