The Disappearance. In 2000, Natalie was at wits end with Susan, her 15-year-old daughter. Most days she was extremely hyperactive with episodes of anger, yelling, hitting, plate throwing, carpet burning, school detentions and knocking out drywall in their home. Although not licensed to drive, Susan would steal Natalie’s keys and take her friends for rides, not coming home until late hours. Susan’s mania was interrupted with periods of depression, where she would cry, hide in her room, and talk of suicide. The marks on her arms and legs reflected self-abuse. “Susan would storm out of the house and I wouldn’t see her for days,” recalls Natalie. “Men would call the house looking for her.”
Natalie brought her to a psychiatrist, who diagnosed Susan as having a bi-polar condition. The psychiatrist said Susan needed treatment, and Natalie called her insurance company, Blue Cross Blue Shield of Minnesota (“BCBSM”), to get authorization for treatment.
The first call to BSBCM resulted in Natalie being told to get pre-utilization approval from Behavioral Health Services, Inc. (“BHSI”), which she was told was an independent mental health clinic that pre-authorized mental health treatment. Natalie called BSHI and was placed on hold for 40 minutes. Thinking that the receptionist forgot her call, she hung up and called back. This time she was put on hold for 20 minutes. Again, she hung up. Natalie called back a third time and quickly interjected with the receptionist that she would like to leave her name with a person who could review her daughter’s file. Nobody called her back. Two days later, Natalie broke through the communication barrier with a real, live person who said she was a reviewer. Natalie described her plight, and the reviewer told her to have the psychiatrist send Susan’s charts. Natalie called the psychiatrist, who warned Susan that BCBSM rarely approved treatment. Natalie never got a follow-up telephone call from the reviewer. Natalie called BHSI, and the reviewer said a mental health provider reviewed the chart and concluded that treatment was not medically necessary. Natalie expressed shock and asked if she could talk to the reviewer’s superior. Natalie again waited for a return call. The superior eventually called back and said she stood by the reviewer’s conclusion. The superior volunteered that Susan’s conduct appeared to be symptomatic of a “conduct disorder” and that the next time Susan destroyed property Natalie should call the police. Distraught and not knowing where to turn, Natalie waited until Susan again stole the family car. This time Susan totaled the car out when she crashed. Natalie called the police. Susan was picked up and shipped to a detention center. Susan never received treatment for bi-polar disorder, or for that matter any other medical condition, at the detention facility, and Natalie couldn’t afford treatment on her own. Natalie called the Minnesota Department of Commerce, which regulated BCBSM, but it said there was nothing it could do to help her.
Susan met new friends at the detention center. Once released, Susan went home, gathered her things, and disappeared, apparently with her new friends. Natalie called then Attorney General Mike Hatch, fearing that her daughter was dead or ensnared in a prostitution ring. Lori Swanson, then a Deputy Attorney General, took the call. Swanson talked to her at length, but Natalie would not meet, would not give her last name, and would not even send her a copy of the insurance policy. Swanson asked her to call when she next heard from Susan.
She never heard from Natalie again.
The Hanging. In the fall of 1999, Karl S. was 13 years old and a very troubled boy. Karl suffered from depression, defiant disorder and chemical dependency. During the fall of 1999, Karl was treated on an outpatient basis by BHSI. His mom Dorothy was surprised by what little treatment Karl was provided, but assumed the clinic knew best. Between September of 1999 and January of 2000, with no treatment by BSHI, Karl was transported to the emergency room and subsequently admitted to the hospital on four separate occasions. These admissions were due to alcohol poisoning, suicide attempts or destruction of property. By January 7, 2000, after Karl was kept in the “lockup” facility of Fairview Hospital for one week, a hospital psychiatrist told Dorothy that her son needed residential treatment and sent him to St. Cloud Children’s Home. Two weeks later, on January 24, 2000, the psychiatrist told Dorothy that, while BCBSM denied inpatient coverage on the basis that it was not “medically necessary,” Karl was a troubled young man who desperately needed treatment. During his visit to St. Cloud, Karl was prescribed Depakote, Prozac, Trazadone and Zoloft. Dorothy could not afford the medical bills, and Karl was discharged from treatment.
