Class Claims

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Class Claims

About 365,000 “total members” were enrolled in CalPERS’ and Anthem’s PPO insurance each year in the period between 2006 and 2014. Exhibit 60, page 7. More than twenty-five percent of CalPERS members enroll in PPO coverage. Id. The principal incentive to buy PPO insurance (PersCare, PersChoice, PERSSelect,[1] et al.) is to be reimbursed for “out-of-network” service providers. The number of “out-of-network” claims per member per year is currently unknown to Plaintiff. The dollar value of each claim is significant, as indicated herein.

The class members are all similarly situated, factually and legally. CalPERS and/or Anthem failed to contract, establish, administer, and set up the PPO reimbursement process so that reimbursement was at UCR rates or at the majority share of UCR rates. Each year, CalPERS offered three PPO plans that were specifically targeted at individuals who wanted to seek medical care from “out-of-network” providers.[2] CalPERS and Anthem promoted, contracted, and administered the PPO coverage via standardized nonnegotiable form contracts, publications, and processes. CalPERS’ and/or Anthem’s standardized materials omitted, failed to disclose, and distorted how the “Allowable Amount” would be calculated for non-emergency, “out-of-network” medical expenses. Anthem administered all of the claims for the PPO plan for CalPERS for the period of 2006 to 2014. Each claim by each class member has been made and presented to CalPERS and/or Anthem and accepted. Heinz and the class performed all aspects of their contractual and other requirements. Each claim by each class member has been paid by CalPERS and Anthem, albeit reimbursed at an unreasonably low, unfair, or unconscionable rate.

Factually, all of the claims of each class member have been presented, accepted, and already paid by CalPERS and/or Anthem, albeit at a greatly reduced rate.

After exhausting the separate required Anthem and CalPERS administrative processes individually and on behalf of the proposed class, Brad Heinz asserts individual and representative claims on behalf of all CalPERS members, beneficiaries, and others who were enrolled in PPO insurance from CalPERS/Anthem for any of the periods between and including 2006 to 2014 who did not receive proper reimbursement and/or where CalPERS and/or Anthem breached statutory rights, fiduciary duties, the contract, or other rights.

Heinz and the class seek the appropriate contracted percentage of the UCR reimbursement rates for their “out-of-network” medical expenses (including medical services, fees, costs, charges, tests, labs, procedures, equipment, treatments, surgery, exams, and other accepted expenditures).


Reliable electronic data and business records are readily available. CalPERS and Anthem have all of the information, including about the cost, actual claim payments, and contract allowance amounts in their databases. See Government Code §22854.5. Reliable electronic data exists in Anthem’s and CalPERS’ information technology systems to ascertain the class members, the “out-of-network” claims already paid, the reimbursement rates paid, and then to compare those rates, claims, and services (in the specific locale) with the UCR[3] or appropriate reimbursement rates that are readily available in the comparable database[4] such as or similar databases. See Exhibit 61; However, CalPERS and Anthem indicate that their data, methodology, practices, and policies related to calculating the “Allowable Amount” and reimbursements are confidential and deemed a “trade secret” exempt from disclosure. Government Code §22854.5.

In addition, the data and comparison are readily made without requiring review of individual files as the claims are coded in standardized numerical values and forms that allow reliable comparison between CalPERS/Anthem reimbursement rates and rates in the or other databases, including by medical code, location, and service.

The data can (i) determine Plaintiffs’ damages; (ii) determine CalPERS’ and Anthem’s liability for its unreasonably low reimbursement rates; and (3) allow Anthem and CalPERS to assert defenses in a readily manageable way without requiring review of individual files or re-determination of claims.

CalPERS owes Heinz and all members of the putative class (collectively “Plaintiffs”) mandatory fiduciary duties pursuant to the California Constitution, statute, case law, and enactments. (See Hittle v. Santa Barbara Cnty. Employees Ret. Assn. (1985) 39 Cal.3d 374, O’Neal v. Stanislaus County Retirement System (2017) 8 Cal.App.5th 1184.) CalPERS breaches its fiduciary duties of loyalty, good faith and fair dealing, to account, and other duties enumerated below. For example, CalPERS breached its fiduciary duties including when it has failed to act in the interest of Plaintiffs, failed to fully disclose, acted adversely, failed to account, and sought advantage for CalPERS, Anthem, or others, including but not limited to offering or providing compensation to Anthem based on carrier performance that rewards Anthem for reducing reimbursement to its members, by failing to reimburse medical expenses at a reasonable rate, and failing to reasonably apply the “Allowable Amount” term in the EOC. CalPERS also failed to oversee Anthem sufficiently. CalPERS has various mandatory nondiscretionary fiduciary duties, one of which is a duty to correct all errors of the system, including under Government Code §§20160 and 20164.

Heinz also asserts that Anthem and CalPERS, separately, severally, or jointly, (1) breached their contractual duties, (2) misrepresented in a manner that perpetrated a fraud on plan participants, (3) omitted material terms, (4) failed to adequately disclose, including that they were offering a nonstandard PPO plan that produced a greatly reduced “Allowable Amount” for non-emergency “out-of-network” medical expenses; (5) failed to act consistent with their legal, fiduciary, and other duties and obligations under law and statute, (6) failed to act in good faith and deal fairly, and (7) otherwise acted unlawfully or incorrectly as described herein.

Heinz individually and as a representative of a proposed class of those similarly situated also asserts claims against CalPERS and/or Anthem, individually, severally, or jointly, for (1) breach of contract, (2) misrepresentation, (3) breach of the implied covenant of good faith and fair dealing, (4) unlawful, unfair and fraudulent business practices, (5) conversion, (6) unjust enrichment, (7) accounting, (8) breach of their various fiduciary duties, and (9) breaches of their various other duties.


[1] “PERS Select, introduced in 2008, has a smaller network of medical groups, but offers a significantly lower premium than PERS Choice or PERSCare. PERS Select is a lower cost option for members who value the freedom of choice offered through a PPO plan design.” Exhibit 55.

[2] CalPERS also required that contracting agencies not offer other health insurance options if the employer contracted to offer the CalPERS health insurance. See Government Code §22934.

   [3] It appears that CalPERS and Anthem may have used “usual, customary, and reasonable” (UCR) or similar higher reimbursement rates for “out of network” emergency services, but do not use the UCR or higher reimbursement for “non-emergency” services, so it is likely that Anthem itself has a data base of usual, customary and reasonable reimbursement rates.

[4] See 2 CCR 599.510(a).