Blue Shield Low Cost Plan Lawsuit Gets Class Cert.

Last week, a California judge agreed to certify a proposed class that claims the “Vital Shield” insurance plan offered by Blue Shield of California is falsely marketed as low cost when it hits customers with high deductibles and fees.

Lead plaintiffs alleged in their 2013 class action lawsuit that Blue Shield introduced a policy series that contained vague and confusing language that effectively hid the policies’ high deductible, fees, and reduced coverage options.

This series, named the Vital Shield, was developed in response to the expanding market for low-premium health insurance plans, alleged the plaintiffs, but instead tricked consumers who didn’t know what they were getting due to the policies’ confusing language.

The Blue Shield class action lawsuit sought to represent individuals who purchased insurance plans from the Vital Shield Series. Blue Shield argued that the proposed class shouldn’t be certified because each individuals’ expectations of the plan would be different. Blue Shield also claimed that it couldn’t have misrepresented the plans because it sold most policies through third-party brokers. However, U.S. Superior Court Judge Elihu M. Berle disagreed with Blue Shield and granted class certification last week.

Judge Berle found that the plaintiffs established that individuals who purchased Blue Shield’s Vital Shield plans received a “uniform presentation” of the deductibles and out-of-pocket maximums for the plans. Judge Berle pointed out that Blue Shield’s own marketing strategy and focus for the Vital Shield plans were reasonable deductibles, co-payments, and out-of-pocket maximums.

The class action lawsuit alleges that Blue Shield violated California’s unfair competition law, committed breach of contract, fraud by concealment, intentional misrepresentation, and breach of good faith and fair dealing. The plaintiffs are seeking an order from the court enjoining Blue Shield, along with disgorgement, damages, and attorneys’ fees and costs.

The plaintiffs claim that the high cost of the out-of-pocket maximum, buried in the fine print in Vital Shield policies, acts as a “hidden deductible.” This cost can almost double the annual cost of the plans, say the plaintiffs in their complaint. As an example, they point to the Vital Shield 2900 policy, which they allege carries a $2,900 annual deductible, but in actuality requires policy holders to pay $5,900 to access coverage for routine services like doctor’s office visits, MRIs, and X-rays.

According to the class action complaint, “[t]hrough the use of misleading policy names, sales brochures, Internet advertisements, press releases and other marketing materials, Blue Shield has sold its Vital Shield policies through deception.”

“Obscure provisions contained in policy footnotes,” allege the plaintiffs in their complaint, “require insureds to meet a second tier ‘hidden deductible’ in addition to policies’ stated annual deductible before such services will be covered.”

The lead plaintiffs are represented by Robert Gianelli and Joshua Davis of Gianelli & Morris

The Blue Shield Vital Shield Class Action Lawsuit is Arthur Bodner, et al. v. Blue Shield of California Life and Health Insurance Co., Case No. BC516868, in the Superior Court of the State of California, County of Los Angeles.