Facts

Douglas Kerr filed a putative class action against Kaiser Foundation Health Plan Inc. in relation to patients' insurance plans.

PLAINTIFFS' CONTENTIONS: Plaintiffs contended that Kaiser participated in patient dumping. Specifically, plaintiffs claimed, that Kaiser told its psychiatric patients who were covered by its insurance that they would only receive care if they canceled their insurance. Thus, plaintiffs claimed that the patients would cancel their insurance and that these patients became uninsured and were eligible for public assistance, such as Medicare and Medi-Cal. Therefore, plaintiff alleged that this practice violated the Unruh Civil Rights Act, along with California's competition and anti-fraud laws.

DEFENDANT'S CONTENTIONS: Kaiser denied the allegations. Kaiser contended it never forced anyone to cancel their coverage. In certain relatively rare cases, Kaiser members entered a specialized type of locked mental health facility that often preferred Medi-Cal coverage to private insurance, and in some of these cases, cancellation of Kaiser coverage was required to enter the facility. Kaiser argued that this requirement was not mandated by Kaiser, and any decision to cancel coverage was made by a court-appointed conservator. Kaiser contended that residential mental health care has been one of its covered benefits for years, that it covers many members' care at such facilities, and that the settlement merely confirmed that it is Kaiser's policy to pay for residential treatment whenever it is medically necessary.

Result

The parties reached a settlement agreement. Kaiser agreed to pay class attorneys $1.2 million in fees and costs and the lead plaintiffs $10,000. Additionally, Kaiser agreed to issue notices to mental health physicians, therapists, social workers and others addressing when Kaiser members should be transferred to locked residential psychiatric facilities so that there is no confusion. Moreover, under the agreement, those whose plans were canceled were eligible to re-enroll.