FILED: NEW YORK COUNTY CLERK 01/08/ :18 PM INDEX NO /2014 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 01/08/2016

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1 FILED: NEW YORK COUNTY CLERK 01/08/ :18 PM INDEX NO /2014 NYSCEF DOC. NO. 21 RECEIVED NYSCEF: 01/08/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X MARGOT HEAD as Administratrix of THE ESTATE OF WILLIAM HEAD WILLIAMS, MARGOT HEAD, individually, and WILLIAM HARRISON WILLIAMS, Index No.: /2014 -against- Plaintiffs, AMENDED VERIFIED COMPLAINT EMBLEM HEALTH, HEALTH INSURANCE PLAN OF GREATER NEW YORK, and VALUE OPTIONS Defendants. X Plaintiffs, MARGOT HEAD as Administratrix of THE ESTATE OF WILLIAM HEAD WILLIAMS, MARGOT HEAD, individually, and WILLIAM HARRISON WILLIAMS by their attorney, DAVID L. TRUEMAN, complaining of the defendants, EMBLEM HEALTH, HEALTH INSURANCE PLAN OF GREATER NEW YORK ( HIP ), and VALUE OPTIONS, set forth upon information and belief: INTRODUCTION 1. This action was brought by Margot Head, Administratrix of the Estate of William Head Williams, Margot Head, individually, the mother of the decedent, William Head Williams, and William Harrison Williams, the father of the decedent, William Head Williams. Plaintiffs claimed that Defendants, Emblem Health and HIP, and Defendant, Value Options, failed to approve the decedent, William Head Williams, for necessary medical and substance use treatment, including recommended and necessary in-patient detoxification treatment, despite Amended Complaint Page 1

2 knowing the medical necessity of such services and despite knowing that without such services William Head Williams would continue to suffer from Substance Use Disorder, continue to use substances, experience significant psychological distress, and be at grave risk of overdose and death. As a result of the failure to provide authorization to enter an in-patient detoxification program at Beth Israel Hospital as recommended by health care professionals at the Hospital, Plaintiffs claimed that William Head Williams continued to use substances, overdosed, and died as a result of the overdose. Plaintiffs initiated this suit on behalf of William Head Williams and his estate as well as individually on behalf of Margot Head, the mother of William Head Williams, and William Williams, the father of William Head Williams, with fourteen causes of action. 2. By Decision, Order, and Judgment of Judge Lobis, dated October 9, 2015, the Court allowed certain causes of action to go forward, dismissed others, and permitted plaintiffs to replead other causes of action from the Verified Complaint. (Exhibit A is a copy of Judge Lobis Decision and Exhibit B is a copy of the Verified Complaint.) 3. Plaintiffs file this Amended Verified Complaint ( Amended Complaint ) and those causes of actions which Judge Lobis permitted to be repled. PARTIES 4. That at all times mentioned herein, William Head Williams was a resident of the State of New York, residing at 220 West 98 th Street, Apartment 5A, New York, New York prior to his death on December 2, That Margot Head has been issued Letters of Administration, dated June 20, 2013, by the Surrogate s Court of the County of New York as the Administratrix of the Estate of Amended Complaint Page 2

3 William Head Williams. 6. That at all times mentioned herein, Margot Head, the mother of William Head Williams, is and has been a resident of the State of New York residing at 220 West 98 th Street, Apartment 5A, New York, New York. 7. That at all times mentioned herein, William Harrison Williams, the father of William Head Williams, is and has been a resident of the State of New York residing at 220 West 98 th Street, Apartment 5A, New York, New York. 8. That at all times herein mentioned, Defendant, Emblem Health, was and is a corporation conducting business in New York, with its principal location at 55 Water Street, New York, New York. 9. That at all times herein mentioned, Defendant, HIP, was and is a corporation conducting business in New York, with its principal location at 55 Water Street, New York, New York. 10. That at all times herein mentioned, Defendant, Value Options, was and is a foreign corporation conducting business in New York, with its principal location at 240 Corporate Boulevard, Norfolk, Virginia. 11. That, upon information and belief, Defendant, Value Options, was and is an agent of Defendants, Emblem and HIP, providing utilization review and other services for those Defendants. JURISDICTION AND VENUE 12. The Court has jurisdiction of this action pursuant to Judiciary Law 140-b. 13. Venue is proper in this Court pursuant to CPLR 503(a) as Plaintiffs reside in New Amended Complaint Page 3

