Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
ERISA Class Action Settlement Results in Business Reforms (Not Payment)
Author: Scarinci Hollenbeck, LLC
Date: July 21, 2014
Key Contacts
Back
Horizon Blue Cross Blue Shield of New Jersey Inc. (Horizon) will alter its business practices and pay $2.5 million in attorney’s fees under the terms of a class action settlement approved in federal court last week.
The suit alleged the insurance company under-reimbursed health plan subscribers for out-of-network services in violation of the Employee Retirement Income Security Act (ERISA).
Lead plaintiff Catherine McDonough first filed the suit in 2009 and was later joined by the New Jersey Psychological Association. While Horizon plan document required reimbursement for out-of-network services at the “usual and customary rate,” the insurer relied on two inaccurate methods of calculation: a database provided by Ingenix Inc. and an in-house schedule known as “Top of Range.” The settlement’s affected class ultimately included 2.7 million insureds and over 181,000 out-of-network health-care providers.
The parties reached a proposed settlement in December 2013, which recently received final approval by U.S. District Judge Stanley Chesler. Under the terms of the settlement, Horizon will discontinue using both the Ingenix database and the “Top of Range” reimbursement schedule for such claims. The insurer will also update its plan language, member handbook, website and marketing materials to explain how it calculates reimbursement amounts for covered services provided by out-of-network providers.
Objectors to the settlement argued that it provided no real benefit to the class members, whose expert valued their claims at $10 billion. However, Judge Chesler maintained that the business reforms required under the agreement met the criteria of the law: “By requiring Horizon to update and revise plan language, member handbooks and marketing materials, the settlement tangibly addresses a significant problem about which the class complained in this action,” he concluded.
The court also rejected arguments against the $2.5 million fee, noting that existing precedent allows for attorneys fees in settlements that call for policy and procedure changes rather than monetary payments. It will be interesting to see whether that aspect of the Judge’s decision is challenged on appeal.
- Practices: Corporate Transactions & Business, Commercial Litigation - Business Litigation Attorney
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
SPACs Are Back, What You Need to Know
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Author: Dan Brecher
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Author: Dan Brecher
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Author: Brian D. Spector
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Author: Christopher D. Warren
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
Author: Scott H. Novak
President Trump's Termination of Member Gwynne Wilcox
On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]
Author: Matthew F. Mimnaugh
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.