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)

Frequently Asked Questions

  1. BASIC INFORMATION

  2. WHAT IS THIS LAWSUIT ABOUT?‎

    This lawsuit is about whether 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 violation of the Employee Retirement Income Security Act of 1974 (“ERISA”)and the plans that Blue Shield administers, developed, implemented, and applied overly restrictive medical necessity criteria guidelines, leading to denials of claims or requests for coverage of treatment that otherwise may have been approved. Plaintiffs allege that Defendants developed, adopted, and applied Guidelines for coverage of treatment for psychiatric and substance use disorders at the Residential and Intensive Outpatient levels of care that are more restrictive than generally accepted professional standards. Plaintiffs claim that Class members’ ERISA plans provide, as one condition of coverage, that the services in question be consistent with generally accepted professional standards.

    Defendants deny all of Plaintiffs’ allegations of wrongdoing and contend that they have fully complied with the law.

  3. WHAT IS A CLASS ACTION AND WHO IS INVOLVED?‎

    In a class action lawsuit, a “class representative” sues on behalf of herself and other people who have similar claims. Together, the class representatives and the others with similar claims are called a “Class” or “Class members.” The Court-appointed class representatives in this case are the three Plaintiffs Charles Des Roches, Sylvia Meyer, and Gayle Tamler Greco, whose children were denied coverage and benefits by Defendants for treatment of psychiatric or substance use disorders at the Residential or Intensive Outpatient levels of care on the ground that they did not meet medical necessity under the Challenged Guidelines1, and whose appeals of HAI’s initial denial decisions were rejected by Blue Shield.

  4. WHO IS IN THE SETTLEMENT?

  5. WHO IS A CLASS MEMBER?

    The following Class was certified by the Court on June 15, 2017:

    All participants or beneficiaries of a health benefit plan administered by either Blue Shield defendant and governed by ERISA whose request for coverage (whether pre-authorization, concurrent, post-service, or retrospective) was denied, in whole or in part, between January 1, 2012 and the present, based upon the Magellan Medical Necessity Criteria Guidelines for any of the following levels of care: (i) Residential Treatment, Psychiatric; (ii) Residential Treatment, Substance Use Disorders, Rehabilitation; (iii) Intensive Outpatient Treatment, Psychiatric; or (iv) Intensive Outpatient Treatment, Substance Use Disorders, Rehabilitation. Excluded from the Class are Defendants, their parents, subsidiaries, and affiliates, their directors and officers and members of their immediate families; also excluded are any federal, state, or local governmental entities, any judicial officers presiding over this action and the members of their immediate families, and judicial staff.

    The period of time covered by this definition is the “Class Period.” Because Defendants stopped using the Challenged Guidelines for Blue Shield members on March 5, 2017, any coverage denials issued after that date are not covered by the definition of the Class.

    Excluded from the Class are the federal judge who has presided over the case and individuals who timely and validly request exclusion (“opt out”) from the Class.

    If you are not sure whether you are a member of the Class, you can write to the lawyers in this case at the addresses listed in FAQ 11.

  6. DID THE COURT DECIDE WHO IS RIGHT?‎

    No, the parties entered into the Settlement before the lawsuit reached a trial or court decision, so if the Court approves the Settlement there will not be a trial or decision about which side was right.

  7. WHAT THE SETTLEMENT PROVIDES

  8. 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 plan for 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 30, 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 30, 2018 to submit that evidence to the Settlement Administrator. Documentation should be sent to the Settlement Administrator at: 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.

  9. IF YOU DO NOTHING

  10. WHAT HAPPENS IF I DO NOTHING?‎

    If you do nothing, you will be included in the Class. Information about your claims for coverage for Residential or Intensive Outpatient treatment of psychiatric or substance use disorders will be supplied by Defendants to Class Counsel and the Settlement Administrator to facilitate implementation of the Plan of Allocation, and you will get a payment according to the Plan of Allocation. And you will be bound by the Settlement if it is finally approved by the Court. If you do nothing, you will not be able to sue Defendants (or other released entities) on your own for the Released Claims as described in the part of FAQ 5.

    If you do not wish Defendants to disclose data relating to your request for coverage, to Class Counsel and the Settlement Administrator, you must notify the Settlement Administrator no later than May 11, 2018. Contact information for the Settlement Administrator and a description of how to notify the Settlement Administrator appears in the table in FAQ 7.

    If you want to pursue any claim related to the issues in this case on your own and at your own expense, you should opt out of the Settlement.

  11. HOW DO I OBJECT TO DISCLOSURE OF MY PERSONAL TREATMENT DATA AND INFORMATION?

    If you wish to object to the disclosure by Defendants of your personal treatment data and information relating to your request for coverage to Class Counsel and the Settlement Administrator, you must notify the Settlement Administrator of this objection no later than May 11, 2018.

