|
 Printer-Friendly Version
Archived News Release--Caution:
information may be out of date.
For more information call: 202-219-8921
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).
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."
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.
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.
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.
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.
# # #
(Herman v. Blue Cross/Blue Shield of Massachusetts) Civil Action No.
95-12522PBS
Archived News Release--Caution:
information may be out of date.
| 
