Blue Shield Class Action Lawsuit Brought Over Denial of Mental Health and Drug Treatment Claims

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Santa Clara, CA: Blue Shield of California and its claims administrator Magellan Health Services, are facing a bad faith insurance class action lawsuit alleging it wrongly restricted patients’ access to outpatient and residential mental health treatment.

The complaint was filed in Northern California by two parents who allege their teenage children were denied coverage, repeatedly, under the parents’ employer-based health insurance plans. The children required medical assistance for serious mental and substance abuse problems, according to the lawsuit.

The lawsuit received class-action status in June, enabling patients whose claims were rejected under similar circumstances to join as plaintiffs.

According to the complaint, Blue Shield and Magellan Health Services of California, which handles the insurer’s mental health claims, developed criteria that violate accepted professional standards and the terms of the health plan itself. Further, the plaintiffs claim the defendants are in violation of the Employee Retirement Income Security Act, a federal law that regulates employee benefit plans. (Californiahealthline.org)

The class action alleges specifically, that the insurers authorized residential patients care only if less intensive treatment in the previous three months was unsuccessful. This “fail-first” approach is inconsistent with standards established by professional groups such as the American Psychiatric Association or the American Society of Addiction Medicine, the complaint states.

The plaintiffs seek to change Blue Shield’s and Magellan’s policies to be consistent with the law, generally accepted professional standards and the terms of its own plans, according to the lawsuit. Further, they seek to have the thousands of mental health and substance-use benefit denials reprocessed by the defendants.

Plaintiffs are represented by Psych-Appeal Inc., Grant & Eisenhofer PA, and Zuckerman Spaeder LLP.

The lawsuit is Charles Des Roches, et al. v. California Physicians’ Service, et al.

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