Zuckerman Spaeder Lawsuit Says Magellan and Blue Shield of CA Illegally Restrict Mental Health Coverage  

Zuckerman Spaeder LLP today filed a class action lawsuit against Magellan Health Services and Blue Shield of California alleging that the companies improperly limited and denied mental health coverage. On behalf of minor plan participants and their families, firm partners D. Brian Hufford and Jason S. Cowart allege in the lawsuit that the insurers utilize proprietary internal guidelines that intentionally restrict coverage for residential and intensive mental health and substance abuse treatment.

According to the complaint, the guidelines used by Magellan and Blue Shield systematically deny coverage to patients “unless such claimants can meet a set of requirements entirely different from, and often conflicting with, the generally accepted professional standards for treatment.” The complaint alleges that the companies’ restrictive and secretive process directly violates the terms of plans administered by Magellan and Blue Shield, and the legal and fiduciary responsibility the companies’ owe plan participants.

“Residential treatment is often the only level of care that can effectively treat severe mental illnesses. We believe that the internal policies and procedures adopted by Magellan and Blue Shield improperly restrict insurance coverage for such care. From our perspective, this can be a life or death issue,” said Zuckerman Spaeder partner Jason S. Cowart.

The new class action lawsuit, which was filed along with co-counsel from Psych-Appeal, Inc. and Grant & Eisenhofer P.A., is part of Mr. Hufford and Mr. Cowart’s ongoing efforts to hold insurance companies accountable for their internal rules and procedures that drive so many decisions affecting the health of patients and livelihoods of doctors.

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Kalie Walrath
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