St. Charles Surgical Hospital, LLC et al vs. Louisiana Health Service & Indemnity Company et al

Case Background

On June 8, 2022, Plaintiff St. Charles Surgical Hospital, LLC and Center For Restorative Breast Surgery, L.L.C. filed an Insurance Underpayment lawsuit in the New Orleans Civil District Court(Case number: 2:19-cv-13497). Judge Sidney Cates presided over the case.

Cause

St. Charles Surgical Hospital and the Center for Restorative Breast Surgery are renowned medical facilities specializing in breast cancer treatment. They provided high-quality medical services to patients insured by Louisiana Health Service & Indemnity Company (Blue Cross Blue Shield of Louisiana), Blue Cross & Blue Shield of Louisiana, Inc., and HMO Louisiana, Inc. The plaintiffs were out-of-network providers with an ongoing business relationship with the defendants. Before performing any procedures, the plaintiffs followed Blue Cross's authorization process, obtaining approvals and verifying that the insurer would pay a fair rate for out-of-network services. However, after the plaintiffs provided care, Blue Cross consistently underpaid them, often remitting only cents on the dollar compared to the billed amounts. This pattern of underpayment persisted for over a decade. Blue Cross engaged in deceptive practices by sending time-sensitive payment documents to patients instead of providers. It concealed internal policies aimed at reducing payments and used contradictory procedures. The insurer targeted the plaintiffs' doctors and patients, pressuring them to use in-network facilities. In some cases, Blue Cross authorized procedures but later denied payment. It claimed these procedures were not medically necessary without notifying the plaintiffs of this change. As the dominant health insurer in Louisiana, Blue Cross used its market power to intimidate and harass the plaintiffs. Its actions formed part of a continuous, systematic, and sophisticated scheme to defraud and harm out-of-network providers, including interfering with claims for out-of-state insureds and systematically underpaying for these services as well.

Injuries

The plaintiffs suffered significant financial harm due to Blue Cross's systematic underpayments and payment delays. Their relationships with patients were severely damaged when Blue Cross failed to cover authorized procedures as promised, placing the plaintiffs in a difficult position with patients who had been told their care was authorized. They also experienced substantial disruption to their medical practices from Blue Cross's intimidation tactics targeting their physicians and patients. These actions threatened the plaintiffs' ability to provide critical medical care, particularly to breast cancer patients.

Damages

The plaintiffs alleged they were underpaid by millions of dollars for authorized medical services provided to Blue Cross members over several years. They sought compensation for the full reasonable value of services rendered, as well as damages for Blue Cross's fraudulent and abusive business practices. The plaintiffs claimed they suffered ongoing damages due to Blue Cross's unlawful acts. While the exact amount of damages was to be proven at trial, the plaintiffs asserted that their damages exceeded the threshold necessary for a jury trial.

Key Arguments and Proceedings

Legal representation

• Plaintiff(s): Charles Surgical Hospital, LLC | Center For Restorative Breast Surgery, L.L.C.
  • Counsel for Plaintiff: James McClendon Williams| Ashley Gremillion Coker | Daniel Edwin Buras, Jr. | David Robert Sherman | James M. Garner | Joshua Simon Force | Matthew Arthur Sherman | Patrick R. Follette | Walter R. Woodruff

• Defendant(s):Louisiana Health Service & Indemnity Company doing business asBlue Cross Blue Shield of Louisiana | Blue Cross & Blue Shield of Louisiana, Inc. | HMO Louisiana Inc
  • Counsel for Defendants: Kim M. Boyle| Clerc Cooper | Douglas M. Chapoton | Jessica W. Chapman |Michael C. Drew | Michael Joseph O'Brien | Richard Allen Sherburne, Jr. | Richard John Tyler | Shelton Dennis Blunt | Tyler J. Rench