The St. Cloud psychiatrist told Dorothy to set up an appointment with a psychiatrist as soon as possible. Dorothy called BHSI to request an early appointment. BHSI said the earliest appointment was two months away. After returning home, Karl went into the back yard and hung himself. Karl survived the hanging but suffered severe brain damage.
Jail is the Best treatment. Tom W. had a 14-year-old daughter, April, who suffered from depression and oppositional defiance disorder. April was a chronic runaway who was found by Minneapolis police on Lake Street in the middle of the night with members of the Gangster Disciples. Tom took her to a psychologist, who said she was a threat to her own safety and needed inpatient treatment at a residential facility. April was referred to the Wilson Center in Faribault. BCBSM denied coverage, claiming it wasn’t medically necessary. Rather, BCBSM claimed that April should be brought to juvenile court. April’s therapist responded:
“I strongly believe that April will be dead before there will be sufficient criminal charges to warrant treatment through the criminal justice system.”
Tom called the Medical Director at BCBSM. Tom made repeated calls, but the medical director never returned them. Tom finally went to the reception desk at the headquarters of BCBSM, sat down, and refused to leave until the director saw him. The director finally saw him, but then simply referred him to Dr. Scanlon, the Medical Director at BHSI. Tom then confronted Dr. Scanlon, who said the Wilson Center was not licensed to provide psychological services, and, in any event, the Wilson Center was the subject of a “scandal.” Tom contacted the Minnesota Department of Health, which said that the Wilson Center was properly licensed to provide psychological services, and that the “scandal” referred to a person at the Center who 15 years before had abused a patient.
Tom continued to receive denials and couldn’t afford to pay for the treatment. He had no recourse but to bring April home from the Wilson Center. Tom recalls that he asked Dr. Scanlon what type of treatment was covered under the policy, and Dr. Scanlon replied that the parent should impose better “limits” on the daughter. Tom responded that he had been sleeping in the doorway of the hall leading to April’s bedroom to keep her from running away and that he did not know of what other “limit setting” could occur. Scanlon then suggested that the family get “leverage” from the juvenile justice system and suggested that if April were reported to have committed a crime or hurt herself, she could then be placed into juvenile custody.
In November of 1999 April was admitted to United Hospital after once again being a runaway. BCBSM again denied coverage stating that it was not medically necessary. After bouncing around to several more providers, April was admitted to Fairview-University Hospital, where Dr. Kerry Fox, a psychiatrist retained by BHSI, examined her. Dr. Fox confirmed that April suffered from severe major depression, oppositional defiant disorder, intermittent explosive disorder, and chemical dependency. Dr. Fox recommended residential treatment. Even though BHSI had retained Dr. Fox to conduct the examination, BCBSM and BHSI still denied treatment for April. After that, a family member died, and Tom inherited $70,000. It all went to pay for the past due bills on April’s treatment.
No Treatment for Eating Disorders. Kitty M. had a daughter named Sadie, who was 18 years old. In February of 2000, Kitty learned that Sadie had bulimia. Kitty was taking up to 60 laxatives per day, was regularly purging herself after eating, and was engaged in “cutting,” where a patient cuts her extremities so as to focus her pain and depression on a specific area. On April 4, 2000, Kitty was admitted to the Methodist Hospital Eating Disorder Program but was discharged after nine days because BCBSM denied coverage. Sadie continued to be treated in the outpatient program at Methodist, but BCBSM denied coverage for this as well. By August of 2000, the family incurred $21,000 in unreimbursed medical bills and had to terminate Sadie’s treatment.
During this time, Sadie’s mother tried to contact other mental health providers in the BCBSM provider directory. While there were several physical locations, there were only two clinics: Aspen and BHSI. Kitty called Aspen Clinic and was told that it was not equipped to deal with an adolescent eating disorder. Kitty then called BHSI. She eventually was connected to a psychologist who said that he had no idea who dealt with adolescent eating disorders. She continued to call BHSI but was either be put on hold or placed into voicemail. Nobody ever returned her calls.
