Blue Cross Faces Allegations That It Drives Up Prices By Stifling Competition Around the Country

The nation's biggest health-insurance story at the moment probably revolves around the U.S. Supreme Court deliberations on the fate of Obamacare. But a lawsuit filed recently in the Northern District of Alabama could prove to have a major impact in its own right.

A case styled Fred R. Richards, et al v. Blue Cross and Blue Shield of Alabama, et al alleges that 38 Blue Cross companies across the country illegally stifle competition and drive up costs for consumers. Court documents list Charles M. Thompson of Birmingham as chief local counsel for the plaintiffs. The New York-based firm of Cohen Milstein also represents plaintiffs in the antitrust case, which seeks class-action status.

The named plaintiff is Richards and Sons Construction Co., a small Bessemer-based firm and Blue Cross customer. Reports Stan Diel of al.com:

According to the lawsuit filed this week in the U.S. District Court for the Northern District of Alabama, the 38 member companies in the national Blue Cross and Blue Shield Association are granted service territories outside of which they are restricted from conducting business. 

Such agreements are a violation of federal anti-trust law and "have resulted in fewer health insurance choices for Alabama residents and increased premiums ..." the lawsuit alleges. "This reduced competition and inflated premiums would not be possible without defendants' illegal agreements to eliminate competition and divide markets."

What was the response from Blue Cross?

Koko Mackin, vice president for corporate communications at Blue Cross and Blue Shield of Alabama, said the insurer has the fifth-lowest family premiums in the country among all employers, and the suit is without merit.

The case involving Blue Cross and Blue Shield of Alabama hits close to home here at Legal Schnauzer for several reasons:

*  Mike McGarity, the troublesome neighbor who launched our numerous legal headaches, works at BC/BS of Alabama, even though he has an extensive criminal record. As a Medicare contractor, BC/BS of Alabama is supposed to abide by stringent federal guidelines on employee screening. So how is it that the company has a documented criminal in its midst?

* Mrs. Schnauzer and I, for a short while, received our health care from Dr. Amy LeJeune at the UAB Inverness Clinic. We only went there because Dr. Edward Childs, our family physician for roughly 20 years, retired from his practice at UAB's Kirklin Clinic. Dr. LeJeune continued a prescription that Dr. Childs had initiated about eight years earlier, and things seemed to be going smoothly. Then, about three months ago, I was notified that Dr. LeJeune was not going to continue the medication. In fact, she was going to rescind a prescription she already had written. When I inquired as to what in the heck was going on, Dr. LeJeune's nurse, Amy Mathis, informed me that the decision to discontinue my prescription came after Blue Cross and Blue Shield of Alabama started to "have an issue" with me being on the medication. Ms. Mathis further stated that BC/BS was "starting to see that there was no reason" for me to be on the medicine. She didn't say that Blue Cross had questioned whether it was going to cover the medicine; she said it had determined that I should not be taking it. In other words, a nurse for a UAB physician flat-out told me that Blue Cross was making decisions about my medical care. Does this happen to other people? Does Blue Cross "play doctor" for other insureds? Doesn't that go way beyond an insurer's authority? Does it violate laws that govern the health-insurance field? And why does a UAB doctor allow a health-insurance company to control what she does or does not prescribe? Suffice to say, Mrs. Schnauzer and I no longer entrust our health care to Dr. LeJeune or UAB Inverness Clinic, and we would strongly encourage others to avoid them.

* Finally, I was checking documents at the federal courthouse in Birmingham recently when I stumbled upon a most interesting whistleblower lawsuit. It seems a former high-ranking executive at BC/BS of Alabama alleged that the company took Medicare dollars and used them to shore up its private insurance business. I will be writing more shortly about that case, but for now, it raises these questions: How many Blue Cross affiliates around the country use federal taxpayer dollars to illegally pad the bottom line on their private insurance business? How much does this cost taxpayers every year? Is this an indication that we really do need a government-run health-care program to replace private insurers who cannot be trusted?