A 13-year-old class-action lawsuit accusing New Jersey's largest insurance carrier of short-changing surgery centers across the state ended Friday, resulting in a settlement of at least $160 million, federal court records and the lead attorney in the case said.
Horizon Blue Cross Blue Shield of New Jersey denies the "material factual allegations and legal claims" contained in the lawsuit, but both sides agreed to settle and avoid further protracted and expensive litigation, according to the settlement.
The settlement is an important win for the 180 same-day surgery centers who make up the class, and for the people who use them, said Bruce Nagel of Nagel Rice of Roseland, the lead attorney representing the plaintiffs.
The surgery centers have already received all but $4 million of the settlement money, which Horizon is expected to submit within 30 days, Nagel said.
"What it means is if the surgery centers get a higher reimbursement, the co-pay for individuals is less. It helps the public, and helps the surgery centers who should be paid for their work they do. And through this lawsuit, we have ensured that they will."
He described it as the largest settlement of a case in New Jersey seeking reimbursement for out-of-network services, and estimated the total amount could be closer to $200 million.
The lawsuit, filed in federal court in 2005, sought the money surgery center operators said Horizon shortchanged them when the nonprofit health insurance company altered its payment formula in 2004, Nagel said.
Horizon changed its formula back in 2008, according to the settlement, and began making reimbursements based on the proper "prevailing healthcare charges system."
Horizon spokesman Tom Vincz said the settlement "represents final closure of the matter."
"This was a long and protracted settlement in which the plaintiffs initially demanded many multiples of the final settlement amount," Vincz said. "Over the years, litigants dropped out of the case and or settled on their own."
The terms of the settlement were reached in January, but it took six months to notify all of the surgery centers. The final court appearance was before U.S. District Court Judge Kevin McNulty in Newark.
Collectively, Horizon has paid out $20 million more in reimbursement to the centers every year since 2008, Nagel said. It's a whopping figure he said Horizon refused to release until only recently.
"For many of these centers, they did not know they were under-reimbursed. This is found money they never realized we created for them,' Nagel said.
"It benefits virtually every single one" of the surgery centers in New Jersey," with the exception of two that opted-out of the settlement, Nagel said.