Law Offices of John Michael Jensen

Anthem CalPERS PPO Health Insurance Promotion, Sale, Reimbursement Litigation

Heinz et al v. Anthem CalPERS (BC664844, Los Angeles County Superior Court, Spring Street Courthouse.) is a proposed class action against Anthem Blue Cross and the California Public Employees Retirement System,and its Board of Administration (CalPERS) for Fraud, Misrepresentation, unfair business practices, and related claims regarding the promotion, sale, reimbursement, and other practices related to the PPO insurance, out-of-network services, and other issues relating to PERS Care (PERSCare) ,PERS Choice (PERSChoice), PERS Select (PERSSelect), and other PPO health insurance (i.e. PERS Gold, PERS Platinum, etc).

Info on filed Class Action Complaint Against Anthem/CalPERS for Fraud, Misrepresentation, Unfair Business Practices, Etc in the Promotion, Sale, Reimbursement, and Related matters in PPO Insurance (PERSCare, PERSSelect, PERSChoice, et al) especially around Out-of-Network Services.

More specifically, the proposed class action (BC664844)against CalPERS and Anthem Blue Cross Life & Health Insurance Company and/or Blue Cross of California d/b/a Anthem Blue Cross, (“Anthem”), aalleges 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, PERS Gold, PERS Platinum, and PERS Select, etc); (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”).

What is PPO Insurance? The main “advantage” or the distinguishing feature of PPO insurance is it provides reimbursement for out-of-network providers. “People choose PPOs for… the ability to see a broader array of providers that may not operate all in the same system.” CalPERS Health Director Moulds, p. 53:1-4, Health Benefits Comm. Sept 21, 2022, RJN Ex 1.

From 2005 to 2014, Anthem and CalPERS engaged in misconduct by writing, distributing, and making available standardized promotional material that made identical, material misrepresentations about the benefits, advantages, and terms of the PERS Care, PERS Choice, and PERS Select coverage that were exposed to each proposed class member as part of Anthem and CalPERS’ long-term advertising campaign.

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.

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.

  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.

In the Heinz et al v. Anthem CalPERS matter, Plaintiffs allege Anthem-CalPERS made many misrepresentations of material facts, failures to disclose material facts and their documents patently misrepresent material terms of the PPO coverages including PERSCare, PERSChoice, PRESSelect, and other PPO coverages.

As an example, Anthem-CalPERS misrepresented as fact that there was a 20%-30% difference between in-network and out-of-network reimbursement [(10%-20% for in-network) and (60% for out-of-network) is a 20% to 30% difference[1]]. Consistently misrepresented in a long-term advertising campaign, Anthem CalPERS used these material misrepresentations of the PPO terms to promote and sell the PPO.

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 misrepresentation falsely inflated the coverage and value of the PPO, and caused subscribers to pay higher premiums and receive lesser coverage.

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.

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.

  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

Anthem and CalPERS cannot misrepresent that reimbursements for “in-network” and “out-of-network” services differed by a percentage of charge, higher-co-payment, or higher co-insurance, when in fact Anthem used a different Allowable Amount for reimbursing “out-of-network” services. Moreover, Anthem cannot gain a secret profit in part by misrepresenting the difference and then reducing the “base” “Allowable Amount” for out-of-network claims.

As of 2023, CalPERS web site still defines PPO as: “PPO – A Preferred Provider Organization (PPO) is similar to a traditional “fee-for-service” plan, but you must use doctors in the PPO provider network or pay higher co-insurance (percentage of charges). You must usually meet an annual deductible before some benefits apply. You’re responsible for a certain co-insurance amount and the plan pays the balance up to the allowable amount.

https://www.calpers.ca.gov/page/active-members/health-benefits/plans-and-rates/

Each year from 2008 to 2015, about 325,000 members enrolled in Anthem and CalPERS’ PPO programs. It is unknown how many non-PPO claims were submitted.

If you are interested in receiving occasional news and updates about these and other matters, please subscribe to the Newsletter of the Law Offices of John Michael Jensen.

To view our privacy policy, disclaimer, and terms and conditions of use, please click here.

[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%.

[1] The 10% difference (20%-30%) arises from the different in-network reimbursement of PERSChoice (10%) or PERSCare (20%). This difference is irrelevant to the present dispute.

---