Des Roches, et al. v. California Physicians’ Service, et al.

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

Case No. 5:16-cv-2848 (LHK)

If you sought health insurance coverage or benefits from BLUE SHIELD OF CALIFORNIA or BLUE SHIELD OF CALIFORNIA LIFE AND HEALTH INSURANCE COMPANY for RESIDENTIAL TREATMENT OR INTENSIVE OUTPATIENT TREATMENT for PSYCHIATRIC OR SUBSTANCE USE DISORDERS on or after January 1, 2012 through March 5, 2017, you could get a payment from the proposed settlement of a class action lawsuit.

Important Dates

May 11, 2018 - Deadline to postmark or submit objection to the disclosure by Defendants of your personal treatment data

June 5, 2018 - Deadline for Requests for Exclusion to be submitted if electronic or Received if mailed

June 5, 2018 - Deadline for Objections to be Received

June 28, 2018 at 1:30 p.m. - Fairness Hearing

There is a proposed settlement (“Settlement”) with California Physicians’ Service d/b/a Blue Shield of California, Blue Shield of California Life & Health Insurance Co. (together, “Blue Shield”), and Human Affairs International of California (“HAI,” and together with Blue Shield, “Defendants”) in a class action lawsuit, Des Roches, et al. v. California Physicians’ Service, et al., Case No. 16-cv-2848-LHK (N.D. Cal.).

The Settlement will resolve a lawsuit over whether Defendants violated their obligations to members of health plans that Blue Shield administers under the Employee Retirement Income Security Act of 1974 (“ERISA”) (“Blue Shield ERISA members”) by developing, adopting, and applying a set of medical necessity criteria (the “Magellan Medical Necessity Criteria Guidelines,” “MNCGs,” “Guidelines,” or “Challenged Guidelines”)1 that Plaintiffs allege were more restrictive than generally accepted professional standards, which were used to determine whether coverage requests for treatment at the Residential or Intensive Outpatient levels of care for psychiatric or substance use disorders were medically necessary.

Defendants deny all of the Plaintiffs’ claims, but have agreed to the Settlement to resolve the class action case.

The Settlement provides two main types of relief to the Class:

  1. Defendants, who stopped using the Challenged Guidelines for Blue Shield ERISA members during the pendency of the lawsuit, will not return to using the Challenged Guidelines for Blue Shield ERISA members and will issue a bulletin to personnel conducting medical necessity reviews for members of Blue Shield health benefit plans, confirming that denials of Class members’ coverage requests using the Challenged Guidelines should not be relied upon in future coverage request denials based on medical necessity; and
  2. Defendants will make a Settlement Payment of $7 million for the benefit of the Class. The amount of this Settlement Payment that remains after payment of the costs of providing notice and administering the Settlement, and any attorneys’ fees, litigation costs, and Plaintiff incentive amounts authorized by the Court, will be used to make monetary payments to Class members according to a Plan of Allocation, which is summarized in FAQ 5 and attached to the Notice as Exhibit A.

THIS SETTLEMENT APPLIES ONLY TO PEOPLE WHO SOUGHT INSURANCE COVERAGE FOR TREATMENT OF PSYCHIATRIC OR SUBSTANCE USE DISORDERS AT THE RESIDENTIAL OR INTENSIVE OUTPATIENT LEVELS OF CARE, AND WHOSE CLAIMS WERE DENIED ON THE GROUND THAT THE CLAIMS WERE NOT MEDICALLY NECESSARY UNDER THE CHALLENGED GUIDELINES.

THE SETTLEMENT DOES NOT APPLY TO PEOPLE WHO SOUGHT COVERAGE FOR TREATMENT FOR EATING DISORDERS OR TREATMENT FOR SEXUAL OFFENDERS.

NOTE REGARDING THE PRIVACY OF YOUR INFORMATION: If you sought insurance coverage for treatment of substance use disorders (at either the residential or intensive outpatient levels of care), you may enjoy enhanced privacy protections under federal law (42 C.F.R. Part 2). At this time, information sufficient to identify the nature of the treatment you (or your insured) received, whether substance use disorder treatment or psychiatric treatment, has not been provided to Class Counsel or the Settlement Administrator. Any member of the Class, no matter which treatment you sought or received, can object to disclosure of information or data relating to your request for coverage for treatment to Class Counsel and the Settlement Administrator. If you wish to object to disclosure of this information, you must notify the Settlement Administrator no later than May 11, 2018. Contact information for the Settlement Administrator and instructions appear in FAQ 7. However, in order to compute the individualized monetary recovery to which you may be entitled under the Plan of Allocation, based on a “Treatment Amount” (see FAQ 7 and Exhibit A), information about the specific treatment you received is necessary. This information is referred to as “Class Claims Data” in the Settlement. This information will be disclosed ONLY to Class Counsel and the Settlement Administrator. You have the right to keep this information private. If you have no objection to the disclosure of such information to Class Counsel and the Settlement Administrator, you need not take any action.

PLEASE NOTE: EVEN IF YOU OBJECT TO DISCLOSURE OF YOUR PERSONAL TREATMENT INFORMATION AND DATA, YOU STILL ARE A MEMBER OF THE CLASS AND WILL RECEIVE A SHARE OF THE SETTLEMENT FUND. However, your share will only be from the portion of the Settlement Fund that does not require use of the personal treatment information and data that you have decided not to disclose. See FAQ 5. The only way to exclude yourself from the Class and the Settlement is to opt-out, as described in FAQ 9.