4 York County. THE VERIFIED COMPLAINT AND JUDGE LOBIS DECISION ON THE MOTION TO DISMISS 14. Plaintiffs filed a Verified Complaint in relation to William Head Williams medical insurance policy and coverage and Defendants failure to approve him for in-patient detoxification. 15. The Verified Complaint included the following causes of action, numbered as follows in the Verified Complaint: First: Second: Third: Fourth: Fifth: Sixth: Seventh: Eighth: Ninth: Tenth: Eleventh: Twelfth: Thirteenth: Fourteenth: Medical Malpractice (All Defendants) Gross Negligence, Practicing Medicine Without A License (All Defendants) Negligence (All Defendants) Gross Negligence (All Defendants) Fraud And Misrepresentation: Utilization Review (Defendants, Emblem and HIP) Fraud And Misrepresentation: Substance Use and Mental Health Treatment (Defendants, Emblem and HIP) Breach of Contract (Defendants, Emblem And HIP) Bad Faith Breach of Insurance Contract (Defendants, Emblem and HIP) Deceptive Acts and Practices: Article 22A, Section 349 of the General Business Law of the State of New York (Defendants, Emblem and HIP) Injunction Prohibiting Utilization Review (Defendants, Emblem and HIP) Injunction Prohibiting The Sale Of Insurance Policies (Defendants, Emblem And HIP) Injunction Prohibiting Utilization Review (Defendant, Value Options Punitive Damages (Defendants, Emblem And HIP) Punitive Damages (Defendant, Value Options) 16. In her determination of October 9, 2015, Judge Lobis granted dismissal of the first, second, fifth, sixth eighth, tenth, eleventh, twelfth, and thirteen causes of action; of the seventh and eighth causes of action as to the individual plaintiffs; and of the individual causes of Amended Complaint Page 4

5 action for wrongful death. 17. In that determination, Judge Lobis granted plaintiffs leave to serve an amended complaint so as to replead the fifth, sixth, eighth, and thirteenth causes of action within 20 days after service on plaintiffs attorney a copy of [the] order with notice of entry. 18. The third, fourth seventh, ninth, and fourteenth causes of action were neither dismissed nor subject to repleading. 19. In this Amended Complaint, Plaintiffs identify the causes of action as follows: First: Second: Third: Fourth: Fifth: Sixth: Seventh: Eighth: Ninth: Negligence (All Defendants) (Not dismissed) Gross Negligence (All Defendants) (Not dismissed) Fraud And Misrepresentation: Utilization Review (Defendants, Emblem and HIP) (Replead) Fraud And Misrepresentation: Substance Use and Mental Health Treatment (Defendants, Emblem and HIP) (Replead) Breach of Contract (Defendants, Emblem And HIP) (Not Dismissed as to Decedent) Bad Faith Breach of Insurance Contract (Defendants, Emblem and HIP) (Replead as to Decedent) Deceptive Acts and Practices: Article 22A, Section 349 of the General Business Law of the State of New York (Defendants, Emblem and HIP) (Not Dismissed) Punitive Damages (Defendants, Emblem And HIP) (Replead) Punitive Damages (Defendant, Value Options) (Not dismissed) 20. The causes of action that were not dismissed are pled exactly as they were in the Complaint and, therefore, as they remain the same as in the original Complaint where they were not dismissed, they are not subject to a subsequent motion to dismiss. 21. Judge Lobis ruled that this Amended Complaint needed to be filed within 20 days of the service of the Notice of Entry with Judge Lobis determination. Since the issuance of Judge Lobis determination, Plaintiffs and Defendants have attempted to resolve this case but were unsuccessful. At this time, as Defendants have not filed the Notice of Entry with judgment, Plaintiffs are serving the Notice of Entry upon Defendants and filing the Notice of Amended Complaint Page 5

6 Entry and this Amended Complaint. JURISDICTION AND VENUE 22. The Court has jurisdiction of this action pursuant to Judiciary Law 140-b. 23. Venue is proper in this Court pursuant to CPLR 503(a) as Plaintiffs reside in New York County. WILLIAM HEAD WILLIAMS MEDICAL COVERAGE 24. At all relevant times herein, the decedent, William Head Williams, had medical insurance coverage with Defendants, Emblem and HIP. 25. Upon information and belief, at all relevant times herein, Defendants, Emblem and/or HIP employed Defendant, Value Options, as its agent to engage in and conduct utilization review services. WILLIAM HEAD WILLIAMS SUBSTANCE USE DISORDER 26. The decedent, William Head Williams, had a history of substance use. 27. The decedent, William Head Williams, had a history of suffering from Substance Use Disorder. 28. The history of the decedent s substance use and Substance Use Disorder was known by all the Defendants. 29. As a result of life-threatening experiences due to his Substance Use Disorder, William Head Williams had decided that he needed to receive help for his condition and determined that he needed to enter a substance use detoxification program. 30. William Head Williams understood that his health was in significant danger if he Amended Complaint Page 6

7 continued to use substances. 31. William Head Williams understood that he was in significant danger of overdosing and dying if he continued to use substances. 32. Because he was worried that he would continue to use drugs and be at grave risk of overdosing and dying, on October 16, 2012 William Head Williams requested in-patient detoxification treatment at Beth Israel Hospital. THE UTILIZATION REVIEW PROCESS 33. Utilization review is the process by which a health plan examines plan members claims for health care services to determine whether the services are medically necessary, and, therefore, according to the policy, eligible for coverage and payment. 34. Utilization review is subject to a variety of state and federal laws, including Timothy s Law, New York Insurance Law, N.Y. Ins. Law 3221 and 4303, the Comprehensive Care Centers for Eating Disorders law, the federal Mental Health Parity and Addiction Equity Act, and the Affordable Care Act. 35. In the instant matter, it is claimed, and the New York State Attorney General found that all the Defendants violated all these laws. The results of these investigations are reported in the Attorney General s In the Matter of Emblem Health, Inc., Assurance No.: , Assurance of Discontinuance Under Executive Law Section 63, Division 15 ( Emblem AOD )1 (Exhibit C) and the Attorney General s In the Matter of Value Options, Inc., Assurance No.: 14-1 Note that the Attorney General identified that Emblem, HIP, and GHI are related entities: Emblem, a not-for-profit corporation formed in 2006 by the merger of Group Health Incorporated ( GHI ) and the Health Insurance Plan of Greater New York ( HIP ), offers health plans to New York consumers. Emblem s principal offices are located at 55 Water Street, New York, New York (Emblem AOD, 1). Amended Complaint Page 7

