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Landmark seeks permission to sue Blue Cross

March 22, 2012

It’s no secret that Blue Cross Blue Shield of Rhode Island and Landmark Medical Center have a rocky relationship. Way back in 2010, Landmark said a failure to negotiate fair reimbursement rates with BCBSRI  made its most promising bidder drop out of a deal to buy the hospital (that hospital chain, then known as Caritas, eventually came back with another offer an a new name-Steward. )

More recently, Blue Cross has opposed a piece of legislation that would make it possible for for-profits to buy more than one hospital in the span of three years.  This is a direct slam on Steward, which says it might back out of buying Landmark if the bill doesn’t pass.

The feud has spilled out on the pages of the Providence Journal’s editorial section.  Blue Cross Blue Shield’s CEO and President made a swipe at Steward’s desire to buy multiple hospitals.  Landmark countered with a response, and just today Steward followed up with some choice words of its own.

In the latest escalation of this feud, now Landmark wants to take Blue Cross Blue Shield to court. Tomorrow, the hospital’s Special Master Jonathan Savage will ask Superior Court Judge Michael Silverstein to lift his hold on a year old lawsuit that takes Blue Cross Blue Shield to task for offering inadequate reimbursement rates.  The suit asks for three things-

  1.  An order forcing Blue Cross to “negotiate in good faith” and sign a contract with Landmark for “reasonable reimbursement rates.”
  2. Money to compensate Landmark for all Blue Cross Blue Shield’s “past underpayments.”
  3.  An order compelling Blue Cross to cut down on its administrative costs and limit its “accumulation of wealth.”

Judge Silverstein put a hold on the lawsuit in the midst of a busy season of trying to find a buyer for Landmark with the hope that the hospital and its new owner could eventually work something out with the health insurer. Apparently that hasn’t happened.

A note on request #3- according to Blue Cross, 85.3% of the company’s expenses went directly to pay for medical expenses last year. That means contributions to reserves and administration costs accounted for 14.7% of its budget. That’s on par with requirements set by the federal health care overhaul.   Also, Rhode Island’s Health Insurance Commissioner keeps a pretty tight eye on health insurers in the state, so I’m not sure what a judge’s order could accomplish beyond what he’s already doing.

Judge Silverstein considers the matter tomorrow at 9:30am in his courtroom. I’ll let you know what happens.

3 Comments leave one →
  1. Moe Howard permalink
    March 22, 2012 5:48 pm

    Just another of Steward’s attempts to extort any and all possible RI entities before we beg them to please, please just take the keys to Landmark.

    These guys are laughing all the way to the (Wall Street) bank!

    The Judge and his Special Master own this one.

  2. Moe Howard permalink
    March 22, 2012 6:58 pm

    Oh, in his op ed in today’s ProJo Mr. Guyon points out (proudly) that Steward “rescued the pension plan of 14,000 employees” in Massachusetts when they acquired the six Caritas Christi hospitals. In the Landmark deal Steward kicks the existing LMC pension responsibilities to the Pension Guaranty Fund where pensioners will get a percentage of what they have accrued! Interesting, no?


  1. Landmark and Blue Cross ordered to go into mediation « The Pulse: health care in RI

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