King & Spalding partner Daron Tooch represented NorthBay HealthCare Group, a two-campus hospital in Solano County, California at trial in the Northern District of California against Blue Shield for underpayment of non-contracted emergency and post-stabilization services. 

Blue Shield terminated its network contract with NorthBay effective December 2016, and immediately began paying NorthBay at less than half the rates provided for under the parties’ now-terminated contract.  NorthBay sued, seeking the reasonable value of the services provided to Blue Shield members, which it contended was significantly higher than the amounts paid by Blue Shield since termination of the contract.  Blue Shield countersued, contending that the reasonable value of NorthBay’s services was in fact even less than the amounts Blue Shield had been paying pursuant to its own reasonable value methodology.  After a six-day trial, during which the jury heard evidence of the array and quality of NorthBay’s services and the rates at which other commercial payors had contractually agreed to pay NorthBay, the jury was charged with answering a single question:  What is the reasonable value of the services NorthBay provided to Blue Shield’s members?  The jury returned a verdict of 67% of NorthBay’s full billed charges, nearly twice the amount that Blue Shield had been paying under its unilateral reasonable value methodology and far above the rates advocated by Blue Shield’s valuation expert witness.  The parties are now charged with applying the jury’s verdict to the more than 1,600 individual claims at issue, with total damages estimated at more than $16 million.

A copy of the verdict is available here.