Law Offices of John Michael Jensen

Anthem CalPERS PPO (PERSCare PERSELECT PERSChoice) Litigation, Proposed Class Action

Introduction
Misrepresentation
Concealment
Unfair Business Practices
Proposed Class Action

Introduction

  1. This proposed class action against the California Public Employees’ Retirement System and its Board of Administration (collectively “CalPERS”) and Anthem Blue Cross Life & Health Insurance Company and/or Blue Cross of California d/b/a Anthem Blue Cross, (“Anthem”), and Does 1-100 (“Defendants”) asserts misrepresentation, concealment, unfair business practices, and other claims related to (1) CalPERS’ and Anthem’s misrepresentations regarding the benefits, advantages, and terms of the Preferred Provider Organization (PPO) health benefit coverages (PERS Care, PERS Choice, and PERS Select); (2) Anthem engaging in unfair business practices, including misrepresentation, false advertising, unfair practices, deceptive practices including manipulating Claim Target Guarantee or other incentives to gain increased administrative fees and/or secret profits; and (3) the resulting damage to individuals who were enrolled in PERSCare, PERS Choice, or PERS Select at any time between January 1, 2008, to December 31, 2014 (“Plaintiffs”).
  2. Negligent Misrepresentation (CalPERS and Anthem)
  3. In connection with (i) the sale of PPO health insurance policies (PERS Choice, PERS Care PERS Select) and (ii) the reimbursement of “out-of-network” medical services under the policies, CalPERS and Anthem negligently misrepresented to Plaintiffs that reimbursement of “out-of-network” Non-PPO medical services differed from the reimbursement of “in-network” PPO medical services by a percentage of the charges, a higher co-payment, higher co-insurance, or higher percentage.
  4. Since entering the Health Benefit Administration contract in 2007, Anthem and CalPERS had no reasonable basis to assert that the reimbursements for “in-network” and “out-of-network” medical services differed by a “percentage of charges,” higher co-payment, higher co-insurance, or higher percentage. Anthem and CalPERS knew or should have known that Anthem used a different base Allowable Amount for calculating reimbursement of “out-of-network” service claims than for calculating reimbursement of “in-network” service claims. There was no common and no shared basis underlying the calculation for “in-network” and “out-of-network” reimbursement. CalPERS and Anthem did not provide information or a means to readily compare the different “in-network” and “out-of-network” “Allowable Amounts”, rates, or reimbursement methods which they claim in part are proprietary. The different base “Allowable Amounts” were not patent and were not transparent to Plaintiffs.
  5. Asserting that the reimbursement differed by a percentage of charge, higher co-payment, higher co-insurance, or higher percentage, was deceptive, unfair, misleading, and false, particularly as Anthem often reduced the “out-of-network” “Allowable Amount” base rates by more than the 20% to 30% difference in “percentage of charge,” co-insurance, or co-payment, in addition to reducing the reimbursement to 60% of the new reduced Allowable Amount base.
  6.  In other words, Anthem and CalPERS created a double, compounded reduction: Anthem and CalPERS (1) reduced the base Allowable Amount, and then (2) paid 60% of the newly reduced Allowable Amount base when it reimbursed out-of-network services.
  7. CalPERS and Anthem’s misrepresentations and concealment made the PPO coverages and “out-of-network” benefits appear substantially more advantageous and more valuable than they were.[1] The representation of the “out-of-network” reimbursement as a “higher percentage of charge” et al was a material term as “out-of-network” claims were a significant advantage of PPO coverage. Anthem’s and CalPERS’ misrepresentations about the PPO’s benefits, advantages, and terms enticed individuals to buy, enroll, and re-enroll in PPO coverage, pay higher premiums, seek “out-of-network” services, and submit more “out-of-network” claims.
  8. Intentional Misrepresentation, False Promise (Anthem)