No Provider Available. Mandy S. had a son with different mental health problems but ran into the Same barricade. In March of 1999, Steven was 11 years old. He had attended five schools and had been expelled from most of them. Steven had been expelled for assaulting a teacher, had been suspended at least a dozen times, had damaged cars with a wrench, had been a runaway, had attacked his principal, had caused a teacher’s aide to be hospitalized with a concussion, had broken a desk, radiator and heating grill at school, had threatened suicide, and had threatened to kill other people. The police were called to Steven’s home at least a dozen times.
In March of 1999, Mandy contacted BCBSM to find out what kind of mental health coverage was available. She was referred to BHSI, which she was told was an independent mental health clinic. There were several BHSI clinics listed in her BCBSM directory. She called each one of the clinics, noticing a similar pattern with each telephone call. For instance, she was always placed on hold. She would then be requested to leave her name and telephone number with a Consumer Service Representative (CSR) to get a call back, which rarely occurred. When she was able to get a CSR, she was told it would be at least eight weeks before she could get an appointment for Steven. Because Steven needed treatment immediately, Mandy looked for other mental health clinics. As it turned out, almost all the clinics in the network were affiliated with either BSHI or the Aspen Clinic.
Steven’s mother continued to call the clinics daily, hoping to find an opening due to a late cancellation. During these calls, she would ask whether the clinic had a child psychiatrist in the entire network. When she complained, the CSR stated that “This is how it is. There is nothing I can do about it.” No clinic was able to provide her with timely treatment for the entire year.
“Chronically Understaffed.” In Peter H’s case, the father confronted a BCBSM network psychiatrist about the lack of access to a therapist. The BCBSM network psychiatrist told him there was no provider in the network because it was “chronically understaffed.” To get referred out of the BCBSM network to a therapist, Mr. H was told that he needed a referral from a BCBSM network psychiatrist. When he demanded that the psychiatrist refer his son out of network, the psychiatrist said she couldn’t do it because “she would be punished for referring outside the network.” Mr. H called BHSI 81 times to get a referral, with the only response being that it would be best if he had his son arrested and referred to juvenile court.
And the stories kept coming.
The Interviews. The Attorney General’s Office received several hundred letters a week from the public on issues varying from magazine subscriptions to hospital mergers. Deputy Attorney General Lori Swanson spent many hours each week plowing through the letters and looking for a pattern or practice of egregious abuse that the Office should address.
By late 1999, Swanson and Hatch accumulated a number of letters from desperate parents looking for help for their children. They first tried the Minnesota Department of Health and the Minnesota Department of Commerce, the primary regulators of health insurance companies and HMOs, but they did no more than send a form letter to the insurer. They then looked at the responses to the consumer advocates in the Attorney General’s Office. They found that BCBSM, Medica, and HealthPartners were particularly cavalier in responding to the office, claiming that the policies were regulated by the Department of Commerce, the Department of Health or the U.S. Department of Labor. If the complaint were pursued, the insurer would claim that the policy didn’t cover the treatment being sought.
The mental illness problems were all over the map. Drug addiction. Eating disorders. Bi-polar condition. Suicide. Personality disorders. Extreme depression. The one thing in common was that nobody was getting coverage. The parents also had in common a great fear of talking to a government employee about the sensitivities of their child’s condition. They worried about the consequences of talking to the government. They prayed that their child would “grow out of it.” The parents were extremely stressed, some believing what the insurance companies implied, namely that they were “bad” parents. They didn’t want the humiliation of their child’s mental illness being stored in a government file.
Hatch and Swanson met individually with approximately 50 different families. The families were so discouraged that on many occasions they went to their homes. Other times, they came to the office for an individual meeting, embracing a great deal of trepidation. It took considerable time to get them comfortable with the situation and to talk about their child. To get more patients, Attorney General Hatch gave speeches at medical seminars and psychologist meetings, raising the issue and asking them to have the parents of the patient call the office.
Because Swanson and Hatch were looking at litigation, they had to pick one insurer as a defendant, or else the insurers would claim that their actions were an industry standard. She picked the largest insurer, BCBSM. First, it had more insureds and therefore more patients. Second, it seemed to have a higher frequency of complaints. Third, it claimed to be an organization whose mission was to promote the public health when it, in conjunction with the State, sued the tobacco industry in the 1990s.
