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Elevance Health Inc. has agreed to pay $3.3 million to settle a lawsuit accusing it of wrongfully denying coverage for a critical spinal surgery under employee health plans, according to a recent Kentucky federal court filing.

The lawsuit, brought under the Employee Retirement Income Security Act (ERISA), alleged that Elevance—formerly known as Anthem—improperly classified minimally invasive sacroiliac joint fusion surgery as "medically unnecessary," forcing patients to pay out of pocket for the procedure. The settlement aims to compensate affected plan members while preventing further litigation.

Settlement Seeks Court Approval

The plaintiffs filed a motion Monday requesting preliminary approval of the Elevance $3.3M deal, arguing that the agreement is both fair and reasonable under federal law.

The agreement covers individuals who were denied coverage for the spinal procedure between Sept. 20, 2017, and July 30, 2021, and had to pay for the surgery themselves. Elevance, a major player in the health insurance industry serving over 100 million members, rebranded from Anthem in 2022.

Compensation for Affected Patients

Under the settlement terms, eligible individuals can file reimbursement claims for up to $15,000. However, the agreement caps Elevance’s payout at $2.5 million for settlement claims. Court documents estimate that approximately 1,000 plan members could be part of the class.

Beyond the direct settlement fund, Elevance has also agreed to cover up to $825,000 in attorneys’ fees and litigation costs. Additionally, the four named plaintiffs will each receive $17,500 as part of the deal.

Allegations of Wrongful Denials

The lawsuit, originally filed in September 2019, accused Elevance of violating federal benefits law by wrongfully rejecting claims for the spinal procedure. Plaintiffs contended that the insurer intentionally misclassified the surgery as “investigational” and “not medically necessary” to avoid covering it.

In response, plaintiffs sought a court mandate requiring Elevance to review denied claims and adopt a policy permitting coverage when specific medical criteria were met. By July 2021, Elevance had updated its policy to allow coverage for the procedure.

Legal Battle and Court Rulings

Elevance attempted to dismiss the case, arguing that the plaintiffs had failed to include necessary parties and that, as the parent company, it had no direct authority over coverage decisions.

However, in August 2020, U.S. District Judge Gregory F. Van Tatenhove ruled that Elevance could not escape liability, as it had created the policies governing these claim denials. While the judge did dismiss parts of the case over procedural issues, he ultimately determined that Elevance bore responsibility for its coverage decisions.