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Blue Shield of California Files Lawsuit Against CenCal Health for Dumping Patients to Avoid Paying Medical Costs

CenCal Health purposefully shifted cost of medical care to Blue Shield to limit their own financial exposure, raising healthcare costs and threatening the Affordable Care Act  

SAN FRANCISCO (July 14, 2016) – Blue Shield of California has filed a lawsuit against Santa Barbara San Luis Obispo Regional Health Authority (CenCal Health) alleging the county-organized Medi-Cal plan purposefully avoided paying millions of dollars in medical care claims by signing up around 40 of its very ill members into Blue Shield’s individual health plans and paying the premiums on their behalf.

The suit, filed this week in Superior Court State of California, County of San Francisco, alleges CenCal Health continued to receive Medi-Cal payments from the state for these members while engaged in a scheme that the suit describes as shifting “the cost of their medical care to the other insurance carrier, allowing CenCal Health to limit its financial exposure to only the monthly insurance premiums.” (Filed Complaint, Page 1, Section 5, Lines 23-25)

Blue Shield of California has issued the following statement regarding the lawsuit:

“For over a year, Blue Shield of California has been working with regulators to stop CenCal—a county-organized Medi-Cal plan—from dumping around 40 of their most expensive members into Blue Shield individual commercial plans. CenCal targeted its sickest members and advertised the scheme to providers who would benefit from higher rates for these members, even paying the member’s premiums using a CenCal employee’s corporate credit card.

“Moreover, CenCal continues to collect money from the state for each of these members while not covering many of their medical expenses. CenCal has publicly admitted this was done to ‘help shift the cost of their medical care to the other insurance carrier [Blue Shield], allowing CenCal Health to limit its financial exposure to only the monthly insurance premium.’  Over the past 18 months, CenCal has enrolled around 40 members in Blue Shield plans, at a cost of nearly $12 million to Blue Shield.

“The California Department of Health Care Services took action in December to prohibit CenCal from signing up new members under this scheme, but 21 members remain on Blue Shield’s rolls. We are seeking relief from this unlawful and unfair expense in court and through California regulatory agencies. If these members no longer have Blue Shield coverage, they will still receive all their medical services with much lower cost-sharing through their CenCal Medi-Cal coverage, largely from the same medical providers. During the interim, we will ensure that these patients have access to all necessary medical care while we continue to pursue legal and regulatory action against CenCal.

"Importantly, these types of financially self-interested third-party payment schemes are spreading across the nation, resulting in higher individual market rates that threaten the viability of the Affordable Care Act and Covered California.”

Contact: Stephen Shivinsky, 415-229-5359,

Background on Blue Shield of California
Blue Shield of California, an independent member of the Blue Cross Blue Shield Association, is a nonprofit health plan with 4 million members, 6,800 employees and more than $13 billion in annual revenue. Founded in 1939 and headquartered in San Francisco, Blue Shield of California and its affiliates provide health, dental, vision, Medicaid and Medicare health care service plans in California. The company’s mission is to ensure all Californians have access to high-quality care at an affordable price. Blue Shield has contributed more than $325 million over the past ten years to the Blue Shield of California Foundation. Contact your local agent or broker about Blue Shield of California products and services, or visit