Excuses: The Tools of Incompetence. In most cases, the parents described horrible experiences with BCBSM. Hatch and Swanson thought that, in sufficient numbers, they could prove that BCBSM was providing little or no coverage in mental health care. They set up a large chart -- about 6 feet by 4 feet -- with about 50 rows and about 20 columns. The 20 columns had short headings to identify each tactic used by the insurer with each family. The 50 rows were the names of the families and a brief description of the medical condition. The 20 tactics included: (1) Being on hold for more than 30 minutes, (2) Claiming that a request for mental health coverage must be in writing, and then claiming that the parent provided insufficient written information, (3) Deferring decisions for months, and in some cases up to a year, (4) Claiming that alternative treatment had not been attempted (although not describing what “alternative treatment” was available), (5) Claiming that inpatient treatment was not medically necessary (for chemical dependency), (6) Claiming that the provider sought by the family was not licensed or otherwise qualified, (7) Claiming that the treatment was experimental, (8) Claiming that the condition was not treatable (anorexia) (9) Claiming that the parents needed to exercise “limit-setting” on the child, inferring that the parents were “bad” parents, (10) Claiming that the condition was not medical in nature (autism) (10) Claiming an artificial limit on the number of treatments, (11) Claiming that the matter was one for the police or juvenile courts, (12) Claiming that the physician or provider had not followed proper channels, (13) Claiming that pre-utilization was not obtained, even though the policy did not require pre-utilization approval.
The excuses were endless, with the one common theme being that treatment was not going to be provided.
The Investigation. It took over five months of interviews before they were able to complete two 6’X4’ charts that showed obvious patterns of abuse. The problem, however, was that the parents did not want to be part of a lawsuit. Nobody wanted their child to be named at a public or private hearing.
In the summer of 2000, Hatch again called each family to talk about treatment and the need for a lawsuit. By this point, the office had a few psychologists and psychiatrists willing to testify, even though they feared retaliation by BCBSM. The problem with relying on the therapists was that it would be too easy for BCBSM to make the providers look greedy. After several months of interviews, they got six families who were willing to allow the use their initials in a lawsuit. They also agreed to testify, but only if a court ordered that their testimony would be in camera, meaning that it would be confidential.
Strategic Litigation. Swanson learned as a young lawyer from breast cancer litigation in the 1990s that the executives of large companies (be they insurance companies or Fortune 500 companies that were self-insured) didn’t care about the cost effectiveness of treatment. They were willing to spend substantially more money on a defense lawyer to deny a claim even if it exceeded the cost of the treatment. The rationale was always the Same: if they paid for the new treatment, the floodgates would open and there would be a cascade of claims. It was far easier for the executives to ignore new treatments that were effective.
It is important for a lawsuit to have a public “face.” The only “face” for the issue of children’s’ mental illness were the families who were in such despair. Five families agreed to do participate in the litigation, but only if their identities were kept from the public. This did not make for an easy lawsuit.
Swanson sued BCBSM on October 3, 2000.
Stage One: “We have been Sandbagged.” BCBSM immediately convened a “War Room” to respond to the lawsuit. It denounced the lawsuit as politically motivated and denied that the Attorney General had met with their representatives. Dr. Mark Banks, the CEO of BCBSM, proclaimed:
“It’s difficult for me to hear the false charges brought forward in the
Attorney General’s lawsuit. He never approached Blue Cross to discuss
any potential problems. Instead, he chose to ignore the facts and grab
Dr. John Scanlon, the Medical Director of BHSI, noted that BCBSM provides coverage for 94% of the treatment sought by patients. He denied that BCBSM recommended the juvenile justice system as an alternative to mental health care. BCBSM took out a full-page advertisement in the newspapers, claiming that it was shocked by the lawsuit and claimed that it routinely paid for mental health coverage. BCBSM claimed that the complaint was based on only a few isolated cases. It argued that Hatch sandbagged the company.
The BCBSM Ship Takes on Water. That is, until hundreds of families stepped forward to tell their stories.
By February of 2001, an additional 25 families signed affidavits which described in detail the bad faith of BCBSM. And they were willing to have their names used. The affidavits were filed with the Court to show the misconduct of BCBSM and once again draw more consumers into supporting the case. BCBSM countered this activity, demanding that the Court obliterate the affidavits and keep these stories under “seal,” even though the parents and children were aware of their contents and were willing to make them public. Their attempts to make the affidavits private drew more media inquiry.
