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Gendreau v. California Physicians' Service

United States District Court, S.D. California

July 14, 2017

TIMOTHY GENDREAU, individually, and on behalf of himself and all others similarly situated, Plaintiff,
v.
CALIFORNIA PHYSICIANS' SERVICE, d/b/a BLUE SHIELD OF CALIFORNIA, Defendants.

          ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [DOC., 43]

          Cathy Ann Bencivengo United States District Judge

         This matter is before the Court on the motion for summary judgment filed by Defendants California Physicians' Service, d/b/a Blue Shield of California and Blue Shield of California Life and Health Insurance Company (together “Blue Shield”).[1] The motion has been fully briefed, and the Court has deemed the motion suitable for determination without a hearing. After a thorough review of the issues and for the reasons discussed below, the motion is granted.

         I. Background[2]

         Plaintiff Timothy Gendreau has been a Blue Shield insured member since 2005.

         [Doc. No. 60-2 at 1.][3] Plaintiff obtains his insurance through a group health service contract between Blue Shield and his company, The Gendreau Group. [Doc. No. 60-6 at 51.] While Plaintiff has been covered under different plans, each plan contains substantively similar plan terms specifying the plan's “Calendar Year Maximum Out-of-Pocket Responsibility.” [Doc. No. 48-3 at 311.] The Plan's[4] Certificate of Insurance provides a summary of the benefits, exclusions, and general provisions of the Plan. [Doc. No. 48-3 at 286.]

A. Plan Language
The Plan states under Calendar Year Maximum Out-of-Pocket Responsibility:
1. Individual Coverage
The per Insured maximum out-of-pocket responsibility required each Calendar Year for covered Services* rendered by Preferred Providers, MHSA Participating Providers and Other Providers is shown in the Summary of Benefits.
The per Insured maximum out-of-pocket responsibility required each Calendar Year for covered Services* rendered by Non-Preferred Providers and MHSA Non-Participating Providers is shown in the Summary of Benefits. Once the maximum out-of-pocket responsibility has been met, the Plan will pay 100% of the Allowable Amount for covered Services for the remainder of that Calendar Year.

[Doc. No. 60-6 at 49.] The term “Allowable Amount” is defined under the Plan's definitions section. The amount varies depending on whether a particular service involves a participating or non-participating provider, emergency or non-emergency services, and if services were received in or out of state. [Doc. No. 48-3 at 347.] The Plan also states:

If the Insured or Physician requests a Brand Name Drug when a Generic Drug equivalent is available, the Insured is responsible for paying the difference between the Participating Pharmacy contracted rate for the Brand Name Drug and its Generic Drug equivalent, as well as the applicable Generic Drug Copayment. This difference in cost that the Insured must pay is not applied to the Calendar Year Deductible and is not included in the Calendar Year maximum out-of-pocket responsibility calculations.

[Id. at 323.]

         With regard to payment of benefits, the Plan states, “Claims will be paid promptly upon receipt of proper written proof and determination that Benefits are payable.” [Id. at 342.] The Plan also includes a section on Blue Shield's grievance process for “receiving, resolving and tracking Insureds' grievances with Blue Shield Life.” [Id. at 343-45.] Members should first contact the customer service department to request an initial review and if not resolved may then request a grievance. [Id.] After submitting the grievance, members also have the option to make a request to the Department of Insurance to have the matter submitted to an independent agency for external review in accordance with California law. [Id.]

         B. Plaintiff's Complaints and Grievances with Blue Shield

         Plaintiff began contacting Blue Shield several times a year dating back to as early as April 12, 2011, with complaints that he had met or overpaid his deductible or out-of-pocket maximum. [Id. at 8.] On that date, Plaintiff asked to speak to a supervisor who discussed with Plaintiff how much of his deductible had been satisfied for the year, reviewed his out-of-pocket maximum, and explained how claims are processed. [Id. at 12.] About a month later, Plaintiff contacted Blue Shield again to correct claims that over applied on his deductible and Blue Shield complied. [Doc. No. 60-6 at 2.] The administrative record provides several instances of Plaintiff contacting Blue Shield with similar complaints each year through 2016. [See Doc. Nos. 48-3, 60-6.]

         In 2012, Plaintiff received medical services through Scripps Clinic Medical Group (“Scripps”), a Blue Shield participating provider. [Doc. No. 48-3 at 26.] However, due to a mistake by Scripps in using an incorrect provider code, Blue Shield erroneously processed Plaintiff's claims as if Scripps was a non-participating provider. [Id.] After Blue Shield was made aware of the error, it reprocessed the claims from these services and determined it made several incorrect payments to Plaintiff which were intended to be sent to Scripps. [Id. at 75.] Blue Shield sent Plaintiff several letters requesting reimbursement of the incorrect payments that were sent to Plaintiff in error. [Id. at 134-146.] Plaintiff contacted Blue Shield to appeal their reimbursement requests stating that he did not owe Blue Shield any money and that he believed Blue Shield sent him these checks as overpayment because he had already met his deductible and out-of-pocket maximum. [Id. at 75.]

         On January 4, 2013, Blue Shield sent a letter initially denying Plaintiff's appeal after determining that the reimbursement efforts were valid and stating that Blue Shield was unable to confirm Plaintiff's contention that he was advised the checks were issued to him as overpayment of his deductible or out-of-pocket maximum. [Id. at 148.] However, Blue Shield ultimately discontinued all ...


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