  9. In connection with (i) the sale of PPO health insurance policies and (ii) the reimbursement of “out-of-network” medical services, Anthem fraudulently misrepresented that reimbursement of “out-of-network” medical services differed from the reimbursement of “in-network” medical services by a percentage of the charges, higher co-payment, higher co-insurance, or higher percentage of the bill.
  10. Concealment(CalPERS and Anthem)
  11. CalPERS and Anthem omitted, concealed, and failed to disclose that the base Allowable Amount for “out-of-network” medical services could be substantially lower than the base Allowable Amount for “in-network” services, for the same service. Exhibits 24-26, 28, 41-53, 55.
  12. Concealment, Constructive Fraud (CalPERS, Anthem)
  13. . CalPERS is a fiduciary that concealed and failed to disclose material information described herein, in a manner that damaged Plaintiffs and allowed CalPERS and Anthem to gain additional monies.
  14. Heinz and Plaintiffs Reliance.
  15. Brad Heinz relied and Plaintiffs relied (or are presumed to rely) on CalPERS’ and Anthem’s representations when each bought PPO coverage, enrolled and re-enrolled in the PPO coverage, continued the PPO coverage, paid premiums, chose “out-of-network” medical services, filed claims for “out-of-network” reimbursements, presented and exhausted individual and class claims in Anthem and CalPERS administrative process, and otherwise, including as Anthem and CalPERS (a fiduciary) distributed identical, material misrepresentations about the “out-of-network” reimbursement term as part of a long-term advertising campaign to promote, sell, and administer “out-of-network” claims under the PPO policies. Anthem and CalPERS also solely knew and concealed material facts.
  16. Unfair Business Practices. (Anthem)
  17. Anthem misrepresented, concealed, and falsely advertised in tandem with and as part of one of Anthem’s unfair business practices. By misrepresenting the “out-of-network” reimbursement terms of the PPO coverages as more favorable than how Anthem administered the actual reimbursement to be[2], Anthem enticed more Plaintiffs to buy PPO coverage, pay higher premiums, seek more “out-of-network” medical services (including in lieu of “in-network” services), and submit more “out-of-network” claims. Additional “out-of-network” claims provided Anthem more opportunity to reduce the “out-of-network” reimbursements as a means to increase its fees under the Claim Target Guarantee. Heinz alleges on information and belief that Anthem received significant fees, incentives, or profits as a result of its unfair practices.
  18. Even if CalPERS could provide Anthem complete discretion to determine the Allowable Amount for “out-of-network” reimbursement simultaneously with a profit incentive to reduced reimbursements, Anthem and CalPERS cannot misrepresent the PPO policy terms.
  19. Harm to Plaintiffs (CalPERS and Anthem).
  20. All individuals who enrolled in PERS Care, PERS Choice, or PERS Select at any time between January 1, 2008 to December 31, 2014 (“Plaintiffs”) suffered harm and damage proximately caused by Anthem and/or CalPERS’ misrepresentation, including (i) paying excessive premiums; (ii) receiving lower value coverage; (iii) suffering the loss of funds transferred to Anthem under the Claim Target Guarantee or other terms; (iv) from Anthem’s secret profits or higher Administrative Fees, and (v) similar damage.
  21. All individuals who enrolled in PERS Care, PERS Choice, or PERS Select (“Plaintiffs”) at any time between 2008 to 2014 suffered harm and damage proximately caused by Anthem’s unfair business practices described herein.

[1] An example of the materiality of reimbursement rate is evident in the different premiums charged for PERS Care and PERS Choice. Although related to the “in-network” reimbursement rate, Anthem and CalPERS charged higher premiums for (i) PERSCare which reimbursed in-network services at 90%, than (ii) PERS Choice which reimbursed in-network services at 80%.

[2] In the reimbursements, Anthem maintained the appearance that Anthem and CalPERS were abiding by the different percentage of charges described in its promotional material, but in fact also reduced reimbursements by reducing the Allowable Amount of out-of-network claims.

Introduction      Misrepresentation       Unfair Business Practices         Example of Class Rep            Class Claims