8 176, Assurance of Discontinuance Under Executive Law Section 63, Division 15, which specifically made findings against Defendant, Value Options ( Value Options AOD ) (Exhibit D). 36. The overwhelming majority of requests for authorization are for health care services that insureds physicians and other health care providers have determined to be medically necessary for the care of their patients. 37. Insurance companies, therefore, conduct utilization review of care that physicians and other health care providers have already determined is medically necessary. 38. When a member of a plan submits a claim for coverage for health services the plan will either pay the claim automatically or conduct utilization review for the claim. 39. If the plan conducts utilization review it will make a determination if the health care services are medically necessary even though its insureds health care providers have already determined that such care is, indeed, medically necessary, which is why they recommended it in the first place. 40. Insurance companies either make utilization review determinations with staff hired by them to make those determinations or hire an outside company to make utilization review decisions. 41. With great frequency, insurance companies hire outside specialized utilization review companies to conduct the utilization review of requests for substance use and mental health treatment, including for the treatment of Substance Use Disorder. 42. Upon information and belief, in the instant matter, Defendants, Emblem and HIP, hired Defendant, Value Options, to make utilization review decisions for requests for substance use and mental health treatment, including for the treatment of Substance Use Disorder. Amended Complaint Page 8

9 43. In the instant case, Defendant, Value Options, made those determinations for Defendants, Emblem and HIP, for the request by Beth Israel Hospital for in-patient detoxification treatment for decedent, William Head Williams. 44. If an insurance company determines that the care is medically necessary it will provide an authorization to receive the care and then pay for the services. 45. If the company determines that the recommended and necessary medical care or services are not medically necessary according to the insurance company, it will send the insured an adverse determination letter which, pursuant to New York State law, must contain a detailed explanation of the clinical rationale for the denial. 46. Contrary to this mandate, Defendants never sent to decedent, William Head Williams, any legally required documentation as to their denial of his claim or their rationale for said denial. 47. An insured or plan member whose claim has been denied due to the insurance company s determination that the care is not medically necessary has, pursuant to New York State law, the right to file an internal appeal to the insurance company in an attempt to demonstrate why its determination that the health care is not medically necessary is incorrect. 48. The internal appeal is generally decided by the same entity that decided the original request; i.e., if the original request for substance use or mental health care was determined by a specialized company, as in the instant matter, that company will make the appeal determination. 49. Although an internal appeals process is available, many individuals do not or cannot take advantage of the process. 50. Those who do appeal incur the burden of time and expense of preparing an appeal Amended Complaint Page 9

10 or hiring an attorney to prepare the appeal. 51. If the internal appeal is denied the insurance company will issue an appeal denial letter which, by law, is to be identified as a Final Adverse Determination. 52. Individuals whose appeals are denied then have the opportunity to apply to New York State for an independent external review by an agent hired by New York, as long as the external review request is initiated (in most cases) within four months of receipt of the Final Adverse Determination. 53. The purpose of the availability of an external review is to provide a safeguard for insurance company financial interests in denying medical care. 54. The external review determination is binding on the plan as well as the individual. 55. Although the external review is binding, the individual retains the ability to file a plenary action to determine his/her rights to insurance approval and payment for the care. Individuals are not mandated to file a request for external review in order to file an action in court, although some courts maintain that one must exhaust the available administrative remedies (internal appeals) prior to filing a lawsuit to force the insurance company to provide authorization and payment for the care the health care provider has already recommended and determined is medically necessary. 56. In the instant matter, decedent, William Head Williams, did not have an opportunity to appeal as he overdosed two hours after receipt of the denial of Beth Israel Hospital s request that he receive in-patient detoxification treatment and suffered an overdose four days later on October 20, 2012 which resulted in him entering a coma from which he would never recover. 57. In the instant matter, at no time did decedent, William Head Williams, receive a Amended Complaint Page 10

11 written denial of authorization for inpatient detoxification as required by New York State law. DEFENDANTS IMPROPERLY FAILED TO AUTHORIZE TREATMENT FOR WILLIAM HEAD WILLIAMS 58. On or about October 16, 2012, William Head Williams went to Beth Israel Hospital, located at 10 Nathan D. Perlman Place, New York, New York, requesting that he be admitted to an in-patient detoxification program. 59. Upon information and belief, staff at Beth Israel Hospital made a request of Defendants that they approve William Head Williams for medically necessary in-patient detoxification treatment. 60. Upon information and belief, staff at Beth Israel Hospital communicated to Defendants the nature and extent of the condition and symptoms of decedent, William Head Williams, and his need for in-patient detoxification treatment. 61. Upon information and belief, staff at Beth Israel Hospital communicated to Defendants that William Head Williams was significantly depressed and was a significant danger to himself if he did not urgently receive the requested treatment. 62. Upon information and belief, staff at Beth Israel Hospital communicated to Defendants that without treatment in an in-patient detoxification treatment William Head Williams would not be able to stop using substances. 63. Upon information and belief, staff at Beth Israel Hospital communicated to Defendants that without treatment in an in-patient detoxification treatment William Head Williams was at grave risk of overdosing. 64. Despite the recommendations from the staff at Beth Israel Hospital, Defendants failed to authorize treatment for William Head Williams for in-patient detoxification treatment. Amended Complaint Page 11

