A federal judge allowed portions of a putative class action lawsuit against Blue Shield of California and Magellan, the insurer’s contracted mental health services administrator, to move forward over allegations that they published an inaccurate directory of mental health providers, according to a Sept. 23 court order.
The plaintiffs are Blue Shield subscribers who alleged they relied on representations about the insurer’s mental health provider network but were unable to obtain in-network care or had to pay out of pocket. U.S. District Judge William Orrick granted in part and denied in part Blue Shield’s and Magellan’s motions to dismiss the complaint.
Here are five things to know:
1. The plaintiffs brought 13 claims against Blue Shield and Magellan, including breach of contract, unfair competition, misrepresentation and Employee Retirement Income Security Act claims. They are seeking damages, injunctive relief, restitution and attorneys’ fees.
2. The plaintiffs alleged Blue Shield’s mental health provider directory included providers who were out of network, unavailable or did not offer the services listed. One plaintiff alleged she continued seeing her existing therapist at a cost of $150 out of pocket per weekly session before discontinuing therapy because she could no longer afford it.
3. Mr. Orrick dismissed the breach of implied covenant claims against Blue Shield. He also dismissed claims against Magellan for breach of contract, breach of implied covenant, intentional misrepresentation, negligent misrepresentation and unjust enrichment.
4. The court allowed the plaintiffs’ ERISA claims for improper denial of benefits, breach of fiduciary duty and violation of the Parity Act to proceed. The Parity Act claim was brought against Blue Shield only.
5. The court denied the remainder of the motions to dismiss and granted the plaintiffs leave to amend. The plaintiffs have 20 days to file an amended pleading.
Blue Shield of California does not comment on pending litigation, according to a statement shared with Becker’s.
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