Class Certification Nixed in Blue Shield Lawsuit

SAN FRANCISCO (CN) - Blue Shield customers who were denied coverage based on policy exclusions failed to show the commonality required for class certification, a federal judge ruled.

The parents of a boy described only as Geoffrey F. brought the action in 2009, claiming Blue Shield denied coverage of Geoffrey's residential treatment for his "disruptive behavior disorder," as their plan didn't cover residential treatment for mental illnesses.

Challenging the denied reimbursement under the California Mental Health Parity Act, Geoffrey's parents also brought a claim for breach of contract under the Employee Retirement Income Security Act.

U.S. District Judge Yvonne Gonzalez Rogers denied the plaintiffs class certification on Monday, finding the proposed grouping too broad and ill-defined. "The proposed class appears to include every beneficiary/participant in a Blue Shield ERISA plan who was denied coverage, based on a policy exclusion, for any form of 'residential treatment' for any form of mental illness or behavioral disorder," Gonzalez wrote.

She added: "The only constants appear to be beneficiaries who were insured in some capacity under a Blue Shield health insurance policy, and who received mental health treatment in a residential treatment facility, and who claim that Blue Shield improperly denied coverage. This failure to precisely define the proposed class creates a major barrier for certification."

Whether each member's claims fall under the Parity Act would also raise too many individual issues, Gonzalez said. "In order to establish that his/her claim falls under the Parity Act, each purported class member would have to show that he/she has a Parity Act condition, that the residential care services he/she received were for treatment of that condition, that the services/treatment were covered by the Parity Act, and that the services/treatment were medically necessary (or that Blue Shield had waived that requirement by not raising it during the administrative proceeding when it had sufficient information in its possession to have evaluated medical necessity)," the 26-page opinion states. "Each of these questions may require an individualized inquiry, which defeats predominance."

Gonzalez said it would be difficult to manage the case, as each class member would have to establish his own right to recovery. "Plaintiffs have made no attempt to explain how the court could possibly try this case as a class action given the number of individual issues involved," she wrote.

The ruling concludes: "In light of plaintiffs' failure to articulate a definition of an ascertainable class, and in light of the fact that numerous individual issues predominate over any common issues, a class action is plainly not a superior method of adjudication of the controversy."

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