Reasonable and Customary

We just received a notice in the mail telling us we are part of another class action lawsuit. This time the defendant in the case is our health insurance company. When we’ve been included in a class action lawsuit in the past, it’s usually meant that a small check was coming our way. It’s always good to get an unexpected check in the mail, even a small one. And there’s the justice angle, too. Some corporation or other is paying for its bad behavior.

In this case, our health insurance company has agreed to stop relying on two questionable databases when they determine those wonderful “reasonable and customary” charges: “We could give you 80% of what your doctor charged. Instead, we’ll give you 80% of the reasonable and customary charges where you live”.

Unfortunately, as we all know, everyone’s doctor always seems to charge more than what is “reasonable and customary”, according to the insurance companies.

So it’s good news that the company will stop short-changing its customers by underestimating “reasonable and customary” charges. That’s the principal result of our class action lawsuit being settled.

Another result is that the two named plaintiffs in the case (the “class representatives”) are going to receive a total of $35,000 as “incentive payments”. In other words, they’re being rewarded for bringing the lawsuit, and to encourage other injured parties to bring their own lawsuits in similar cases. 

Ok, that’s all well and good, but how about that check for $25 or $11.95 that’s going to be coming our way? The settlement is supposed to be “fair, reasonable and adequate to the members of the Class”, and we are definitely members of the unfortunate class shortchanged by our insurance company, so some financial compensation is in order, even if it’s only enough to buy lunch.

To our surprise, however, the settlement doesn’t include cash compensation to anyone but the two named plaintiffs. Maybe the lawyers forgot about us (we’ve never been introduced).

What the lawyers clearly did remember was to collect their fees. The settlement calls for our insurance company to pay “an award of attorneys’ fees and costs for Class Counsel not to exceed the sum of $2,500,000”.

So the two plaintiffs get $35,000, the rest of us get a notice in the mail and a promise of good behavior from our insurance company, while the lawyers who handled the lawsuit get no more than $2.5 million, which the insurance company can pay off by adding a few pennies to its rates. 

I believe that’s what lawyers call “reasonable and customary”.