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Hospital Calls Blue Cross a Big Bully

HILLSBOROUGH, N.C. (CN) - A hospital claims Blue Cross Blue Shield of North Carolina promised it annual increases in reimbursements for 20 years, but hasn't paid any since 1996, and threatened to terminate the acute care facility's "preferred status" if it asserted its claim to the money.

Scotland Memorial Hospital, of Laurinburg, N.C., said it's tolerated the situation since the mid-1990s because payments from Blue Cross Blue Shield represent more than 50 percent of its inpatient private insurer revenue and it couldn't afford to lose its contract with the insurer.

Scotland Memorial seeks treble damages and punitive damages, plus interest, for breach of contract and unfair and deceptive trade practices.

The hospital, which according to its most recent annual report admitted more than 6,000 patients in 2008, entered into a "preferred hospital agreement" with Blue Cross Blue Shield in May 1990. The agreement established the terms and conditions and fee schedule the insurer would pay Scotland for health-care services.

In July 1993, the parties agreed that Blue Cross would increase its reimbursement rate each year by a percentage equal to the midpoint between the Consumer Price Index and either the medical care or hospital-and-related-services portion of the CPI - whichever was higher - during the preceding 12 months.

But Blue Cross Blue Shield of North Carolina has frozen its reimbursement at the 1995 rates ever since, the hospital says.

In the meantime, the relevant midpoint between the CPI and the medical portion of CPI has increased by 46.9 percent, according to the complaint.

Scotland Memorial is represented in Orange County Court by William Purcell II of Laurinburg.

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