12 65. Despite William Head Williams policy indicating that he had coverage for inpatient detoxification treatment, Defendants failed to authorize such treatment. 66. Defendants were well aware of decedent s need for in-patient detoxification treatment yet refused to authorize such care despite Beth Israel informing Defendants that William Head Williams was a danger to himself and that there was a great risk that he would overdose if not treated. 67. Defendants were well aware of William Head Williams substance use and Substance Use Disorder as they had previously authorized treatment for him. 68. Despite the fact that the medical policy of William Head Williams provided for the in-patient detoxification treatment that Beth Israel Hospital recommended, and in violation of that policy, Defendants refused to authorize such treatment for him. 69. Despite their clear knowledge that William Head Williams needed in-patient detoxification treatment and despite the warnings of Beth Israel Hospital that William Head Williams was at significant risk to continue abusing substances and to overdose, Defendants, with gross negligence and reckless disregard for the well-being, health, and life of William Head Williams, denied him the care he desperately needed. 70. Without the pre-authorization of in-patient detoxification treatment, Beth Israel Hospital could not provide the treatment William Head Williams required. 71. Without having receiving authorization for treatment at Beth Israel Hospital, decedent, William Head Williams, left the hospital overwhelmingly despondent, even more depressed because he could not receive treatment, and at tremendous risk. 72. Two hours after having been turned down by Defendants to receive medically necessary in-patient detoxification treatment, decedent, William Head Williams, overdosed. Amended Complaint Page 12

13 73. Four days later, on October 20, 2012 decedent, William Head Williams, suffered another overdose resulting in him suffering a coma from which he never recovered. 74. On December 2, 2012 William Head Williams died as a result of the overdoses which would not have occurred on October 16, 2012 and October 20, 2012 if Defendants had authorized the recommended and necessary in-patient detoxification treatment for him. THE TRAGIC CONSEQUENCES OF THE DEATH OF WILLIAM HEAD WILLIAMS FOR HIS PARENTS, MARGOT HEAD AND WILLIAM HARRISON WILLIAMS 75. As a result of Defendants failure to provide in-patient detoxification treatment which resulted in the death of William Head Williams, Margot Head, mother of William Head Williams and William Harrison Williams, father of William Head Williams, are devastated. 76. As a result of Defendants failure to provide in-patient detoxification treatment which resulted in the death of William Head Williams, Margot Head and William Harrison Williams suffer daily overwhelming and intense pain and loss, from which they will never recover. DEFENDANTS FAILURE TO AUTHORIZE IN-PATIENT DETOXIFICATION TREATMENT FOR WILLIAM HEAD WILLIAMS WAS PART OF A PATTERN OF ABUSE BY DEFENDANTS WHEREIN THEY SYSTEMATICALLY FAILED TO APPROVE MEDICALLY NECESSARY TREATMENT 77. The Policy provided that Defendants would provide and authorize all medically necessary treatment. 78. Defendants failed to authorize decedent, William Head Williams, for the inpatient detoxification treatment recommended as medically necessary and requested by the health care professionals at Beth Israel Hospital. Amended Complaint Page 13

14 79. A review of the utilization review denial patterns by Defendants, Emblem and HIP and Value Options, indicates that they systematically incorrectly deny medically necessary treatment for their insureds. 80. A review of the utilization review denial patterns by Defendants, Emblem and HIP and Value Options, for mental health and substance use treatment indicates that they systematically incorrectly deny medically necessary treatment for mental health and substance use services for their insureds. 81. The New York State Attorney General conducted investigations and made determinations that Defendants, Emblem and HIP and Value Options, among other insurers and utilization reviewers, engaged in fraudulent and illegal conduct in relation to medical care policies issued by Defendants, Emblem and HIP, and administered, in part, by Defendant, Value Options, and to the utilization review in such policies. (Emblem AOD, exhibit C and Value Options AOD, Exhibit D). 82. The Attorney General determined that Defendants, Emblem and HIP, and Value Options, violated various laws, including mental health parity laws, by discriminating against individuals with mental health and substance use problems, including those with Substance Use Disorder, such as decedent, William Head Williams. 83. Relevant results of the investigations as in the Attorney General s Emblem AOD and Value Options AOD are cited infra. 84. The Policy at issue in this case was provided by Emblem and HIP which were subsidized by New York State. The Emblem AOD ( 2) stated: In the regular course of business, Emblem enrolls consumers in health plans and contracts with health care providers for the delivery of health care services to those consumers. Offering hundreds of different health plans in New York State, Emblem, through its GHI and HIP divisions, Amended Complaint Page 14