On February 2, 2001, the office filed a second amended complaint, this time alleging in graphic detail the frustrations of these families. At this point, the office was able to estimate that BCBSM was shifting over $10 million in treatment to the taxpayer by funneling children to juvenile arrest and foster care. Swanson also had a litany of BCBSM correspondence from families which refuted the repeated public proclamation of innocence by BCBSM. She also had dozens of redacted letters from BSHI to mental health facilities which contradicted the letters BHSI sent to the families of patients.
And insiders at BCBSM and BHSI came out of the woodwork, claiming that they were encouraged to deny treatment at any cost. Insiders said the Medical Director insisted that there was no effective treatment for an eating disorder. Insiders heard one BHSI manager proclaim that there was no such thing as a chemical dependency emergency.
A former BHSI office manager said that the ultimate goal of avoiding coverage was to get the child before a district court judge who would order that the child receive treatment at government expense. A BHSI insider claimed that in some cases children were ordered to receive treatment by the district court judge, and BHSI would still decline to provide coverage. As it turns out, the Minnesota Department of Human Services, which paid tens of millions for court-ordered treatment in situations where the child had BCBSM coverage, never bothered to file a claim against BCBSM.
Sunshine is the Best Disinfectant. BCBSM refused to identify its mental health claims, arguing that patient confidentiality prevented the State from even looking at denials, even if the Office agreed that the names of the family were obliterated. They also made a motion to have the entire proceeding conducted in camera, meaning that the media and the public would be barred from getting further knowledge about the lawsuit. The office fought hard on both motions.
The office that BCBSM, as a plaintiff in the tobacco lawsuit, argued that it was a public utility—essentially a representative of the public—and the rights of those tobacco victims needed to be disclosed to it. The office started off its brief with a quotation from the BCBSM tobacco brief:
“Our system of jurisprudence is founded on a presumption of openness.”
Stage Two: “We are Surprised.” BCBSM clearly didn’t like the cascade of new complaints and whistleblowers. It was taking in water and needed to plug the leaks. On February 4, 2001, it took out a second full page advertisement, this time claiming “surprise” by the allegations and claiming that it would look into the problem.
Throughout February and March, the office received a tidal wave of complaints about mental health denials from the policyholders of BCBSM, HealthPartners and Medica. These three insurers had almost 85% of the insurance business in the state. The office drafted more investigators and attorneys into the matter, interviewing hundreds of families about the treatment, or more appropriately the lack of treatment, they received. Swanson also arranged for investigators to peruse the records of the Minnesota Department of Human Services, trying to pin down the financial impact of this “cost-shifting” on taxpayers.
By June of 2001 the office estimated the cost to the state to provide mental health care for patients who already had private insurance was over $50 million.
Stage Three: “We Failed These Families in Some Important Ways.” The lawsuit was eventually settled with the establishment of a Mental Health Court. The Court was composed of three retired judges, one of whom was appointed by Hatch, one appointed by Judge Kevin Burke, who was Chief Judge of Hennepin District Court, and one by BCBSM.
In addition, BCBSM would reimburse the state for $8 million for mental health costs that were pushed over to taxpayers.
Finally, and perhaps most important, BCBSM was required to forward all claims for mental health treatment to the court within 48 hours after they were received. No more delays or equivocations were acceptable.
On June 19, 2001 Hatch held a joint news conference with BCBSM. At the news conference announcing the settlement, Hatch also announced that Medica and HealthPartners also had big problems with mental health care and that, if they didn’t agree to the Mental Health Court, they would be sued.
At the news conference, BCBSM Vice President Richard Neuner, said:
“We failed these families in some important ways. And that is why we are here.”
On June 24, 2001 BCBSM took out another full-page advertisement. This time it promised more fairness in the decisions it made as it related to mental health care.
The other two insurers, Medica and HealthPartners, saw the writing on the wall: Either get out front on the issue or wallow in the swamp of litigation. They soon announced that they too would join the mental health court.
Over the next six years the complaints about the treatment of mental illness evaporated in Minnesota.
Settlement - Download below