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(District of New Jersey D.C. 01-cv-04183) - page 6 / 30

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subsidiary of Health Net of the Northeast, Inc. (HN-NE). Health Net, Inc. (HNI) is the corporate parent not only of HN-NJ and HN-NE but also of other subsidiary insurance companies that provide medical benefits to participants in benefit plans established under the Employee Retirement Income Security Act

(ERISA), 29 U.S.C. § 1001 et formulation and administrative

seq.

Although

certain

policy

services are shared among the

Health claims

Net companies, a subsidiary is responsible for deciding in accordance with these policies and for paying claims

to participants subsidiaries do

from the not hold or

subsidiary’s assets. manage the assets of

HNI and its their customer

benefit

plans.

Rather,

the

Health

Net

subsidiaries

sell

insurance

policies

to

the

plans.

When

a

plan

beneficiary

submits

a

claim,

the

subsidiary

will

process

the

claim

and,

if

appropriate,

pay the

beneficiary HNI or any

from the subsidiary’s own of the subsidiaries obtains

funds. Similarly, when legal advice, counsel is

paid from HNI’s or the subsidiary’s funds. of the subsidiaries is a plan administrator the benefit plans.

Neither HNI nor any or trustee for any of

The plaintiffs are beneficiaries of two different employee benefit plans that purchased point-of-service policies from HN- NJ. Under the plaintiffs’ policies, health care providers are classified as in-network or out-of-network. When beneficiaries obtain care from out-of-network providers, they must pay a higher share of the cost than they would had they obtained care from in-network providers. In determining what percentage of an out-of-network charge HN-NJ will pay, HN-NJ will look to the Usual, Customary, and Reasonable (UCR) charge for the

service provided.

In defining UCR charges, Health Net

companies rely on data contained in certain national databases.

6

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