California Insurance Law Firm Files Class Action Lawsuit Against Health Insurer Alleging Wrongful Denial of Coverage for Medical Treatment

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Gianelli & Morris is suing Blue Shield of California, alleging bad faith and statutory violations based on the insurer’s blanket denials of coverage for the use of the Coflex medical device to treat lumbar spinal stenosis

On May 5, 2020, the California insurance law firm Gianelli & Morris filed an individual and class action complaint in the Superior Court of the State of California for the County of Los Angeles. The complaint, Kathryn Segalle v. Blue Shield of California (Case No. 20STCV17454), alleges breach of contract, breach of the implied covenant of good faith and fair dealing (insurance bad faith), violation of California Business & Professions Code section 17200, and seeks declaratory relief and other legal remedies. The crux of the complaint is the allegation that Blue Shield wrongfully issues a blanket denial of all requests for coverage to use the Coflex medical device in the treatment of lumbar spinal stenosis.

The complaint filed by Gianelli & Morris alleges that Blue Shield violates its duties under the law by denying all requests to use Coflex as a treatment for lumbar spinal stenosis. The complaint cites Blue Shield’s internal guidance documents that deny coverage for all uses of Coflex to treat lumbar spinal stenosis, whether as a stand-alone procedure or following decompression surgery.

According to the complaint, Blue Shield treats Coflex as an “investigational” procedure and, therefore, not eligible for coverage. Blue Shield’s “Medical Policies” on investigational procedures, cited in the complaint, deem a procedure or treatment investigational in the following situations:

  • The treatment is not recognized under generally accepted professional medical standards as being safe and effective for use in the treatment of the condition at issue
  • Services have not been granted approval when required by state or federal government agency
  • Services are not approved or recognized according to accepted professional medical standards, even though authorized for use in testing, trials, or human studies

Coflex does not fit into any of these categories and should not be considered investigational, according to the complaint. The complaint alleges that Coflex received pre-market approval from the Food and Drug Administration (FDA) in 2012. As a Class III medical device, the pre-market approval process Coflex had to undergo was rigorous and exhaustive regarding safety and effectiveness, as described by the United States Supreme Court in Riegel v. Medtronic, Inc. (2008) 552 U.S. 312. The complaint further points out that in the years following FDA pre-market approval in 2012, Coflex has been shown safe and effective in additional peer-reviewed clinical studies, has been widely used and accepted by spine surgeons across the country to successfully treat spinal stenosis, and has been recommended by numerous medical societies, including the Advancement of Spine Surgery, North American Spine Society, American Pain Society, and the National Institute for Health and Care Excellence.

Lawsuit Seeks Injunction, Money Damages

The complaint alleges that Blue Shield goes beyond its own policy exclusions by requiring the Coflex device to show better results or safety than a covered treatment. The lawsuit alleges that Blue Shield, by its actions, has breached its contracts with policyholders and acted in bad faith. As attorney for the plaintiffs, Rob Gianelli, stated, “A treatment choice for the use of an FDA-approved device like Coflex should be between the spine surgeon and the patient. A health plan should not be allowed to unilaterally decide that an approved device is ‘investigational,’ particularly when that decision is influenced by factors beyond the medicine.” The lawsuit seeks declaratory and injunctive relief, as well as money damages against Blue Shield for loss of benefits and other harm caused by their actions.

About Gianelli & Morris

Gianelli & Morris is a Los-Angeles based insurance law firm concentrating its practice in the representation of California insurance policyholders who have been denied benefits or otherwise been the subject of maltreatment by their insurance company.

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Carter Spohn

by NextClient Staff Writer
@GianelliMorris
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