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Blue Shield of Calif. 'drastically' underpaid for ER services, jury says

A federal jury decided Tuesday that insurer Blue Shield of California underpaid a California hospital system for emergency medical services provided to Blue Shield’s members.

The jury in the U.S. District Court in San Francisco determined that Blue Shield must pay out-of-network NorthBay Healthcare Group 67% of its billed charges since the end of 2016. King & Spalding, the law firm representing NorthBay, estimated that it would recover more than $16 million, but the exact amount has not yet been decided.

In a statement, however, Blue Shield said the case went to trial because the amounts NorthBay charged for emergency services ran counter to its goal of providing “quality care that is sustainably affordable.” The jury decided that the value of NorthBay’s services were “far lower” than what it billed, Blue Shield said, adding that the additional amounts Blue Shield may owe has not been determined.

According to NorthBay’s amended complaint filed in July 2017, Blue Shield ended its contract with the system’s two hospitals in December 2016. But NorthBay continued to provide emergency and post-stabilization services to Blue Shield members when they showed up, as required by law.

NorthBay billed Blue Shield, which responded saying it did not need to pay the charges submitted by NorthBay because they exceeded the contracted agreement between the two, despite there being no contract, according to NorthBay’s complaint. NorthBay sued Blue Shield, claiming the insurer reimbursed it at unreasonably low rates.

“Blue Shield has deliberately and drastically underpaid hospitals for the medically necessary services they have provided to the members and insureds of Blue Shield” and its affiliates, NorthBay said in the complaint.