$7M Settlement Resolves Blue Shield Mental Health Coverage Class Action

California Physicians’ Service d/b/a Blue Shield of California has agreed to pay $7 million to settle a class action lawsuit alleging improper restrictions on coverage for mental health treatments.

Lead plaintiff Charles Des Roches alleged in a 2016 class action lawsuit that Blue Shield refused to provide insurance coverage for residential and intensive outpatient mental health and substance abuse treatment.

Over a quarter of all American adults suffer from mental health conditions, some life-threatening, but Blue Shield improperly denied coverage for certain types of mental health care treatment, alleged the Blue Shield class action lawsuit.

The insurance provider agreed to pay $7 million to end the class action lawsuit. Further, it changed its policy guidelines as a result of the litigation and the terms of the settlement prohibit Blue Shield from reverting to the old policies.

“As a result of the settlement, neither class members nor any other participant or beneficiary in plans administered by Blue Shield will ever suffer denials of coverage for residential or intensive outpatient treatment on the basis of the allegedly defective [guidelines] challenged by plaintiffs in this case,” noted the class action plaintiffs in their motion for settlement approval.

The Blue Shield class action lawsuit alleged that Blue Shield violated terms of the Employee Retirement Income Security Act that protects participant rights for certain insurance plans, as well as retirement and pension plans. The plaintiff alleged that the guidelines Blue Shield used to deny claims, called the Magellan Medical Necessity Criteria Guidelines, violated the insurers’ duty to provide coverage under ERISA.

Class Members include Blue Shield health insurance plan participants who were denied coverage for residential and outpatient treatment for mental or substance use.

“The Settlement, if approved, will provide significant monetary and non-monetary relief to people enrolled in health plans administered by Defendants California Physicians’ Service d/b/a Blue Shield of California and Blue Shield of California Life & Health Insurance Company, who sought and were denied coverage for residential or intensive outpatient treatment of mental health or substance use disorders pursuant to the Magellan Medical Necessity Criteria Guidelines in effect from January 1, 2012 to March 5, 2017,” states the proposed settlement agreement.

Class Members whose claims for treatment were denied will be prioritized under the terms of the settlement; however, Class Members who opted not to undergo treatment because their claims would not be covered will receive a share of 25 percent of the $7 million settlement fund.

According to the motion for approval of the settlement, Blue Shield will notify Class Members using a confidentiality program.

Top Class Actions will post updates to this class action settlement as they become available. For the latest updates, keep checking TopClassActions.com or sign up for our free newsletter. You can also receive notifications when this article is updated by using your free Top Class Actions account and clicking the “Follow Article” button at the top of the post.

Des Roches is represented by Meiram Bendat of Psych-Appeal Inc.; Daniel L. Berger, Kyle J. McGee and Rebecca A. Musarra of Grant & Eisenhofer PA; and Jason S. Cowart of Zuckerman Spaeder LLP.

The Blue Shield Mental Health Coverage Class Action Lawsuit is Charles Des Roches, et al. v. California Physicians’ Service d/b/a Blue Shield of California, et al., Case No. 5:16-cv-02848, in the U.S. District Court for the Northern District of California, San Jose Division.