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)

5. WHAT DOES THE SETTLEMENT DO?


The Settlement has three major parts: (1) an agreement by Defendants not to use the Challenged Guidelines going forward for Blue Shield ERISA members and to issue a bulletin to all 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; (2) payments to Class members; and (3) a release by Class members of any legal claims arising out of Defendants’ development, adoption, and application of the Challenged Guidelines and Defendants’ decisions concerning coverage of 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.

(1) Defendants’ Agreements to Refrain from Using the Challenged Guidelines and to Issue a Bulletin

Under the Settlement, Defendants agree that they shall not apply the Challenged Guidelines to coverage decisions going forward for Blue Shield ERISA members. Defendants also agree that they shall issue a bulletin to all 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.

(2) Payments to Class Members

Under the Settlement, Defendants will also make a lump sum payment of $7 million (as referenced above, the “Settlement Payment”). This Settlement Payment, after subtracting settlement administration costs, attorneys’ fees and litigation expenses, and any Plaintiff incentive amount, will make up the “Settlement Fund.” A Settlement Administrator will oversee the distribution of payments from the Settlement Fund to Class members. The allocation of the Settlement Fund to Class members (the “Plan of Allocation”) in its entirety is attached as Exhibit A.

The Plan of Allocation divides the Settlement Fund into two parts. The first part is composed of 75% of the Settlement Fund and will be used for payments to Class members who received the treatment for which Defendants denied coverage. The second part is composed of 25% of the Settlement Fund, plus any residual funds remaining from the first part after all payments to Class members who received treatment are made (i.e., Class members with Treatment Amount(s)).2 All Class members, including those who received a payment from the first part of the Settlement Fund, will receive a payment from the second part of the Settlement Fund.

More specifically, the Plan of Allocation provides for the following payments to Class members:

  • Each Class member with a Treatment Amount will receive his or her Total Treatment Amount from the Settlement Fund so long as the Class’s Total Treatment Amount does not exceed 75% of the Settlement Fund. In the event that the Class’s Total Treatment Amount exceeds 75% of the Settlement Fund, each Class member with a Treatment Amount will receive his Pro Rata Share of 75% of the Settlement Fund. The Plan of Allocation discusses in greater detail how a Class member’s Pro Rata Share would be calculated.
  • After each Class member with a Treatment Amount receives a payment, as discussed in the preceding bullet, the remaining portion of the Settlement Fund will be distributed to the Class with every Class member receiving an equal share of the remaining 25% (or more) of the Settlement Fund.

Each Class member will receive, at a minimum, an equal share of 25% of the Settlement Fund. Class members with a Treatment Amount, as discussed above, will receive more (i.e., payment of the Class member’s Total Treatment Amount plus the minimum amount). These calculations, however, are subject to a number of unknown variables. For example, the opportunity of Class members to submit documentation could increase both the number of Class members with a Treatment Amount, and the amount of the Class’s Total Treatment Amount. In fact, individuals with a Treatment Amount might receive less than their Treatment Amount (i.e., the Class Member’s Pro Rata Share), if the Treatment Amount increased substantially from the amount reflected in Defendants’ data.

How to Submit Additional Documentation: Each Class member may call the Settlement Administrator at 1-866-573-6825 and selecting Option "0" to request information reflected in the Class Claims Data about the Class member. A Class member may then submit additional documentation, if he or she desires to do so, related to each denial. ANY SUCH ADDITIONAL DOCUMENTATION MUST BE SUBMITTED NO LATER THAN JUNE 5, 2018 TO BE CONSIDERED. The form of documentation that a Class member must submit, if he or she desires to do so, is not limited to any particular category, but must reflect: (a) the date(s) of the treatment; (b) the number of Treatment Days;3 and (c) the level of care at which the treatment was received. Exemplary forms of documentation include invoices or bills from the provider who provided the treatment; explanation of benefit documentation from Defendants; and medical records, such as treatment notes from the provider. However, documentation such as a letter created by a Class member or other similar documentation created for purposes of submission in connection with this Settlement will not be accepted as valid documentation. The new documentation will be used, as explained in the Plan of Allocation, in certain circumstances,4 to calculate the Class member’s Treatment Amount and, in turn, the Class member’s distribution. By submitting any such additional documentation, you agree to be contacted by the Settlement Administrator and Class Counsel to discuss the documentation submitted.

If you choose to submit documentation, you have until June 5, 2018 to submit that evidence to the Settlement Administrator. Documentation should be sent to the Challenged Guidelines Settlement at: PO Box 30352, Philadelphia, PA 19103. You can also transmit an electronic copy of the documentation to the Settlement Administrator. Please contact the Settlement Administrator at the following address to arrange for secure transmittal:
ChallengedGuidelinesSettlement@AdministratorClassAction.com.

NOTE: To allow efficient, cost-effective administration of the Settlement and thereby maximize the distribution to Class members, all evidence that a Class member wants considered must be submitted together, at the same time, in a single communication or parcel.

(3) Release of Claims Against Defendants

If you do not opt out of the Class, you, your current and former employees, attorneys, heirs, executors, administrators, agents, legal representatives, conservators, professional corporations, partnerships, assigns, successors, and with respect to minors, parents and guardians, will fully, finally, and forever release, relinquish, and discharge all of the Defendants and their Affiliated Entities from, and shall forever be enjoined from prosecution of Defendants and their Affiliated Entities for, any and all Released Claims.

“Released Claims” means any claims, rights, and liabilities of any nature, including but not limited to, actions, claims, demands, causes of action, obligations, damages, debts, charges, attorneys’ fees, costs, arbitrations, forfeitures, judgments, indebtedness, liens and losses of any kind, source or character, whether arising out of federal or state law, whether known or unknown, whether asserted or unasserted, arising on or before the Effective Date, whether in contract, express or implied, tort, at law or in equity or arising under or by virtue of any statute or regulation, by reason of, or arising out of Defendants’ development, adoption, and application of the Challenged Guidelines during the Class Period (including “Unknown Claims” as defined in the Settlement). For avoidance of doubt, “Released Claims” include all claims by the Class members relating to the coverage decisions and denials reflected in Class Claims Data and all claims arising out of the facts alleged in the operative complaint.



Footnotes:

  • 2. Treatment Amount is defined in the Plan of Allocation, and that definition will control. However, it generally means the greater of (a) the amount that Defendants’ records reflect would have been used to calculate the benefit payments if a post-service claim had been approved, or (b) an amount calculated by multiplying the Class member’s Treatment Day(s) or Revised Treatment Day(s) number by the rate agreed to by Plaintiffs and Defendants based on Defendants’ claims and reimbursement data for the level of care for the year in which the denial occurred. [Return to Text]

  • 3. The definition of Treatment Day(s) is contained in the Plan of Allocation, and that definition will control. However, it generally means the days of treatment a Class member received, following a denial, at the level of care for which coverage was denied. The treatment must be connected to the denial, so there is a temporal component that requires the treatment to have been received within fourteen (14) days of the denial. [Return to Text]

  • 4. For example, the new documentation would not be used if it results in a lower Treatment Amount than the Treatment Amount based on information already contained in the Class Claims Data. [Return to Text]

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