A federal judge in Newark has adopted a special master's report recommending that plaintiffs' lawyers in a class action against Health Net Inc. be ordered to repay $246,224 for failing to properly supervise a claims administrator.
The special master, Paul Zoubek, was appointed in the wake of delays in distribution of the settlement to class members, who filed suit over alleged under-payment of claims for medical services. A $215 million Employee Retirement Income Security Act settlement was reached in 2008 but five years later, $90 million had still not been paid to class members, according to court documents.
Zoubek, of Montgomery, McCracken, Walker & Rhoads in Cherry Hill, N.J., was asked to examine whether class counsel should be replaced or ordered to repay any portion of the $69 million in legal fees from the case, and whether sanctions or other disciplinary actions were warranted against Health Net or the two law firms representing the class, Wilentz, Goldman & Spitzer of Woodbridge, N.J., and Pomerantz Haudek Block Grossman & Gross of New York.
Zoubek's report found that no basis existed for the replacement of class counsel or for a so-called "clawback" of counsel fees it received. The report also said no disciplinary actions or sanctions were warranted against Health Net or the two law firms because neither had demonstrated bad faith.
On Feb. 5, U.S. District Judge Faith Hochberg of the District of New Jersey approved a $6.25 million amendment to the prior $215 million settlement. On the same day, she approved Zoubek's special master report.
Zoubek's report recommended that if the amendment were approved, the court should withhold a payment of $492,448 out of the cash settlement fund in the case to Berdon Claims Administration. Half of that amount, $246,224, should instead be charged to class counsel, with the Wilentz firm and Pomerantz Haudek each required to pay $126,112, Zoubeck's report said.