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New Jersey Psychologists Fight to End Unlawful Practices of Major Health Insurance Plans



The New Jersey Psychological Association (NJPA), which represents approximately 2,000 psychologists throughout the state, has filed a lawsuit in conjunction with two patient co-plaintiffs against Horizon Healthcare Services, Inc. and Magellan Health Services. The suit seeks a declaration that Horizon and Magellan have violated patient confidentiality rights and breached the terms of their plan documents by systematically and wrongfully requiring psychologists to disclose confidential patient information to secure authorization for payment for mental health treatment.


The suit alleges that defendants’ practices not only contradict the plan documents of the State Health Benefits Plan, the largest insurance plan in the state, but also violate state and federal laws protecting patient privacy.  NJPA filed the suit to preserve and protect the rights of its members and its members’ patients, who are directly affected by Horizon’s and Magellan’s actions. 

“The skill and support of my psychologist were crucial when I was dealing with a deeply personal and challenging time in my life,” said Steven Sargese, a retired law enforcement officer in Essex County and a co-plaintiff in the lawsuit.  “Unfortunately, my health plan repeatedly denied the full course of treatment recommended by my psychologist.  I’m determined to stand up for people who need mental health services and cannot stand up for themselves.”

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“The insurance companies are harming the very people they're supposed to help and make it increasingly difficult for us to help these individuals lead productive and healthy lives,” said New Jersey Psychological Association President Sharon Ryan Montgomery, PsyD. “They put us between a rock and a hard place by requiring psychologists to violate patient confidentiality and disclosing patients’ innermost thoughts and feelings or denying authorization that limits patients’ access to care. Their actions are in direct conflict with their stated mission of improving health and can be very debilitating for patients and society as a whole.”

Under the New Jersey Practicing Psychology Licensing Act, psychologists are prohibited from disclosing confidential communications, notes, or records as defined in the Act.  Under the federal HIPAA Privacy Rule, psychologists may only provide the minimum patient information necessary to make coverage, benefit and payment determinations.

Similarly, plan documents relating to the State Health Benefits Plan, called NJ Direct, state that only the minimum necessary information will be requested when making treatment and payment decisions. Further, the State Health Benefits Plan is subject to state and federal privacy laws designed to protect the disclosure of patient health information.

“The American Psychological Association Practice Organization applauds the NJPA for undertaking this battle on behalf of its members and the patients they serve,” said Executive Director for Professional Practice Katherine C. Nordal, PhD.  “Confidentiality is vital to the patient-provider relationship, and any action that undermines patient privacy, especially in violation of the law, must be addressed.”

In addition to the lawsuit against Horizon and Magellan, NJPA is further upholding its commitment to psychologists and patients by participating in several class-action lawsuits against Horizon, Aetna and Cigna. The suits challenge the unlawful practice of systematically under-paying out-of-network healthcare providers for their services by knowingly relying on a faulty database to determine reimbursement rates.

About NJPA

The New Jersey Psychological Association (NJPA) is a private, not-for-profit, professional organization representing approximately 2,000 psychologists throughout the state.  Since its establishment in 1931, NJPA has been committed to its mission of advancing psychology as a science, as a profession and as a means of promoting health and human welfare. The NJPA has continued to be instrumental in protecting patient privacy, maintaining the standards of practice, and educating the public about the important role of psychology in health, mental health and as a part of ongoing wellness.  For more information about NJPA please visit:  


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