Class Claims Blue Shield Gouges Customers

     LOS ANGELES (CN) – Blue Shield of California uses deception and misrepresentations to sell policies with “hidden deductibles” that do not cover essential medical services, policyholders claim in a class action.
     Lead plaintiffs Arthur Bodner and Michael Felker sued Blue Shield of California Life and Health Insurance Company in Superior Court, alleging fraud, intentional misrepresentation, breach of contract and other charges.
     “Plaintiffs bring this action to remedy misrepresentations of coverage Blue Shield has made in the marketing of its individual ‘Vital Shield’ health insurance policies,” the complaint begins. “Through the use of misleading policy names, sales brochures, Internet advertisements, press releases, and other marketing materials, Blue Shield has sold its Vital Shield Policies through deception.
     “Contrary to the statements of Blue Shield’s marketing materials and portions of the policy language itself, the Vital Shield policies provide no coverage for a variety of essential medical services. Obscure provisions contained in policy footnotes require insureds to meet a second tier ‘hidden deductible’ in addition to the policies’ stated annual deductible before such services will be covered. This drives up the insureds’ out-of-pocket costs to many times what they should reasonably expect from a review of marketing materials and policy language.
     “Under Blue Shield Vital Shield policies, insureds must actually pay many thousands of dollars more than the stated annual deductible of the plan before any coverage for essential medical care applies. For example, under the Vital Shield 2900 policy, which Blue Shield represents as having a $2,900 annual deductible, a consumer must actually pay, at the very least, $5,900 out of pocket before the policy will provide any coverage for expensive and essential medical services such as X-rays, diagnostic examinations, laboratory services, CT scans, MRIs, and doctor office visits. And because the footnoted language of the policies states that an insured’s payment for such medical services does not count against the deductible (the stated one and the hidden one), it is possible for an insured to incur thousands of dollars in out-of-pocket costs without ever reaching her deductible or maximum out of pocket.
     (Parentheses in complaint.)
     The policies state that once the deductibles have been met during a calendar year, policyholders are entitled to benefit payments for covered services, the class claims.
     “However, in footnotes, the Vital Shield policies state that, for a host of expensive and essential medical services, ‘No benefit payment is made by the Plan for this Service until the Maximum per Insured Calendar year Copayment/Coinsurance responsibility is met.’ Thus, the Maximum per Insured Calendar Year Copayment/Coinsurance responsibility amount is actually the minimum an insured must pay out-of-pocket before receiving any benefits for such services, i.e., a hidden deductible,” according to the complaint.
     Many of these medical services “tend to be medical procedures that occur early in the diagnosis and treatment of an illness, e.g., physician office visits, radiological procedures, pathology and laboratory services, so that the insured’s deductibles and out-of-pocket maximum remain unsatisfied through the provision of such services, further driving up out-of-pocket costs and defeating the reasonable expectation of the insureds,” Bodner says.
     The class includes all California residents who are or have been enrolled in an individual Blue Shield Vital Shield policy.
     Plaintiffs seek restitution and disgorgement of profits derived from wrongful conduct.
     They are represented by Antony Stuart with the Stuart Law Firm in Los Angeles.

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