Dive Brief:
- Blue Shield of California is being sued by enrollees who argue the insurer owes its members another $35 million in rebates due to errors in its medical-loss ratio calculation in 2014.
- The class-action lawsuit was brought by members Becky Ebenkamp and Rebecca Morris and filed on behalf of the more than 446,000 individual policy holders from that year.
- The matter was first brought to light in a complaint by former Blue Shield public policy director Michael Johnson, who has led multiple challenges against the company since he left in 2015.
Dive Insight:
At debate is whether it was proper for Blue Shield to include $44.6 million in improperly paid medical claims in its 2014 MLR calculations, which critics say classifies administrative mistakes as medical spending.
While Blue Shield maintains that the allegations are misinformed regarding the rules around medical-loss ratios, the plaintiffs' case has drawn a notable lead attorney, lending credence to the argument, Modern Healthcare reported.
The medical-loss ratio rule requires insurers selling individual plans to spend at least 80% of the collected premiums on medical care or “quality improvement activities," or else refund the difference to their members.
“We believe that the allegations are misinformed and incorrect, and that we are in compliance with all the rules regarding medical-loss ratios," the insurer told Modern Healthcare.