15 provides health care coverage for approximately 3.4 million New York consumers, most of whom live in the downstate region, and 1.18 million of whom are New York City employees and retirees. In 2012, Emblem had revenues of $10 billion. 85. Defendants, Emblem and HIP, as well as Defendant, Value Options, provided utilization review services for the policy at issue. The Value Options AOD ( 2) stated: In the regular course of business, ValueOptions, a managed behavioral health care organization ( MBHO ), administers behavioral health benefits for approximately 2.7 million New Yorkers in fully funded or state and local governmental health plans, who include members of the following health plans: MVP Health Care, Inc. ( MVP ), EmblemHealth, Inc. ( Emblem, which includes Group Health Incorporated ( GHI ) and Health Insurance Plan of Greater New York ( HIP )), Oscar Insurance Corporation ( Oscar ) (as of January 1, 2014), and the Empire Plan (as of January 1, 2014), the health benefit plan for New York State and certain local governmental employees. In 2013, ValueOptions had revenues of approximately $1.3 billion nationally, and $95 million for its fully insured Emblem and MVP business. 86. The investigations into Emblem and HIP and Value Options cited in these AODs were initiated and pursued under Executive Law 63(12) which states as follows: 12. Whenever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business, the attorney general may apply, in the name of the people of the state of New York, to the supreme court of the state of New York, on notice of five days, for an order enjoining the continuance of such business activity or of any fraudulent or illegal acts, directing restitution and damages and, in an appropriate case, cancelling any certificate filed under and by virtue of the provisions of section four hundred forty of the former penal law or section one hundred thirty of the general business law, and the court may award the relief applied for or so much thereof as it may deem proper. The word fraud or fraudulent as used herein shall include any device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretense, false promise or unconscionable contractual provisions. The term persistent fraud or illegality as used herein shall include continuance or carrying on of any fraudulent or illegal act or conduct. The term repeated as used herein shall include repetition of any separate and distinct fraudulent or illegal act, or conduct which affects more than one person. Amended Complaint Page 15

16 In connection with any such application, the attorney general is authorized to take proof and make a determination of the relevant facts and to issue subpoenas in accordance with the civil practice law and rules. Such authorization shall not abate or terminate by reason of any action or proceeding brought by the attorney general under this section. 87. Note that the Attorney General engaged in these investigations pursuant to Executive Law 63 (12) which provides the Attorney General the authority to conduct an investigation and enter into an Assurance of Discontinuance. The relevant portion states, [w]henever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting or transaction of business. 88. The AODs specifically addressed Defendants actions in relation to utilization review for mental health and substance use services (behavioral health services). These are the services and utilization review services at issue in the instant matter and related to the decedent and the decedent s request for in-patient detoxification as identified in the Complaint and Amended Complaint. 89. In the Emblem AOD, the Attorney General found that Emblem violated numerous laws, summarizing as follows: 45. The New York State Executive Law authorizes the Attorney General, where there are repeated fraudulent or illegal acts or persistent fraud or illegality in the carrying on, conducting or transaction of business, to seek relief, including enjoining the continuance of such business activity or of any fraudulent or illegal acts, as well as restitution and damages. N.Y. Exec. Law 63(12). 46. Based on the findings of the Attorney General s investigation, the Attorney General has determined that Emblem s conduct has resulted in violations of N.Y. Executive Law Section 63(12), Timothy s Law, the Federal Parity Act, and the Affordable Care Act. Emblem s practices have had the effect of unlawfully limiting Emblem members access to behavioral health services. Amended Complaint Page 16

17 90. Specially, the Attorney General cited violations of the following laws by Emblem and HIP: Timothy s Law, N.Y. Ins. Law 3221(l)(5)(A); 4303(g)(1) (Emblem AOD, 40), New York Insurance Law, N.Y. Ins. Law 3221(l)(7); 4303(l), (Emblem AOD, 41), Comprehensive Care Centers for Eating Disorders (the CCCED Law ), N.Y. Ins. Law 3221(k)(14); 4303(dd) (Emblem AOD, 42), the federal Mental Health Parity and Addiction Equity Act, 29 U.S.C. 1185a; 42 U.S.C. 300gg-26; 45 C.F.R (c)(4)(i) (Emblem AOD, 43), and the Affordable Care Act, 42 U.S.C. 300gg-19(a)(1)(C), 45 C.F.R (a)(3) (Emblem AOD, 43, 44). 91. The Attorney General found that Emblem engaged in fraud in relation to utilization review services, including behavioral health and substance use services, in relation to policies funded by New York State, such as the one provided to the decedent. 92. The Attorney General found that from 2007 through 2010, Emblem received an estimated $17.7 million in New York State funds to subsidize its compliance with Timothy s Law. (Emblem AOD, 37, 40). Thus, Emblem received money for policies provided by New York State, such as the one which Emblem provided to the decedent, misrepresenting the services it would provide to the beneficiaries of the policies provided by New York State in relation to mental health and substance use services. 93. The Attorney General found that, without informing New York State or policyholders, Emblem and HIP and Value Options knowingly used more stringent utilization review criteria for behavioral health utilization review than for medical utilization review without revealing this to the insureds and members. (Emblem AOD, 12-14). Amended Complaint Page 17

