Blue Shield of California and its claims administrator wrongly restricted patients’ access to outpatient and residential mental health treatment, a class-action lawsuit says.

Initially filed in the U.S. District Court for the Northern District of California, the complaint comes from two parents who allege their teenage children were repeatedly denied coverage under their employer-based plans despite serious mental and substance abuse problems. In June, a federal district judge granted a request for class-action status, meaning that patients whose claims were rejected under similar circumstances may join as plaintiffs.

The suit contends that Blue Shield and Magellan Health Services of California, which handles the insurer’s mental health claims, developed criteria that violate accepted professional standards and the terms of the health plan itself. The suit also alleges violations of the Employee Retirement Income Security Act, a federal law that regulates employee benefit plans.

For instance, according to the suit, patients were authorized for residential care only if less intensive treatment in the previous three months was unsuccessful. Such a “fail-first” approach is inconsistent with standards established by professional groups such as the American Psychiatric Association or the American Society of Addiction Medicine, the complaint says.

“They came up with internal guidelines which allowed them to justify denying coverage when it should have been provided,” said D. Brian Hufford, a New York-based partner at Zuckerman Spaeder LLP, one of the law firms representing the plaintiffs.

“It’s very difficult for patients to challenge those kinds of denials because … so much of the decision-making happens behind the scenes,” Hufford said.


Clinicians are so highly regulated by so many agencies, so many folks telling us what we can and cannot do.  Managed Care Organizations (MCOs) get away with these things with impunity and no significant regulation.  Multi-million dollar fines are slaps on the wrist as the “cost of doing business” to these mega-corporations that operate without regard to their customers well-being.

How can you sit an 800 lb gorilla (MCO) in the exam room between the patient and clinician and save costs?  Drive through any city in our fair country and notice the names on the tops of the tallest (most expensive) buildings.  Banks & Insurance Companies (MCO’s)!  Why?   “That’s where the money is”!  Yet we still can’t come up with a health-care system for all.  I do not believe in the single-payer model which gave us $500 toilet seats for the US Air Force; spending without consequences seems to be the government way.  We need to have competition/private enterprise with some rules on what can and cannot be done, not the simple toothless paper tigers we have now!


Dr. Raymond Oenbrink
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