Our observations
Plaintiff Jeremy Jong filed a putative class-action complaint against Blue Shield of California (Blue Shield), one of the largest medical insurance companies in the United States.
Plaintiff and the putative class members allege that Blue Shield uses AI software called the Claims Data Activator to streamline the prior authorization process of its insureds’ claims. Plaintiffs allege that this software systematically denies coverage en masse for treatments, medications, and testing that do not match a certain preset criteria, and that this AI software-driven process allows Blue Shield to evade the legally-required individual physician review process.
Plaintiff and the putative class members are individuals who submitted claims to Blue Shield and had their claims denied when processed through the Claim Data Activator system.
Implicit in Plaintiffs’ claim is that Blue Shield is using its AI software in a manner that does not include enough human oversight. Specifically, once Blue Shield’s AI software determines that the tests, treatments, or procedures for which an insured submitted a pre-authorization claim are not medically accepted or necessary, Blue Shield’s doctors sign off on the denials without individually reviewing the insureds’ files.
This case will be interesting to follow because the court will need to determine the necessary standard of care. If the standard of care in these types of cases is such that doctors would have to individually review insureds’ claims after they are analyzed by AI-driven software, that would remove one major benefit of AI software: it can be used to quickly process massive amounts of data. A related question is if courts decide that more human oversight is needed, how much oversight would it take to meet the standard of care of reviewing individual claims in a “thorough, fair, and objective manner”? For example, would it be enough for doctors to split claim denials into batches, and to individually review a few samples in each batch?
This case involves:
- Putative Class Actions
- State Law Claims
State Law Claims/ Putative Class Actions
Plaintiff brings three claims on behalf of himself individually and on behalf of the putative class members:
- Breach of Implied Covenant of Good Faith and Fair Dealing
- Violation of California's Unfair Competition Law (Cal. Bus. & Prof. Code § 17200 et seq.)
- Unjust Enrichment
For the second claim, which is a state law claim, Plaintiff argues that under California law, Blue Shield was required to conduct and diligently pursue a “thorough, fair, and objective” review to determine whether a submitted claim is medically necessary. Thus, here, plaintiff is alleging that Blue Shield’s process of reviewing claims for prior authorization does not involve enough human oversight of the AI software such that Blue Shield has failed to meet its obligation to review individual claims in a “thorough, fair, and objective” manner.
Judge's Stats
Judge not yet assigned
Plantiff's Attorneys
Lead Counsel: Eugene Y. Turin
Firm: McGuire Law P.C.
About the attorney:
Eugene is a partner concentrating on civil, commercial and class action litigation and he has appeared in several class actions venued in California.
Motion Metrics
32% Motions to Dismiss were granted, 35% denied and 19% partial
19% Summary Judgment Motions were granted, 31% denied and 13% partial
[View source.]
