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Release Date: 01/30/1998
Release Number: 98-35
/ BOS 98-026
Contact Name: Gloria Della
Phone
Number:202.219.8921 |
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A U.S. federal judge today ordered Blue Cross/Blue
Shield of Massachusetts to repay $10 million to participants in and sponsors of
private-sector health plans covered under the Employee Retirement Income
Security Act(ERISA). |
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The court action is the result of a lawsuit filed
by the U.S. Department of Labor against Blue Cross/Blue Shield for failing to
refund savings to ERISA-covered, self- insured plans for hospital services
rendered to residents of Massachusetts between 1988 to 1992. The health care
provider also may be required to pay up to $2 million in civil penalties and
must notify affected employers of any restitution owed to them under the
settlement.
"The department's actions ensure that workers and businesses
receive their fair share of state-mandated health care rebates," said Secretary
of Labor Alexis M. Herman. "At a time when the Administration is working to
increase cost-effective health care coverage, it is unacceptable that any
health care provider would reap excessive profits." |
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Because Massachusetts state law limited the amount
hospitals could charge Blue Cross/Blue Shield for services rendered, between
1988 and 1992, Blue Cross/Blue Shield was refunded approximately $180 million
from area hospitals on behalf of its customers. The insurer was required to
refund a proportionate share of the money to each of the self-insured plans
covered by ERISA, but failed to pass along this money. |
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The lawsuit, filed November 20, 1995, alleged that
Blue Cross/Blue Shield improperly benefitted by not refunding the savings and
by failing to take steps to reduce the copayments of participants and
beneficiaries to reflect the reduced amounts. |
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This case is part of a nationwide enforcement
initiative begun by the department in 1993 to examine plan service providers,
such as insurance companies, third-party administrators and health care
organizations that provide administrative services to self- insured health
benefit plans. The investigative effort is designed to determine whether
retention of undisclosed discounts under agreements with medical service
providers (i.e., hospitals, physicians, etc.) is a widespread practice by
associations that act as third-party administrators. Since 1993, the department
has conducted 118 investigations and recovered more than $35 million. |
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The investigation leading up to the court action
against Blue Cross/Blue Shield of Massachusetts was initiated by the
department's Boston regional office of the Pension and Welfare Benefits
Administration. The settlement was entered in federal district court in
Boston. |
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(Herman v. Blue Cross/Blue Shield of
Massachusetts)
Civil Action No. 95-12522PBS |
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U.S. Department of
Labor news releases are accessible on the Internet. The information in this
news release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing your
request. Call 202.693.7773 or TTY 202.693.7775. |
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