N.C. Class Complains of Insurance Price-Fixing

(CN) - Blue Cross Blue Shield of North Carolina and other insurers conspired with a third network service to fix prices for chiropractic services throughout the state, a class claims.

Lead plaintiff Susan Sykes and three chiropractors claim in the May 26 action that the defendant insurers, which also include Cigna Healthcare of North Carolina, Medcost LLC, and Healthgram Inc., have operated a cartel in the state since at least 2005, to the detriment of health care providers and patients alike.

According to the complaint, the vehicle for this conspiracy is third party Health Network Solutions Inc., which is the subject of a separate lawsuit filed by the plaintiffs.

The network was established to provide chiropractic services to the insurers under contracts with de facto exclusivity covering all 100 counties of North Carolina. About half of the state's 2,000 contractors are enrolled in the network, the complaint says.

"HNS is like a union which negotiates employment terms for its members," the plaintiffs explain. "But unlike a union which represents the interests of the members, HNS puts the Insurers' interests ahead of those of the Plaintiffs and the Class at the behest of and acting in concert with the insurers to the detriment of Plaintiffs and the class."

The class claims that instead of looking out for their interests, Health Network Solutions has become a "gatekeeper" to the patients covered by the insurers.

"For chiropractors to be in-network providers for the insurers and obtain in-network access to the patients, they must go through HNS. This exclusivity enables HNS to collect fees from all chiropractors who seek access to patients covered by the Insurers. The exorbitant fees collected by HNS are among the spoils of HNS's and the Insurers unfair trade practices," the complaint says.

The plaintiffs say all by themselves, the fees represent a restraint of trade because they are a prerequisite to participating in the North Carolina market.

But the concerns are deeper than that, they say.

The complaint says that Health Network Solutions failed to avoid obvious conflicts of interest, becoming merely a tool of the conspiring defendant insurers, and that to obscure those relationships, it failed to obtain a state business license and operates under a structure that is at variance to its representations to federal regulators.

The plaintiffs says that to stay in control the defendants bullied chiropractors through Health Network Solutions' "Utilization Review Process." Operated under the guise of a quality assurance program, the process was used to terminate or threaten to terminate providers from the network without regard to the actual quality of patient care they provided, the complaint says.

"The Utilization Review Process had the effect of restraining covered services to patients, damaging Plaintiffs by denying the agreed compensation for covered services, by restricting service Plaintiffs may provide, and by denying access to covered patients unless Plaintiffs comply with the average cost per patient levels arbitrarily established by HNS in consultation with the Insurers," the complaint says.

"This conduct unjustly enriches HNS and the Insurers by shielding them from paying for medically necessary covered care," the plaintiffs claim.

Further, they say, by establishing an "average cost per patient" through Health Network Solutions, the insurers forced chiropractors to cut their fees and reduce the amount of medically-necessary treatment, while keeping for themselves money that would otherwise have gone to the practitioners.

The class seeks declaratory and injunctive relief, the creation of a constructive trust and the disgorgement of all ill-gotten gains to the plaintiffs, and compensatory and punitive damages.

It is represented by Robert Fields III of Oak City Law in Raleigh, and William Blancato of Doughton Blancato in Winston-Salem, North Carolina.

Representatives of the defendant could not immediately be reached for comment on Wednesday.

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