Lieff Cabraser Civil Justice Blog
Blue Shield of California May Be Shortchanging Consumers

Blue Shield of California May Be Shortchanging Consumers

California’s third largest healthcare plan, Blue Shield, is under scrutiny for allegedly shortchanging consumers by not adequately paying back policyholders for excessive administrative spending in 2014. About 3.4 million customers that participate in Blue Shield of California health plans, but these charges only pertain to the nearly 500,000 Californians who are on an individual plan, as opposed to one purchased through an employer.

Having previously lost its tax-exempt status for its failure to deliver required public benefits, such as affordable coverage, Blue Shield is now getting criticized for its premiums being directed towards executive salaries and other admin costs instead of healthcare. The core of the current issue is that customer premiums should be going towards actual patient care, as mandated by the Affordable Care Act.

As reported by the Los Angeles Times, “Blue Shield did not meet the standard spending 80% of customer’s premiums on healthcare in 2014 and was forced to refund more than $64 million.”

Former Blue Shield public policy director Michael Johnson, who filed the complaint against the health plan provider with the California Department of Managed Health Care, stated that “If Blue Shield is allowed to get away with that, not only will its customers be cheated… the door will be left open for other insurers to adopt Blue Shield’s dishonest accounting approach, and a key consumer protection of the Affordable Care Act will be undermined.”

Contact a Consumer Fraud Attorney at Lieff Cabraser

If you are a Blue Shield policy holder under an individual plan — that is, you purchased your Blue Shield plan on your own, rather than through an employer — we urge you to contact us to discuss your potential case and recovery against Blue Shield. The information you provide will assist in further investigation, and will help us hold Blue Shield accountable for any improper conduct.