By Bill Britt
Alabama Political Reporter
MONTGOMERY—A spalling class-action antitrust lawsuit against Blue Cross/Blue Shield (BCBS) alleges that policy holders (subscribers) in Alabama pay a higher rate for health insurance, because of an “illegal conspiracy to unlawfully divide and allocate the geographic markets for health insurance in the United States,” according to the federal suit.
BCBS contends it has acted within the law and has done nothing wrong.
Unsealed depositions given by BCBS Chief Actuary Noel Carden, as well as Steven Ostlund of the Alabama Department of Insurance (ALDOI), would appear to go beyond the accusations that individuals pay more for insurance in Alabama, because of how BCBS restricts competitions, according to the lawsuit.
Carden and Ostlund offer a window into the relationship between BCBS of Alabama and the Department of Insurance.
The revelations in the lawsuit come at a time when BCBSAL is seeking a 36 percent average rate increase on individual plans offered through the Affordable Care Act (ACA) market place, and a 26 to 41 percent hike on other plans for those who do not qualify for ACA.
According to the transcript BCBS’s Chief Actuary Carden, as well as senior management, were aware that Blue Cross of Alabama was charging rates that were different from those that were filed with the State.
ALDOI’s Actuary Ostlund was questioned about what actions were taken by the department once it became aware of the alleged suspect filings.
Ostlund Transcript 150:
Q: Let me just ask you to assume that this policy at Blue Cross of Alabama was known to senior management, including Mr. Carden, from its inception until they stopped doing it. Are you with me on that?
Q: And that, therefore, it was known that the SERFF filings, the official records, were false in a significant way. What is your belief about what the Department of Insurance should do?
(MR. PRIESTER): Object to the form.
A: That is conjecture. I don’t know what we would do.
Q: (BY MR. SMITH): I’m just going to proffer to you that I took Mr. Carden’s deposition a few days ago and he told me that he knew about it and that it was approved by senior management. So it’s not — it’s not actually conjecture. If those are the facts, what is your intent about what to do?
(MR. PRIESTER): I object to the form and suggesting testimony. But he can answer a question about his knowledge.
A: We will look at the facts. We will look at the — you know, we’ll talk to the commissioner and talk to the general counsel, evaluate what is the proper regulatory response.
Q: (BY MR. SMITH): Right. Have you talked to the commissioner about this?
A: I have.
Q: And tell me about that discussion.
Here Ostlund testifies about at conversation with Insurance Commissioner Jim L. Ridling, (a hold over from the Gov. Bob Riley Administration) which included the need “to wait to see what came out of it, that there was alternatives in terms of what kind of repayments were appropriate, whether the payments should be going to employees or employers….”
Ostlund Transcript 152-153:
Q: All right. What was the commissioner’s reaction? Was he upset, angry?
A: He acknowledged that he received the email and indicated agreement with me that — that — I had suggested that it was like — you know, it was probably best that the money go back to the employer and that the money going back to the employer should be netted against that same employer’s overpayment, underpayment, which was an initial suggestion by Blue Cross-Blue Shield as to the approach that they would take.
Q: All right. And I think my question was whether the commissioner was upset or angry by disclosure of the fact that the largest insurer in the state had submitted rates for approval and then filed different rates from that.
A: He did not express any.
Ostlund goes on to say that he and Commissioner never discussed any type of sanction against BCBSAL or informed the Legislature, the public or the media about omissions on filings or rates variations.
The case has been consolidated in the US District Court for the Northern District of Alabama under District Judge R. David Procter.
Powerhouse attorneys Michael Hausfeld with Hausfeld Global Litigation Solutions and David Boies Chairman of Boies, Schiller & Flexner LLP serve as co-lead counsel in the suits.