Blue Shield wins partial judgement in reimbursement case with NorthBay

By Takesha Thomas | Nov 9, 2018

SAN FRANCISCO — Blue Shield has won a partial summary judgement in California court over claims of unfair business practices.

On Oct. 26, U.S. District Judge William H. Orrick granted the partial summary judgement filed in the U.S. District Court for the Northern District of California by Blue Shield of California Life & Health Insurance. The decision was in response to a lawsuit involving NorthBay Healthcare Group-Hospital Division, which filed suit against Blue Shield over reimbursements.

In his ruling, Judge Orrick granted "partial summary judgment on Count Eight, which alleges unfair business practices; with respect to challenging whether Blue Shield properly considered Section 1300.71 when developing its R&C methodology; and declaratory relief on Count Nine."

NorthBay filed suit in May 2017 over the reimbursements. The health-care network claims they were not receiving "reasonable and customary value of the services given to members of Blue Shield." According to the filing, NorthBay "alleges that Blue Shield’s reimbursement methodology constituted an unfair business practice under California’s Unfair Competition Law."

Under California law, health plans must promptly pay a reasonable amount for the emergency services, called the “reasonable and customary value,” the court ruling said.

According to court paperwork, “prompt-pay” laws require health plans to reimburse hospitals within 30 working days after it receives a complete claim. Hospitals are required to provide treatment to patients even if they have out-of-network health care plans. "NorthBay asserts that Blue Shield uses a flawed methodology or manipulates data, did not properly apply criteria for setting reimbursement rates, and engaged in an unfair payment pattern," the court document said.

In the filing, Blue Shield argued that "there is no private right of action to challenge the methodology used to determine reasonable reimbursements and urging that even if there were the court should abstain from functioning like an administrative body on issues of complex economic policy."

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