Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
ERISA Class Action Settlement Results in Business Reforms (Not Payment)
Author: Scarinci Hollenbeck, LLC
Date: July 21, 2014
Key Contacts
Back
Horizon Blue Cross Blue Shield of New Jersey Inc. (Horizon) will alter its business practices and pay $2.5 million in attorney’s fees under the terms of a class action settlement approved in federal court last week.
The suit alleged the insurance company under-reimbursed health plan subscribers for out-of-network services in violation of the Employee Retirement Income Security Act (ERISA).
Lead plaintiff Catherine McDonough first filed the suit in 2009 and was later joined by the New Jersey Psychological Association. While Horizon plan document required reimbursement for out-of-network services at the “usual and customary rate,” the insurer relied on two inaccurate methods of calculation: a database provided by Ingenix Inc. and an in-house schedule known as “Top of Range.” The settlement’s affected class ultimately included 2.7 million insureds and over 181,000 out-of-network health-care providers.
The parties reached a proposed settlement in December 2013, which recently received final approval by U.S. District Judge Stanley Chesler. Under the terms of the settlement, Horizon will discontinue using both the Ingenix database and the “Top of Range” reimbursement schedule for such claims. The insurer will also update its plan language, member handbook, website and marketing materials to explain how it calculates reimbursement amounts for covered services provided by out-of-network providers.
Objectors to the settlement argued that it provided no real benefit to the class members, whose expert valued their claims at $10 billion. However, Judge Chesler maintained that the business reforms required under the agreement met the criteria of the law: “By requiring Horizon to update and revise plan language, member handbooks and marketing materials, the settlement tangibly addresses a significant problem about which the class complained in this action,” he concluded.
The court also rejected arguments against the $2.5 million fee, noting that existing precedent allows for attorneys fees in settlements that call for policy and procedure changes rather than monetary payments. It will be interesting to see whether that aspect of the Judge’s decision is challenged on appeal.
- Locations: Red Bank, NJ, New York City, Washington, D.C., Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Breach of Contract Explained: Types and Consequences
Breach of contract disputes are the most common type of business litigation. Therefore, nearly all New York and New Jersey businesses will likely have to deal with a contract dispute at least once. Understanding when to file a breach of contract lawsuit and how long you have to sue for breach of contract is essential […]
Author: Brittany P. Tarabour
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide
Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]
Author: Christopher D. Warren
Gross Lease vs. Net Lease: Understanding the Key Differences
Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]
Author: Robert L. Baker, Jr.
What to Do If You Are Impacted by a Retailer Bankruptcy Part 2
Over the past year, brick-and-mortar stores have closed their doors at a record pace. Fluctuating consumer preferences, the rise of online shopping platforms, and ongoing economic uncertainty continue to put pressure on the retail industry. When a retailer seeks bankruptcy protection, a myriad of other businesses are often impacted. Whether you are a supplier, customer, […]
Author: Brian D. Spector
The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business
Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]
Author: Dan Brecher
Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1
The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]
Author: Brian D. Spector
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.