Under the Settlement, Class members will release any individual legal claims they may have against Defendants arising out of Defendants’ development, adoption, and application of the Challenged Guidelines and Defendants’ decisions concerning coverage of the treatment of psychiatric or substance use disorders at the Residential or Intensive Outpatient levels of care that were made on medical necessity grounds under the Challenged Guidelines.

Class Counsel has prosecuted this lawsuit on a wholly contingent basis since its inception in May 2016. Class Counsel will apply to the Court for an award of attorneys’ fees and reimbursement of litigation costs. Class Counsel will also apply for reimbursement of litigation costs paid or incurred in connection with the prosecution and resolution of the lawsuit not to exceed $850,000, as well as payment of notice and administration costs not to exceed $150,000, and incentive awards to each of the three named Plaintiffs in a total amount of $60,000 ($20,000 for each named Plaintiff). In total, Class Counsel will apply for costs and expenses (including litigation costs, notice and administration costs, and incentive awards) of $1,060,000. In addition, Class Counsel will seek an award of attorneys’ fees in an amount not to exceed one-third (33.3%) of the amount that remains of the $7 million Settlement Payment after deduction of the total costs and expenses; that is, Class Counsel will apply for attorneys’ fees of $1,980,000. Any attorneys’ fees, costs and expenses authorized by the Court will be paid from the $7 million Settlement Payment.

Plaintiffs and the Class are being represented by Daniel L. Berger, Esq. of Grant & Eisenhofer P.A., Jason S. Cowart, Esq. of Zuckerman Spaeder LLP, and Meiram Bendat, Esq. of Psych-Appeal, Inc., who are Court-appointed Class Counsel.

Your rights and options—and the deadlines to exercise them—are explained in the Notice. If you are a member of the Class and the Settlement is approved, your legal rights will be affected whether you act or do not act. Read the Notice carefully and in its entirety to see what your options are in connection with the Settlement.

If you have questions about the Settlement, call 1-866-573-6825, or email ChallengedGuidelinesSettlement@AdministratorClassAction.com. You can also write to Challenged Guidelines Settlement, PO Box 30352, Philadelphia PA 19103, or contact Mr. Berger at Grant & Eisenhofer P.A., 485 Lexington Ave., New York, New York 10017, (646) 722-8500, or Mr. Cowart at Zuckerman Spaeder LLP, 485 Madison Ave., New York, New York 10022, (212) 704-9600.

Summary Of Your Options And Legal Rights In This Settlement

REMAIN A MEMBER OF THE CLASS

To remain a Class member for the Settlement, you do not need to do anything. You automatically will be included in the Class and your portion of the Settlement Fund will be calculated based on Defendants’ records. If you believe that those records understate the Allowed Amount for Services Received or Treatment Day(s)2 for treatment for psychiatric or substance use disorders at the Residential or Intensive Outpatient levels for which you were denied coverage, you may submit additional documentation, which may affect the amount of money you are eligible to receive. Information about how to submit additional documentation is provided in response to FAQ 5.

If you remain in the Class, you will give up your right to sue Defendants for claims arising out of the subject matter of the lawsuit.

OBJECT TO DISCLOSURE OF YOUR DATA RELATING TO YOUR REQUEST FOR COVERAGE

You may object to the disclosure to Class Counsel and the Settlement Administrator of data relating to your request for coverage, whether it was for substance use treatment, psychiatric treatment, or both. You may do so by notifying the Settlement Administrator. The procedures for how to object are discussed in response to FAQ 7. Your objection must be submitted electronically or postmarked no later than May 11, 2018.

NOTE. If you object to the disclosure of data relating to your request for coverage, you still will remain a member of the Class. You will be entitled to a share of the Settlement Fund, but not from that portion of the Settlement Fund that requires disclosure of individual treatment data.

EXCLUDE YOURSELF FROM THE CLASS

You may request exclusion from the Class (also known as “opting out”) by notifying the Settlement Administrator of your request to be excluded from the Class. The procedures for how to opt out are discussed in the Notice and in FAQ 9. The request(s) for exclusion must be submitted electronically or received no later than June 5, 2018.

If you exclude yourself from the Settlement, you will not release your claims against Defendants, and you will not be bound by any judgments or orders of the Court as to the Settlement, but neither will you be eligible for any payment from the Settlement, nor will you be able to object to the Settlement.

OBJECT TO THE SETTLEMENT

To object to or comment on the Settlement, or to Class Counsel’s request for an award of attorneys’ fees or costs and expenses, you must send a copy of the appropriate papers via mail to the Court, Class Counsel, and counsel for Defendants. See FAQ 11, or paragraph 11 of the Notice for instructions. Your written objection must be received no later than June 5, 2018.

If you object to the Settlement, you will remain a member of the Class.

GO TO A HEARING

The Court will hold a Fairness Hearing on June 28, 2018, at 1:30 p.m. at the Robert F. Peckham Federal Building & United States Courthouse, Courtroom 8 – 4th Floor, 280 South 1st Street, San Jose, California 95113, to consider whether the Settlement is fair, reasonable, and adequate. The Court may also consider the motion for Class Counsel’s attorneys’ fees, costs, and expenses, and for an incentive amount for the class representatives.

If you want to speak at the Fairness Hearing on June 28, 2018, you must let the Court and the Parties know by June 5, 2018, and provide the Court and the Parties with a letter stating that you intend to appear at the hearing. You cannot speak at the hearing if you opt out of the Settlement.


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