Blue Cross Blue Shield Blamed for Failure

(CN) - An Alabama healthcare provider claims in a lawsuit that Blue Cross Blue Shield forced it out of business by concealing information during contract negotiations.

Alabama Psychiatric Services, along with fellow plaintiff Managed Health Care Administration, sued Blue Cross Blue Shield of Alabama in the Jefferson County, Ala. circuit court last week.

The May 15 lawsuit accuses Blue Cross Blue Shield of misrepresenting its reasons for restructuring its behavioral health products and using confidential information to eliminate a product known as Expanded Psychiatric Services.

The EPS model, which was overseen by Managed Health Care Administration for "approximately 26 years," allowed Blue Cross Blue Shield of Alabama members to receive mental health services from APS.

According to the arrangement, Blue Cross Blue Shield of Alabama "contracted with its members for health insurance, and out of the premiums Blue Cross Blue Shield received, BCBSAL made a per-month per-member payment to MHCA."

The agency, in turn, arranged for the members to receive mental health services at APS facilities around the state.

According to the complaint, approximately 900,000 Blue Cross Blue Shield members received treatment through EPS.

"For more than twenty years, MHCA, APS and BCBSAL enjoyed a mutually profitable relationship operating under the capitation network model," the plaintiffs claim.

In 2013, however, BCBSAL contracted with another company, New Directions Behavioral Health, to manage its behavioral health products. According to the complaint, that company is one in which BCBSAL has an ownership interest.

The plaintiffs' allegations against Blue Cross Blue Shield stem from the negotiations that followed between the parties.

According to the complaint, Blue Cross Blue Shield misrepresented the need for MHCA to provide proprietary information to New Directions, indicating that it was necessary to keep their relationships intact.

From the complaint: "The representation was untrue, in part, because BCBSAL's true intention was to put a business model in place that would significantly undermine MHCA and APS's ability to conduct their business and provide care for patients, and to dismantle the statewide network of behavioral health service providers MHCA and APS had created."

The plaintiffs also claim that Blue Cross Blue Shield misrepresented certain costs associated with expanded psychiatric services, specifically in regards to "out-of-network leakage." The leakage was not a problem to the extent that BCBSAL had suggested, plaintiffs claim.

As a result of the subdelegation agreement the parties reached, "a substantial portion" of MHCA's revenue stream was eliminated, it claims, and APS was forced to close its doors. That also meant the layoff of approximately 260 employees.

According to the plaintiffs, "Had BCBSAL provided the whole truth, and not suppressed material information in its communications with MHCA and APS, MHCA and APS would not have agreed to the business arrangement with BCBSAL and New Directions."

The complaint includes a number of claims against Blue Cross Blue Shield, including fraudulent misrepresentation, fraudulent suppression, breach of contract, breach of implied contract, breach of implied covenant of good faith and fair dealing, promissory estoppel, conspiracy and unjust enrichment.

The plaintiffs are seeking compensatory and punitive damages in the matter. They arre represented by Birmingham attorneys Michael Yancey, Matthew Stephens and Rodney Miller with McCallum, Methvin & Terrell.

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