Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Insurance
July 14, 2016 01:00 AM

Blue Shield of California faces class-action lawsuit over incorrect rebates

Bob Herman
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Members who have health coverage through Blue Shield of California are suing the insurer, alleging the company owes $35 million in additional rebates because it included faulty payments within its medical-loss ratio a few years ago.

    Two Blue Shield members, Becky Ebenkamp and Rebecca Morris, filed the class-action lawsuit on behalf of more than 446,000 other people who bought an individual Blue Shield plan in 2014.

    One of the lead attorneys for the plaintiffs is Jay Angoff, a former Missouri insurance commissioner and former director of the CMS' Center for Consumer Information and Insurance Oversight. While at CCIIO, one of Angoff's primary duties was enforcing the Affordable Care Act's medical-loss ratio rule, which requires insurance companies selling in the individual market to spend at least 80% of collected premiums on medical care or “quality improvement activities.”

    Calls to Angoff's current law practice, Mehri & Skalet, and the other firm involved with the lawsuit, Hadsell Stormer & Renick, were not returned Thursday.

    In a statement, Blue Shield of California confirmed it received the lawsuit and said, “We believe that the allegations are misinformed and incorrect, and that we are in compliance with all the rules regarding medical-loss ratios.”

    The ACA instituted the MLRs as a way to keep costs down and ensure health insurers were spending most of their revenue on patient care instead of profits, marketing and executive compensation. Insurers that don't meet the ratio's thresholds are required by law to pay back the difference to their members in the form of rebates.

    In the first three years of the ACA, insurers paid out more than $1.9 billion in rebates to consumers for not hitting the MLR, a provision that has been unpopular among insurers.

    In 2014, Blue Shield admitted it incorrectly paid about $44.6 million in medical claims, the lawsuit reads. Plaintiffs allege the insurer still included that erroneous amount within its MLR calculations even though it should've been excluded—essentially classifying administrative mistakes as medical spending. That resulted in Blue Shield shortchanging consumer rebates by about $35 million, after adjusting the calculations, according to the lawsuit.

    “It seems to me that what Blue Shield has done absolutely violates the letter and the intent of the MLR provision,” said Michael Johnson, Blue Shield's former director of public policy. Johnson is unaffiliated with the lawsuit, but he has tracked Blue Shield's rate filings and alerted lawyers to look into the issue. He left Blue Shield in 2015 and has openly criticized the not-for-profit insurer for acting too much like its investor-owned peers.

    Blue Shield has since filed a lawsuit against Johnson, alleging he disclosed confidential information, and has dismissed his protests.

    Although Blue Shield said the MLR lawsuit was “misinformed,” Johnson believes it has strong merits based on the fact a former CMS official who managed the oversight of premium ratios has embraced the case's arguments.

    “They wouldn't have taken this case if they didn't think there was a good prospect of recovery for consumers,” Johnson said.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    diversity2_i.png
    How Connecticut's Broker Academy targets health disparities
    cybersecurity_i.jpg
    Massachusetts health insurer faces ransomware attack, member data at risk
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing