Regence Denied Motion to Suspend PEBB Ruling

September 14, 2009 -- With just two weeks before state employees can change their health plan provider, circumstances remain unchanged in the decision by the Public Employees Benefit Board to strip Regence BlueCross BlueShield of Oregon as one of their options.

 

Multnomah County Circuit Court Judge Alicia Fuchs denied a motion this morning by lawyers representing Regence asking that the court suspend PEBB’s decision on the grounds that it was unlawful. A trial to fully decide the matter will commence soon.

 

Providence Health Plan in April was awarded the sole contract to insure more than 100,000 state employees and their dependents for the next two years, starting January 1, 2010.

 

Regence currently insures roughly 80 percent of state employees. The decision represents a multi-million dollar loss for the state’s largest commercial insurance company, ending Regence’s 20-year history with the state.

 

Although state employees and their families currently insured under Regence will have to switch health plans, only 5 percent of enrollees will likely have to switch doctors, according to an analysis by PEBB officials.

 

Per Ramfjord, an attorney with Stoel Rives representing Regence, argued that PEBB changed its administrative rules to apply retroactively in order to “manipulate its action to justify an unlawful act,” being the rejection of Regence’s bid.

 

Ramfjord claimed the process that evaluated Regence was “unfair,” “unlawful,” and caused “irreparable harm.”

 

“If they had been fairly evaluated, it would have saved the state money,” Ramfjord said.

 

In a letter to PEBB contesting PEBB’s decision, Regence then-president Dr. Bart McMullan claimed Regence could save the state $10 million.

 

Regence had asked for $31.81 million to administer the PPO contract over the next two years, while Providence’s offer was $29.71 million. For its part, PEBB said money played a minor role. At issue rather was which plan could improve quality and patient outcomes.

 

Both plans were allowed to renew existing contracts so the bidding was closed to other health plans. Leading up to the process, Regence proposed raising rates by 20 percent, then later compromised to 16.5 percent.

 

Senior Assistant Attorney General Roger DeHoog, arguing for PEBB, said the burden to prove there was error and irreparable harm fell on Regence, which they failed to do. And the judge agreed.

 

“The harm is speculative,” DeHoog said. “Regence is not promoting the public interest, but Regence’s own interest.”

 

After attorneys on both sides argued their case for more than an hour, Judge Fuchs delivered her verdict swiftly, indicating she’d studied the matter thoroughly beforehand. A separate motion to change the venue of the trial to Salem was also denied.

 

Arguing for Providence Health Plan in collaboration with the DOJ was Pete Shepherd, former Deputy District Attorney and current attorney for Harrang Long Gary Rudnick, PC.

 

Regence lost another multi-million contract last year when the Oregon Educators Benefit Board chose The ODS Companies and Providence Health Plans to insure its 145,000 school teachers.