    You may submit this statement to the Settlement Administrator electronically or by U.S. mail at the following addresses:

    Email: ChallengedGuidelinesSettlement@AdministratorClassAction.com
    U.S. mail:
    Challenged Guidelines Settlement
    Attn: Data Release Objection
    PO Box 30352
    Philadelphia, PA 19103

    OBJECTIONS THAT ARE NOT POSTMARKED ON OR BEFORE MAY 11, 2018, OR ARE NOT SUBMITTED ELECTRONICALLY ON OR BEFORE 11:59 P.M. PACIFIC TIME ON MAY 11, 2018 WILL NOT BE HONORED.

  12. WHY WOULD I ASK TO BE EXCLUDED (OPT OUT)?‎

    You should ask to be excluded if you want to keep your right to pursue your own individual lawsuit against Defendants (or other released entities) arising out of the subject matter of the lawsuit. If you choose to opt out, you will not receive any payment from the Settlement Fund, but you also will not be bound by the Settlement, including the release.

  13. To exclude yourself from the Class, you must send to the Settlement Administrator a statement identifying yourself by name and residential address, and declaring, “I request that I be excluded from the Class in Des Roches v. California Physicians’ Service, No. 16-cv-2848-LHK (N.D. Cal.).” You may submit this statement to the Settlement Administrator electronically or by U.S. mail at the following addresses:

    Email: ChallengedGuidelinesSettlement@AdministratorClassAction.com
    U.S. mail:
    Challenged Guidelines Settlement
    Attn: Opt Out Request
    PO Box 30352
    Philadelphia, PA 19103

    REQUESTS FOR EXCLUSION THAT ARE NOT RECEIVED BY JUNE 5, 2018, OR ARE NOT SUBMITTED ELECTRONICALLY ON OR BEFORE 11:59 PM PACIFIC TIME ON JUNE 5, 2018, WILL NOT BE HONORED.

  14. IF I DO NOT EXCLUDE MYSELF, CAN I SUE FOR THE SAME THING LATER?‎

    No. If the Court approves the Settlement and you do not opt-out by the deadline, you will be subject to the release of claims described in FAQ 5, and will lose your right to separately sue Defendants for relief arising from the Released Claims. You will receive a monetary payment from the Settlement only if you do not exclude yourself.

    After the opt-out deadline, Class members will be permanently enjoined from asserting Released Claims.

  15. OBJECTING TO THE SETTLEMENT

  16. HOW DO I OBJECT TO THE SETTLEMENT?

    You can object to the Settlement, the proposed Plan of Allocation, the attorneys’ fees and expenses requested, or the class representative incentive amount. Submitting an objection gives you the chance to tell the Court why you think the Court should not approve any of these things, but will not exclude you from the Settlement. To object, you must send a statement identifying yourself by name and residential address, and setting forth all bases for objection and providing all documentation in support of the objection, to these four different groups identified below (i.e., the Court, Blue Shield Counsel, Class Counsel, and HAI Counsel) no later than June 5, 2018:

    Court

    Clerk of the Court
    United States District Court for the Northern District of California
    Robert F. Peckham Federal Building & United States Courthouse
    280 South 1st Street
    Room 2112
    San Jose, CA 95113

    Class Counsel

    Daniel L. Berger
    Grant & Eisenhofer P.A.
    485 Lexington Avenue
    New York, New York 10017

    Jason S. Cowart
    Zuckerman Spaeder LLP
    485 Madison Avenue
    New York, New York 10022

    Meiram Bendat
    Psych-Appeal, Inc.
    8560 Sunset Boulevard
    Suite 500
    West Hollywood, CA 90069

    Blue Shield Counsel

    Joseph E. Laska
    Manatt, Phelps & Phillips, LLP
    One Embarcadero Center
    30th Floor
    San Francisco, CA 94111

    HAI Counsel

    Jennifer S. Romano
    Crowell & Moring LLP
    515 South Flower St., 40th Floor
    Los Angeles, CA 90071-2201

    OBJECTIONS THAT ARE NOT RECEIVED ON OR BEFORE JUNE 5, 2018 WILL NOT BE HONORED.

  17. THE LAWYERS REPRESENTING YOU

  18. DO I HAVE A LAWYER IN THE CASE?‎

    Yes, unless you exclude yourself from the Class. The Court decided that Grant & Eisenhofer, P.A., Zuckerman Spaeder LLP, and Psych Appeal, Inc. are qualified to represent the members of the Class. Together, the lawyers are called “Class Counsel.”

