Lawrence Basich is on the hook for $400,000 in medical bills that would have been paid by his insurer had his application been processed correctly by Nevada’s Obamacare exchange.
In a closely-watched class-action lawsuit now gathering steam, Mr. Basich is one of two named plaintiffs in the suit against the state-run exchange — and the company that built it — that claims thousands of residents paid for health insurance, but never got covered because of technical glitches on the portal.
The suit may be the first since the Obamacare rollout that pits actual consumers against both the state and its contractor, in this case, Xerox Corp.
Other states that opted to set up their own private insurance markets — including Oregon, Maryland, Massachusetts, Vermont — have withheld payments, renegotiated contracts or threatened to sue their web vendors over faulty exchanges, but a civil complaint filed this month in Clark County, Nev., says residents were left in the lurch because both entities failed to deliver.
“The [Nevada state exchange} and Xerox have utterly failed to create a system that works as advertised, and as a result, thousands of Nevadans remain uninsured despite payment of insurance premiums,” the lawsuit by Las Vegas attorney Matthew Q. Callister contends.
The suit says Mr. Basich suffered a heart attack on New Year’s Eve and had triple bypass surgery and follow-up appointments, only to find out he was not insured during the Jan. 1-Feb. 28 period. He submitted payment in late November for coverage effective Jan. 1, according to the lawsuit.
Nevada awarded Xerox a contract in 2012 worth more than $70 million to build their health exchange, known as Nevada Health Link. But the website, like its federal counterpart and other state-run Obamacare portals, experienced glitches that thwarted enrollment during the open enrollment season from Oct. 1 to March 31.
Last month, a board chaired by Republican Gov. Brian Sandoval hired Deloitte Consulting to assess the exchange and recommend fixes.
Mr. Callister’s complaint estimates there are more than 10,000 state residents who have paid for health insurance through the exchange, but either have not received coverage or did not get it on the correct date. The lawsuit started out with two named plaintiffs, although the class has swelled to 45 people, according to the Callister and Associates law firm.
The second named plaintiff, Lea Swartley, and potential members of the class faced a similar lapse in coverage, despite payment, and suffered damages in excess of $10,000, the lawsuit says.
Analysts said this appears to be the first case of its kind since Obamacare launched in earnest last fall, and that its form — a class action — could be useful if it meets certain legal criteria.
“In many cases where individuals would not sue on their own behalf individually — because the claim is not valuable enough to justify the lawyer bills — a group of plaintiffs can sue in an aggregated form and thus make it cost-effective to join,” said I. Glenn Cohen, a health policy expert at Harvard Law School.
He said the benefits of such an action only apply if the class is certified in court — a process that will run ashore if attorneys cannot convince the court that each member of the class faces a similar enough set of issues and that a class action is the best way to redress their grievances.
Andrew H. Struve, a partner at Manatt, Phelps and Phillips law firm, said it may be a “stretch” to prove that each plaintiff has a similar claim.
While Mr. Basich had the misfortune of having a heart attack, the various claims “would be for very different reasons with very different results,” and the state of Nevada may rely on governmental immunity.
Officials at both the exchange and Xerox declined to comment on the pending litigation.
Exchange spokesman C.J. Bawden said the exchange had not been served in the suit. He added that exchange officials are “keeping all options open when looking at assessing penalties on [Xerox] for not meeting the contract requirements.”
Xerox spokeswoman Jennifer Wasmer said the company “is fully committed to getting all aspects of Nevada Health Link right.”
“Resources from throughout Xerox are on the project, and we continue to work closely with the state to identify critical issues and regularly implement improvements,” she said in a written statement. “At the end of the day, Nevada Health Link has to be a service we’re all proud of, and we’re all focused on that goal.”
Nevadans who tried to sign up by March 31 deadline but ran into technical problems on the exchange’s website have been given until May 30 to finish up their applications under a two-month special enrollment period.