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A federal judge has certified a class-action lawsuit against the largest insurance carrier in Montana, Montana Blue Cross-Blue Shield, based upon allegations that the company denied thousands of “large dollar” claims without proper medical review, leaving residents with insurance to face staggering medical bills or bankruptcy for procedures it deemed “not medically necessary.”
Judge Brian M. Morris, the chief judge of the federal district of Montana, said a claim originally filed by a Helena couple, Johnny and Mary Rutherford, could convert into a class-action claim because of evidence that indicates Montana Blue Cross-Blue Shield, which is owned by Health Care Service Corporation, routinely denied claims without following state law that required investigation and documentation before a denial.
Morris noted that the company provided little in the way of evidence to halt the class-action suit.
“HSCS provided no substantive response to Rutherford’s motion for class certification,” Morris noted in order, issued Wednesday.
HCSC told the Daily Montanan that it will not comment on pending litigation.
The lawsuit, filed in Helena, outlines the way the insurance company, which covers tens of thousands of Montanans, routinely denies large-dollar claims, more than $50,000, by a formulaic procedure that intentionally doesn’t ask for documentation or support for medical procedures, and doesn’t use specialists when reviewing medical records.
Attorneys John Morrison and Scott Peterson of Helena represent the Rutherfords, and they allege in court filings that as many as 15,000 claims may have incorrectly been denied by HCSC, which does business as Montana Blue Cross-Blue Shield, and that Montana law requires it to perform a deeper medical investigation before denying claims.
In the lawsuit, attorneys say that state law requires all insurers to “reasonably investigate claims based on all available information,” and claims that HCSC didn’t just ignore medical documentation, but routinely refused to ask for it.
Morris, in his order, said that it was reasonable to award a “class certification” status to Rutherford and possibly thousands of others because “if HCSC is required to change its standard operation procedure, each class member would be provided a different level of review, potentially changing the outcome of their claim status.”
Originally, the large insurer had sought to dismiss the lawsuit, or keep it under court seal. But newly released documents in the case show that during depositions — when attorneys question the opposing party — representatives of HCSC revealed the large number of claims it denies, and also those denials are usually done quickly, and rarely, if ever, seek other medical records or conversations with medical providers.
In court documents, attorneys for Rutherford detail that any claim for more than $50,000 is flagged for review as a matter of policy, and that HCSC has more than 10,000 pages of medical policies, with checklists of when to pay claims. During questioning, medical reviewers said they checked only the records that were sent to them to ensure they literally checked the boxes. If they did not, an HCSC employee denied the claim and sent it to a doctor for review.
From there, court records said, a medical reviewer would review the work and the record to make sure the medical record did not meet the requirements. The doctors who were hired to review the work were not specialists trained in the procedures they were reviewing, and they told the court they never asked for more documentation or face-to-face meetings with the doctors who performed the procedures which were denied.
“They are not permitted to ask for additional records. They do not contact the treating provider to ask questions. They do not contact the patient. They do not look at the policy,” the lawsuit alleges.
Dr. Kimberly Warren Ellis reviewed Rutherford’s claim, which involved a collapsed vertebrae in his back, but told attorneys she did not have training in spinal conditions or surgery.
“Dr. Ellis testified that she does not think about or consider the impact her denials have on plan members or their families because, ‘that is not (her) job,’” court records indicate.
Nurse Kelly Dunkirk, who originally reviewed Rutherford’s claim, reviewed 64 “large-dollar” claims, sending 17 of them for review by physicians — approximately 27%. Meanwhile, Ellis on the same day denied 9-out-10 claims, according to court records. According to Ellis’ timecard, she spent less than four minutes reviewing each file.
During the court discovery process, attorneys for Rutherford got a larger look at how the state’s largest insurance company treated claims.
“In the last five years, HCSC says it has denied 15,127 claims in Montana alone as ‘not medically necessary,” the court filings say. “According to HCSC, 3,841 (25%) of these claims were appealed by the (patient); 1,165 (30%) of the appeals resulted in the denial being reversed and the claim being accepted and paid.”
A recently retired employee from HCSC who was involved with handling Rutherford’s claim testified that denying claims was part of the system.
“People usually just wind up paying the bill when a claim is denied,” said Yvonne Hencley.
Attorneys for Rutherford said the HCSC practices specifically violate Montana law which states that “no person may … refuse to pay claims without conducting a reasonable investigation based upon all available information.”
While HCSC finally agreed to reverse its decision for Rutherford, state law allows those denied coverage unfairly to continue to seek damages, including suffering or attorneys fees as a way of discouraging large insurance carriers from denying legitimate claims.