  19. WILL THE LAWYERS AND CLASS REPRESENTATIVES BE PAID, AND IF SO HOW?‎

    Class Counsel will ask the Court to approve payment of attorneys’ fees and litigation costs from the Settlement Payment. This payment will compensate Class Counsel for their work investigating the facts, litigating the case, and negotiating the Settlement. The Court must approve the amount of fees and costs awarded to Class Counsel. Class Counsel will file a motion requesting attorneys’ fees and litigation costs no later than May 15, 2018, so you will have time to review that motion prior to deciding whether you want to object or opt-out.

    The amount that the class representatives (who brought the lawsuit and who served as the named Plaintiffs) receive for their coverage requests that were denied will be determined by the same Plan of Allocation used for all Class members. In addition, Class Counsel will ask the Court for an “incentive amount” of up to $20,000 for each class representative (a total of $60,000) to acknowledge their service in coming forward to prosecute their claims. That motion will be filed no later than May 15, 2018. Any such incentive amount must be approved by the Court.

    Class Counsel intends to seek reimbursement of their out of pocket litigation costs of $850,000, and up to $150,000 for costs to conduct notice and administer the Settlement by the Settlement Administrator.

    Class Counsel will seek an award of attorneys’ fees of $1,980,000, which represents one-third of the Settlement Payment remaining after deduction of litigation costs, notice and administration costs, and any class representative incentive amount.

    Class Counsel’s motion for attorneys’ fees and costs, and an incentive amount to the class representatives, will be available on this Settlement website, or you can call the Settlement Administrator to obtain these materials.

  20. HOW IS THE COST OF PROVIDING NOTICE TO CLASS MEMBERS PAID FOR?

    The costs of providing notice about the Settlement to Class members will be paid out of the Settlement Payment.

  21. THE FAIRNESS HEARING

  22. WHEN AND WHERE WILL THE COURT DECIDE WHETHER TO APPROVE THE SETTLEMENT?

    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, 280 South 1st Street, Courtroom 8 – 4th Floor, San Jose, CA 95113. At this hearing the Court will consider whether the Settlement is fair, reasonable, and adequate. If there are objections, the Court will consider them. The judge in the case, Judge Lucy H. Koh, will listen to people who have asked in advance to speak at the hearing. The Court may also decide how much Class Counsel may receive in attorneys’ fees and expenses. The Court will also decide how much the class representatives should receive as an incentive amount. After the hearing, the Court will decide whether to approve the Settlement. It is not known how long these decisions will take.

    The Court can change the date of the hearing without further notice, so please check the docket for the case if you want to appear to make sure that the date and time have not changed. You may also confirm the date, time, and location of the Fairness Hearing with Class Counsel.

  23. DO I HAVE TO COME TO THE HEARING?

    No. Class Counsel will answer questions the Court may have. But you are welcome to come at your own expense. If you send an objection, you do not have to come to Court to talk about it. As long as you mailed your written objection on time, the Court will consider it. If you retain your own lawyer, your lawyer can attend on your behalf.

  24. MAY I SPEAK AT THE HEARING?

    You may ask the Court for permission to speak at the Fairness Hearing. To do so, you must send a letter saying that it is your “Notice of Intention to Appear in Des Roches v. California Physicians’ Service, No. 16-cv-2848-LHK (N.D. Cal.).” Be sure to include your name, address, telephone number, and signature. Your Notice of Intention to Appear must be received no later than June 5, 2018, and must be sent to the Clerk of the Court, Class Counsel, and Defense Counsel, at the addresses in FAQ 10. You cannot speak at the hearing if you opted out of the Settlement.

  25. GETTING MORE INFORMATION

  26. ARE THERE MORE DETAILS ABOUT THIS LAWSUIT?‎

    Yes. Additional information regarding the lawsuit and the Settlement is contained in the Settlement Agreement and Court documents located on the Important Documents page of this website. The information includes the complaint filed in the case; the Settlement Agreement and its attachments; the Opt-Out Form and Objection Form; the Plan of Allocation; and the motion for preliminary approval of the Settlement, along with the exhibits to the motion. In addition, the motion for attorneys’ fees and expenses will be posted to the website after it is filed on or before May 15, 2018.

  27. HOW CAN I LEARN MORE?‎

    If you have additional questions about the Settlement or the case, you can go call 1-866-573-6825, or email ChallengedGuidelinesSettlement@AdministratorClassAction.com. You can also write to the Challenged Guidelines Settlement, PO Box 30352, Philadelphia, PA 19103.

Footnotes:

1. The definition of Challenged Guidelines is contained in the Stipulation of Settlement, dated January 15, 2018. [Return to Text]

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]