A federal judge in Newark has granted final approval to a $160 million settlement on behalf of out-of-network ambulatory surgical centers which claimed the insurance company’s policies did not provide adequate reimbursement for services rendered.
U.S. District Judge Kevin McNulty approved the settlement terms and granted $9 million in legal fees on Friday, ending a 12-year litigation saga over claims that New Jersey’s largest health insurer shortchanged ambulatory surgical centers outside its provider network.
The suit that just settled, Edwards v. Horizon Blue Cross Blue Shield of New Jersey, was filed in February 2013. But the case was filed after a proposed $22 million settlement of another suit making similar claims, Glen Ridge SurgiCenter v. Horizon Blue Cross Blue Shield of New Jersey, fell through in 2010 when more than 60 percent of the roughly 150 class members refused to be part of it.
When the Edwards complaint was filed, the plaintiffs had obtained some key evidence that it did not have in the previous case: documents related to a 2003 decision by Horizon to save money on its payments to ambulatory surgery centers and the company’s hiring of a consultant that set new reimbursement rates in order to realize those savings. The class argued that the consultant’s plan failed to consider applicable laws, regulations and contract terms. Horizon denied the allegations against it.
The settlement terms, first filed with the court in January, were reached following mediation with former U.S. District Judge Stephen Orlofsky, who is with Blank Rome in Princeton. Most of the $160 million has already been distributed in the form of payments to the 183 ambulatory surgical centers in the class over the past decade, said Bruce Nagel of Nagel Rice in Roseland, who represented class members. Those payments are the result of revised reimbursement policies adopted by Horizon during the course of the litigation. But two subclasses of claimants, those serving small employers and those who were allegedly underpaid based on the consultant’s formula, are still awaiting additional payments of $4 million, Nagel said.
The current class representative, North Jersey Ambulatory Surgical Center, replaces Glen Ridge SurgiCenter. Glen Ridge settled with Horizon and was allowed to become an in-network provider. In November 2011, U.S. District Judge Jose Linares held that Glen Ridge settled only its own claims and that the case could go forward with a new named plaintiff.
The settlement was “incredibly well-received,” Nagel said: no class members objected to the settlement terms, and only two class members opted out of the settlement.
Horizon did not object to Nagel’s fee petition of $9 million. Nagel Rice’s partners billed at hourly rates ranging from $550 to $850 and associates from $350 to $450.
The plaintiffs are Barbara Edwards, bankruptcy trustee for former plaintiff Roxbury Surgical Center, which declared bankruptcy; and North Jersey Ambulatory Surgical Center.
Nagel represented the class along with Robert Solomon of his firm and West Orange attorney Robert Prupis.
David Jay and Philip Sellinger of Greenberg Traurig in Florham Park represented Horizon Blue Cross Blue Sheild. Jay referred a reporter’s questions directly to the client.
Horizon Blue Cross Blue Shield spokesman Tom Vincz said in a statement, “This was a long and protracted settlement in which the plaintiffs initially demanded many multiples of the final settlement amount. Over the years, litigants dropped out of the case and/or settled on their own. This settlement represents final closure of the matter.”