Opinion ID: 1428164
Heading Depth: 2
Heading Rank: 3

Heading: CareFirst's Motion to Intervene in the Class Action

Text: Subsequently, CareFirst, a TPA that provides insurance and administrative services to insured and self-funded Plans governed by ERISA, opposed certification of the settling class and filed a motion to intervene in order to argue that the opt-out provisions of the Class Notice should include the right of a health benefit payor to opt out of the settlement class, and to challenge certification of the class in the event that its opt-out were deemed ineffective. CareFirst sought to exclude itself from the class action settlement both as the insurer and the TPA of the ERISA Plans it administered. As a TPA, CareFirst claimed that it is bound by contract and course of dealing to act on behalf of its self-funded plan customers to pursue overpayment of benefits and that [i]nsurers and TPAs were specifically carved from the class, yet the plans they insured and administered were included [in the class]. CareFirst thus argued that its claims against Medco, some of which are being litigated in another action in New Jersey, see Group Hospitalization & Med. Servs., d/b/a CareFirst Blue Cross Blue Shield v. Merck-Medco Managed Care, L.L.P., No. CAM-L-4144-03 (N.J.Sup.Ct.2003), could be improperly released by the Settlement Agreement if CareFirst were denied an opportunity to opt out the claims of its insured and self-funded Plans. The District Court denied CareFirst's motion to intervene, concluding that the right to accept or reject the proposed settlement belonged to the Plan fiduciaries and not to TPAs such as CareFirst. The District Court determined that [b]ecause Care[F]irst is not a member of the [c]lass, and its rights will not be affected by the approval of the Settlement, Care[F]irst lacks standing to object on its own behalf and has failed to demonstrate that it has authority to act for a[P]lan in opting out. In re: Medco Health Solutions, Inc., 2004 WL 1243873, at . With respect to CareFirst's concerns that its claims in the New Jersey action could be released as a result of the Settlement Agreement, the District Court concluded that the Agreement did not release any contract or other direct claims that TPAs may assert against Medco and that, in any event, a TPA was free to demand that its Plan opt out of the settlement. Id. The District Court thereafter certified the instant action as a class action, pursuant to FED.R.CIV.P. 23(a) and (b)(3), and approved the Settlement Agreement, concluding that it was within the range of fair, reasonable, and adequate settlement of the claims of the [c]lass. Id. at . The District Court also awarded legal fees and disbursements and held that [t]hose consolidated cases in which the Plans have opted out of the settlement are hereby severed. Id.