18 94. The Attorney General found that, without informing New York State or policyholders, Emblem applies medical necessity criteria incorrectly when it reviews behavioral health-related requests and claims. (Emblem AOD, 16). 95. The Attorney General found that Emblem and HIP inappropriately applied fail first requirements for behavioral health utilization review but not for medical review and that such requirements were not revealed to either New York State or policyholders. The Attorney General stated that [t]his requirement places yet another obstacle in front of members who, suffering from addiction, may have a small window of opportunity to access treatment and embark on the path to recovery. Emblem s own doctors, however, state that a member s lack of an attempt at an outpatient mode of care is not a reason to deny an inpatient stay. Emblem does not apply such a fail first requirement to medical/surgical benefits. (Emblem AOD, 17). 96. The Attorney General stated that [p]ersons with mental health and substance use disorders comprise a vulnerable population, and may be reluctant to seek care. Frequent and time-consuming utilization review may pose obstacles preventing them from accessing or completing treatment. (Emblem AOD, 18). 97. Indeed, the decedent was just such an individual who had a small window of opportunity to access treatment and embark on the path to recovery and who, tragically, overdosed after having his request for treatment rejected by Defendants. 98. The Attorney General found that Emblem and HIP and Value Options applied a model of utilization review, the Outpatient Outlier Model, which limited outpatient treatment but did not reveal to New York State policyholders that such a limited model was being used. (Emblem AOD, 20-22). 99. The Attorney General found that although substance abuse programs in New Amended Complaint Page 18

19 York State are required to use guidelines developed by the New York State Office of Alcoholism and Substance Use Services, Value Options chose to use different and conflicting criteria and did not reveal to New York State or policyholders that it would not use or was not using the legally required criteria. (Emblem AOD, 23-27) In particular, the Attorney General found that [a]lthough, for medical/surgical benefits, Emblem classifies denials due to lack of preauthorization or clinical information as medical necessity denials, in many cases involving behavioral health benefits, Emblem has classified such denials as administrative, thereby depriving these members with behavioral health conditions of vital appeal rights. (Emblem AOD, 27) In the Value Options AOD, the Attorney General found that Value Options also violated numerous laws, summarizing as follows: 54. The New York General Business Law prohibits [d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state. N.Y. G.B.L. 349(a). 55. The New York State Executive Law authorizes the Attorney General, where there are repeated fraudulent or illegal acts or persistent fraud or illegality in the carrying on, conducting or transaction of business, to seek relief, including enjoining the continuance of such business activity or of any fraudulent or illegal acts, as well as restitution and damages. N.Y. Exec. Law 63(12). 56. Based on the findings of the Attorney General s investigation, the Attorney General has determined that ValueOptions conduct has resulted in violations of N.Y. Executive Law Section 63(12), Timothy s Law, the Federal Parity Act, and the Affordable Care Act. ValueOptions practices have had the effect of unlawfully limiting members access to behavioral health services In the Value Options AOD, the Attorney General specifically identified that Value Options violated the following laws: Timothy s Law (Value Options AOD, 46, 50, 51), N.Y. Ins. Law 3221(l)(5)(A); 4303(g)(1), N.Y. Ins. Law 3221(l)(5)(A)(i)&(ii); Amended Complaint Page 19

20 4303(g)(1)(A)&(B) (Value Options AOD, 46), N.Y. Ins. Law 3221(l)(5)(A)(iii); 4303(g)(1)(C) (Value Options AOD, 47), N.Y. Ins. Law 3221(l)(7); 4303(l) (Value Options AOD, 48), New York s Comprehensive Care Centers for Eating Disorders (the CCCED Law ) -- N.Y. Ins. Law 3221(k)(14); 4303(dd) (Value Options AOD, 49), the federal Mental Health Parity and Addiction Equity Act ( The Federal Parity Act ), 29 U.S.C. 1185a; 42 U.S.C. 300gg-26; 45 C.F.R (c)(4)(i) (Value Options AOD, 50-51), and the Affordable Care Act, 42 U.S.C. 300gg-19(a)(1)(C); 29 C.F.R (b)(2)(iii) (group plans); 45 C.F.R (b)(3)(iii), 45 C.F.R (a)(3) (Value Options AOD, 50, 52, 53) The Attorney General found that Value Options applied more stringent criteria for Emblem and other health plan members for behavioral health utilization review than for medical services but did not reveal to New York State or policyholders that this more stringent criteria would be or was applied. (Value Options AOD, 15-20) The Attorney General found that Value Options appl[ied] medical criteria incorrectly when it reviews behavioral health-related requests and claims but did not reveal to New York State or policyholders that it would apply or was applying those criteria. (Value Options AOD, 21) The Attorney General found that Value Options misclassified the level of care necessary for substance use treatment without informing New York State or policyholders that it would use or was using that criteria. (Value Options AOD, 21, 22) The Attorney General found that the incorrect and inappropriate requirements used by Value Options places yet another obstacle in front of members who, suffering from addiction, may have a small window of opportunity to access treatment and embark on the path Amended Complaint Page 20