Key Arguments or Remarks by Counsel

“Blue Cross either slow paid, low paid, or no paid, all of those bills for the last eight years. They wanted to pressure the doctors and the hospital to come into their network,” said James Williams of Chehardy Sherman Williams Law “Blue Cross Louisiana was able to make 16 percent of whatever amount of money they saved off of the price,” said Williams. “The jury’s finding of misconduct by Blue Cross and Blue Shield of Louisiana shows that the legal system will not allow Blue Cross and Blue Shield of Louisiana to put its self-interest ahead of that of its patients. Physicians and patients have a right to expect Blue Cross and Blue Shield of Louisiana to uphold their promise to provide fair and accurate payment for services,” said attorney Matthew Sherman with Chehardy Sherman Williams.

Claims

The plaintiffs brought two main causes of action under Louisiana state law in a Insurance Underpayment Lawsuit: Fraud: Blue Cross made material misrepresentations about paying for out-of-network care. The plaintiffs reasonably relied on these representations while providing services to Blue Cross members. Blue Cross intended to deceive the plaintiffs and gain an unjust financial advantage by withholding promised payments. The fraudulent actions included misrepresenting and failing to disclose internal policies that were designed to reduce payments. Additionally, Blue Cross employed contradictory policies and concealed guidelines used to deny, delay, or reduce payments for medically necessary services. Abuse of Rights: Blue Cross abused its rights under its contractual relationships with the plaintiffs. It acted with the predominant motive to harm the plaintiffs' practices. This abuse included arbitrary and capricious violations of agreements to pay. Blue Cross also unilaterally refused to pay agreed-upon amounts. Additionally, it used intimidation tactics against the plaintiffs and their patients. The plaintiffs emphasized that their claims were based solely on state law duties owed directly to them as providers. They expressly waived any federal claims under ERISA or FEHBA and any claims related to coverage determinations or benefits owed to patients. The plaintiffs stated they were not seeking to enforce rights under any insurance policies or recover benefits on behalf of patients.

Defense

The insurer argued that authorizing a medical treatment did not guarantee payment, countering the plaintiffs' claims of misrepresentation. Blue Cross emphasized that it did not have a set reimbursement rate for out-of-network providers and instead negotiated individual deals with brokers or employers. They contended that this practice was standard in the insurance industry and did not constitute fraud. The company denied engaging in repricing practices as alleged by the plaintiffs. However, Blue Cross acknowledged that it had agreements with out-of-state Blue Cross plans, which it helped administer. These out-of-state plans determined the payment amounts for claims, a process that Blue Cross argued was distinct from the fraudulent activities alleged by the plaintiffs. In its defense, Blue Cross pointed to its previous legal victories against similar claims. The company highlighted that it successfully defended two comparable lawsuits brought by the hospital in federal court during the early 2010s. By referencing these prior cases, Blue Cross sought to establish a precedent for dismissing the current allegations. The company aimed to demonstrate the legitimacy of its payment practices through these references. Blue Cross maintained that its actions were within legal and industry norms, asserting that the plaintiffs' characterization of its practices as fraudulent or abusive was unfounded. The insurer's defense strategy aimed to portray the dispute as a routine disagreement over reimbursement rates rather than a systematic attempt to defraud healthcare providers.

Jury Verdict

On September 20, 2024, a jury ruled in favor of St. Charles Surgical Hospital and the Center for Restorative Breast Surgery in their case against Blue Cross Blue Shield of Louisiana. In a nearly unanimous decision (11-1), the jury awarded the hospital over $421 million in reimbursements for unpaid claims. The verdict was based on an eight-year billing total of $506.7 million, minus $85.3 million already paid by Blue Cross and patients. The jury determined that Blue Cross significantly underpaid the hospital, leading to the substantial award in an Insurance Underpayment Lawsuit. Court Documents: Available Upon Request Press Release: https://www.msn.com/en-us/health/other/louisiana-doctors-win-big-lawsuit-against-blue-cross-blue-shield/ar-AA1r4Mwy https://www.wdsu.com/article/jd-vance-tim-walz-vice-presidential-debate/62442288