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Blue Shield Owes $419K for Denying Coverage

SAN FRANCISCO (CN) - Blue Shield must pay $419,000 in damages and attorneys' fees to the parents of a boy whom they denied coverage for residential mental health treatment, a federal judge ruled Thursday.

The adoptive parents of a boy described only as Geoffrey F. filed a class action in 2009, claiming Blue Shield denied coverage of residential treatment for Geoffrey's "disruptive behavior disorder" at a wilderness camp and the Island View Residential Center for Adolescents. Blue Shield refused to reimburse the center as the couple's health 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.

In 2014, the U.S. District Judge Yvonne Gonzalez Rogers denied class certification, finding the proposed grouping too broad and ill-defined, and the case went into mediation.

In the transpiring years, another case raising similar issues was being decided by the Ninth Circuit. On June 4, 2012, the appellate court ruled in Harlick v. Blue Shield that while Blue Shield was not required to pay for the plaintiff's residential treatment for anorexia under its plan's residential care exclusion, the Parity Act requires an insurer to pay for medically necessary residential treatment.

In March 2015, Blue Shield offered to pay Geoffrey's parents $79,954 - the amount they had to pay Island View out of their own pockets. They didn't respond to the offer, but in August they filed a motion for summary judgment asking for the $79,954, plus $725,000 in attorney's fees.

Gonzalez Rogers granted the damages, writing, "While it is true that Blue Shield offered plaintiffs that amount on more than one occasion during the course of the litigation, and that plaintiffs failed to respond to Blue Shield's offers, those facts are not relevant to the amount of damages that should be awarded."

She also granted attorney's fees, though she slashed the award by half.

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