21 to recovery. (Value Options AOD, 22) This was exactly the case for the decedent who attempted to access inpatient detoxification but was denied by Defendants and, as a result, overdosed within two hours of having his request for treatment rejected by Defendants The Attorney General found that Value Options presented [f]reqeunt and timeconsuming utilization review which pose[d] obstacles preventing them [substance users requesting treatment] from accessing or completing treatment, barriers which were not revealed to New York State or policyholders. (Value Options AOD, 23, 24) The Attorney General found that Value Options and Emblem applied a model of utilization review, the Outpatient Outlier Model which limited outpatient treatment but did not reveal to New York State or policyholders that such a limited model was being used. (Value Options AOD, 27-31) The Attorney General found that although substance abuse programs in New York State are required to use guidelines developed by the New York State Office of Alcoholism and Substance Use Services, Value Options chose to use different and conflicting criteria and did not reveal to New York State or policyholders that it would not use and was not using the legally required criteria. (Value Options AOD, 36) The Attorney General found that [u]ntil 2014 MVP and the HIP division of Emblem did not cover residential treatment for behavioral health conditions, and Value Options would therefore deny requests by these health plans members for coverage of such treatment. This was not revealed to New York State or policyholders. (Value Options AOD, 37-41) The Attorney General found that Value Options, in violation of New York State Insurance Law, failed to meet the notification requirements of the New York Utilization Review Amended Complaint Page 21

22 Law for prospective and concurrent review in almost all cases sampled. (Value Options AOD, 45). Such notification is vital as it notifies individuals of the right to appeal the denial and provides the basis for the appeal The decedent never received a denial from Defendants and, therefore, could not initiate an appeal Thus, the Attorney General found that contrary to the policies issued by and administered by Emblem, HIP, and Value Options and the requirements of the laws of New York State and the federal government, and without informing New York State or policyholders, Emblem and HIP and Value Options improperly, in violation of their contracts and in violation of a variety of state and federal laws, applied more stringent and more frequent utilization criteria for behavioral health benefits than for medical/surgical benefits, used incorrect and inappropriate criteria for utilization review, and set up models of utilization review that were contrary to requirements, all of which caused harm to New York State and the policyholders Such practices, as identified by the Attorney General and cited in this Complaint, are clearly the result of a pattern of misrepresentation and material omission by Defendants intended to conceal from New York State and policyholders the conduct and violations of the policies which limit access to treatment, conduct utilization review in inadequate, illegal, and improper means, and specifically target individuals seeking mental health and substance use treatment so as to limit their access to such treatment The Attorney General s findings that Defendants engaged in fraudulent and illegal practices is sufficient to allow a claim for fraud against Defendants to proceed and to provide the bases for punitive damages against Defendants. Amended Complaint Page 22

23 DEFENDANTS HAVE BEEN UNJUSTLY ENRICHED BY THEIR SYSTEMATIC PATTERN OF ABUSE OF THE UTILIZATION REVIEW AND AUTHORIZATION PROCESS 117. As Defendants, Emblem and HIP, engaged in a systematic practice of excessively denying authorization for mental health and substance use treatment, Defendants have been unjustly enriched as they have not had to make payments on their policies when they have denied medically necessary care for which individuals have not appealed As Defendants engaged in a systematic practice of excessively denying medical care as revealed by the New York State Attorney General, Defendants have been unjustly enriched as they have been able to keep money they should have paid for the care but for the initial denials. Plaintiffs contend that this delay in payment for half the initial denials which were subsequently reversed has led to a systematic unjust enrichment of these Defendants As a result of their systematic practice of excessively denying substance use and mental health treatment, as identified by the Attorney General, Defendants have been unjustly enriched as they have not had to make payments for such care Upon information and belief, for the year 2012, the year in which Defendants denied decedent, William Head Williams, his treatment and in which he died, Defendants, Emblem and HIP, made profits of hundreds of millions of dollars Upon information and belief, for the year 2012, the year in which Defendants denied decedent, William Head Williams, his treatment and in which he died, Defendant, Value Options, made profits of hundreds of millions of dollars. Amended Complaint Page 23

24 AS AND FOR A FIRST CAUSE OF ACTION NEGLIGENCE ALL DEFENDANTS 122. Plaintiffs repeat and reallege each and every allegation set forth in paragraphs 1 through 121 of the Complaint as if fully set forth herein. determination This cause of action was not dismissed by Judge Lobis in her October 9, All Defendants had duties of care to act reasonably in approving and providing medically necessary treatment for William Head Williams As alleged hereinabove, Beth Israel Hospital requested medically necessary care for the medically necessary treatment of William Head Williams Defendants had an obligation to approve medically necessary care for decedent, William Head Williams Defendants denial of approval and provision of care which were contrary to Beth Israel Hospital s recommendations for William Head Williams were unreasonable and violated the contractual obligations and duties of care Defendants had toward the decedent Plaintiffs suffered the harms and damages set forth hereinabove as a result of the conduct of Defendants, their agents, servants, representatives and/or employees, all of whom acted at all material times in the course and scope of their employment or agency By their conduct, Defendants, with negligence as to William Head Williams condition and medical needs, denied approval and payment for his requested treatment, and, therefore, Plaintiffs are entitled to damages as follows: $100 million for the wrongful death and pain and suffering of decedent, William Head Williams, $100 million to Plaintiff, Margot Head for the pain and suffering and loss of her son, and $100 million to Plaintiff, William Harrison Amended Complaint Page 24

