On July 24, 2008, Judge Faith S. Hochberg of the United States District Court for the State of New Jersey approved a $255 million settlement against Health Net Inc. and several regional subsidiaries to settle three class action suits charging that it improperly reimbursed members for claims when they went to out-of-network providers. Pomerantz was co-lead counsel for the class.
Health Net was charged with violations of the Employee Retirement Income Security Act (ERISA), New Jersey’s employer health plan law, and the federal Racketeer Influenced and Corrupt Organizations Act (RICO) for systematically underpaying Health Net Insurance Plan members.
The suit alleged that the underpayments were related to the use of a flawed database from Ingenix, a subsidiary of United Health Group, to calculate “usual, customary, and reasonable” (UCR) out-of-network charges. The reimbursement issues allegedly affected at least 2 million people in several states, with the class period extending back to 1997.
Plaintiffs contended that the calculation methods left beneficiaries unfairly exposed to excessive balance billing from medical providers.
Judge Hochberg heavily sanctioned Health Net prior to the settlement for extreme and systemic electronic discovery non-compliance in connection with missing emails and lack of candor.
Health Net agreed to pay $215 million to more than 2 million participants in its health insurance plans who were members of the certified class. In addition, it agreed to pay nearly $40 million to reform its business practices, including modifying how out-of-network claims were calculated and increasing corporate transparency.
Case Name
Wachtel v. Health Net, Inc., No. 2:01-cv-04183 (D.N.J.)
Class Period
July 1, 1995 through August 31, 2004
Claims
Violations of the Employee Retirement Income Security Act (ERISA)