Federal Court Certifies Class Action Against Blue Cross Blue Shield of Montana for Improperly Denying Large Dollar Claims
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The Chief Judge of the U.S. District Court for the District of Montana recently certified a class action against Blue Cross Blue Shield of Montana for its standard operating procedure of reviewing and denying claims in violation of Montana law. The lawsuit, originally filed by the Rutherford family, alleges that BCBS of Montana regularly violates Montana’s Unfair Claims Settlement Practices Act, which prohibits an insurer from having a “general business practice” of, among other things, “refus[ing] to pay claims without conducting a reasonable investigation based upon all available information.”1 The certified class is defined as:
All policyholders and plan members covered under non-ERISA health plans in Montana that are administered by [BCBS of Montana] and subject to Montana claim handling law, who have had claims denied by [BCBS of Montana] within the applicable statute of limitations period, pursuant to the Not Medically Necessary Standard Operating Procedure on grounds that the medical procedure being billed was “not medically necessary.”2
The court also certified a subclass, defined as “[p]olicyholders whose claims were denied by [BCBS of Montana] as a third-party administrator.”3
The case began when Rutherford was advised by his doctor to undergo surgery to repair compromised nerves. After the surgery was performed, BCBS of Montana reviewed Rutherford’s surgery and determined that it was not medically necessary and denied coverage, despite previously informing Rutherford that preauthorization was not required. After Rutherford’s provider appealed on his behalf, BCBS of Montana withdrew its denial and approved the claim. Rutherford’s experience revealed BCBS of Montana’s standard operating procedure of systematically denying claims above $50,000 as not medically necessary without engaging in any reasonable investigation of the claim, including seeking out documentation beyond that submitted by the provider. During class discovery, it was revealed that medical reviewers only checked medical records that were sent to them before sending it on to a doctor for further review. The doctors who were hired to review the work often were not specialists trained in the procedures they were reviewing, and “never asked for more documentation or face-to-face meetings with the doctors who performed the procedures which were denied.”4
According to the Rutherfords, at least 15,000 claims in Montana were processed in this way. The court certified the class, finding that it is “conceivable that a large number of claims exist in Montana that were denied by following the Standard Operating Procedure.”5 The court further noted that:
The procedure in which the claims were reviewed remains typical of the class. The class likely would have had to appeal their claim through [BCBS of Montana]’s appeal process similar to the path followed by Rutherford. The class members may have been subjected to various types of injuries as a result of the denial, but all allegedly suffered harm as a result of [BCBS of Montana]’s policy to review claims systematically without consulting outside information.6
The class certification is significant for two reasons. First, most states have an “unfair claims settlement practices act” similar to Montana’s, paving the way for similar class actions. And second, class actions in the healthcare space are difficult to certify, mainly because issues can vary greatly between putative class members, presenting an obstacle to establishing commonality and typicality. The Rutherfords were able to overcome these hurdles, by alleging that a BCBS of Montana policy for reviewing claims was facially illegal under state law — a model that has the potential to be successfully replicated.
[1] Mont. Code Ann. § 33-18-201(4).
[2] Class Certification Order, Dkt. 96, at 14-15.
[3] Id.
[4] Darrell Ehrlick,Federal judge OKs class-action lawsuit against state’s largest insurance carrier, Daily Montanan (June 16, 2025), https://dailymontanan.com/2025/06/16/federal-judge-oks-class-action-lawsuit-against-states-largest-insurance-carrier.
[5] Class Certification Order, Dkt. 96, at 7.
[6] Id. at 10.
- Richard T. Collins
Partner
- Damon D. Eisenbrey
Partner
- Jeremy Ritter-Wiseman
Associate