25 Williams for the pain and suffering and loss of his son. AS AND FOR A SECOND CAUSE OF ACTION GROSS NEGLIGENCE ALL DEFENDANTS 130. Plaintiffs repeat and reallege each and every allegation set forth in paragraphs 1 through 129 of the Complaint as if fully set forth herein. determination This cause of action was not dismissed by Judge Lobis in her October 9, As alleged hereinabove, Beth Israel Hospital requested medically necessary care for decedent, William Head Williams Defendants denial of approval and provision of care were contrary to the recommendations of Beth Israel Hospital and to William Head Williams medical needs Defendants conduct in denying in-patient detoxification treatment was grossly negligent and in reckless disregard of the well-being of decedent, William Head Williams Defendants have evidenced a pattern of on-going egregious conduct by their failure to properly conduct utilization review Defendants have evidenced a pattern of on-going egregious conduct by their failure to properly conduct utilization review for substance use and mental health treatment, including for the treatment of Substance Use Disorder Because of the gross negligence of Defendants, their agents, servants, representatives and/or employees, all of whom acted at all material times in the course and scope of their employment or agency, Plaintiffs suffered the harms and damages set forth hereinabove By their conduct, Defendants, with gross negligence and/or reckless disregard as Amended Complaint Page 25

26 to William Head Williams condition and medical needs, denied approval and payment for his requested treatment, and, therefore, Plaintiffs are entitled to damages as follows: $100 million for the wrongful death and pain and suffering of decedent, William Head Williams, $100 million to Plaintiff, Margot Head for the pain and suffering and loss of her son, and $100 million to Plaintiff, William Harrison Williams for the pain and suffering and loss of his son By their conduct, Defendants, with gross negligence and/or reckless disregard of William Head Williams condition and medical needs, failed to approve and provide the treatment recommended by Beth Israel Hospital, thus resulting in the damages herein stated, and, therefore, Plaintiffs are entitled to punitive and exemplary damages from all the defendants. AS AND FOR A THIRD CAUSE OF ACTION FRAUD AND MISREPRESENTATION: UTILIZATION REVIEW ALL DEFENDANTS 140. Plaintiffs repeat and reallege each and every allegation set forth in paragraphs 1 through 139 of the Complaint as if fully set forth herein. Complaint As per Judge Lobis determination, this cause of action is repled from the original 142. Upon information and belief, Defendants, Emblem and HIP, intentionally withheld information from its customers, insureds, and purchasers of plans and/or policies regarding Defendants' intentions to interpret its policies in a manner inconsistent with, and contrary to, the terms of the policies and/or contrary to representations made by Defendants Upon information and belief, Defendant, Value Options, was an agent of Defendants, Emblem and HIP, and participated in the fraudulent actions identified in this Complaint and in this cause of action. Amended Complaint Page 26

27 144. Upon information and belief, Defendants, Emblem and HIP and Value Options, knew that although their policies provided that they would provide all medically necessary treatment, the Defendants had, in place, practices which improperly, and contrary to law and policy, denied access to medically necessary treatment for policyholders. Such knowledge, misrepresentation, and improper and illegal practices are identified in the Attorney General s Emblem AOD (Exhibit C) and Value Options AOD (Exhibit D) and referenced supra Upon information and belief, Defendants, Emblem and HIP and Value Options, had actual knowledge of the falsity of their misrepresentations and/or were recklessly ignorant of the falsity of their misrepresentations Upon information and belief, Defendants, Emblem and HIP and Value Options, deceived New York State and policyholders, by their intentional failure to disclose their intention to fail to perform and their failure to perform their obligations pursuant to the Policy Upon information and belief, Defendants, Emblem and HIP and Value Options, knew that although their policies provided that Defendants would provide all medically necessary substance use and mental health treatment, they fraudulently misrepresented to New York State and policyholders that they would comply with the provisions of the policies when they knew that they would not do so. Such practices were identified by the Attorney General as specified in the Emblem AOD and the Value Options AOD and referenced supra Upon information and belief, Defendants, Emblem and HIP and Value Options, deceived the decedent, William Head Williams, by their intentional failure to disclose their intention to fail to perform and their failure to perform their obligations under the Policy Upon information and belief, Defendants, Emblem and HIP and Value Options, deceived New York State and policyholders, by intentionally concealing material facts which Amended Complaint Page 27

28 Defendants, Emblem and HIP and Value Options, knew or should have known undermined the proper conducting of utilization review and provision of authorization and payment for medically necessary services Upon information and belief, Defendants, Emblem and HIP and Value Options, deceived decedent, William Head Williams, by intentionally concealing material facts which Defendants, Emblem and HIP and Value Options, knew or should have known undermined the proper conducting of utilization review and provision of authorization and payment for medically necessary services Decedent, William Head Williams, justifiably believed and relied upon Defendants misrepresentations and concealments in the Policy, including those pertaining to requesting authorization for in-patient detoxification treatment Plaintiffs suffered the harms and damages set forth hereinabove as a result of the conduct of the Defendants, Emblem and HIP and Value Options, their agents, servants, representatives and/or employees, all of whom acted at all material times in the course and scope of their employment or agency By their conduct, Defendants, Emblem and HIP and Value Options, fraudulently misrepresented their practice of improperly considering utilization review requests for authorization and payment for medically necessary treatment, including the request of decedent, William Head Williams By their conduct, Defendants, with gross negligence and/or reckless disregard of William Head Williams health and well-being, denied approval and payment for his requested treatment By their conduct, Defendants, with gross negligence and/or reckless disregard of Amended Complaint Page 28