Class Action Lawsuit Against Regence Heats Up
The class action lawsuit filed against Regence BlueCross BlueShield last month for stockpiling its excess funds could face technical challenges and be thrown out of court, acknowledged Darian Stanford, a Portland lawyer, who filed the complaint in Multnomah County Circuit Court.
Together with his counterpart in Philadelphia, David Sanoff, he contends Regence should be spending its $150 million in excess profit on policyholders rather than paying millions of dollars to executives. Last year, Mark Ganz, CEO and president of Cambia Health Solutions, the parent company of Regence, brought home $2.5 million from the health plans in Oregon, Utah and Washington. Ganz also earns a salary from the Regence BlueShield in Idaho, but that state does not disclose compensation of insurance executives.
Regence has hired the law firm of Stoel Rives LLP to defend itself, and must respond by July 19. Most likely, its attorneys will ask the judge to dismiss the case, asserting that the plaintiffs lack legal standing, Stanford said. “Our first hurdle is to be able to make these claims and be heard about our grievances.”
From its perspective Regence has more than a 70 year history of providing Oregonians with access to quality, affordable healthcare, according to its spokesman, Jared Ishkanian. “Our values are rooted in always putting our members first and having the financial stability to meet their medical needs, now and in the future. We believe this claim is meritless, and we will aggressively defend these allegations and do everything in our power to ensure assets dedicated to serving our members are not used to enrich trial lawyers.”
Stanford contends this is not a “lawyer get well case. In a class action lawsuit, the court can award a reasonable attorney fee, “but no one gets rich on a declaratory judgment. Enriching trial lawyers is kind of just hyperbolic rhetoric. Unlike us, the lawyers hired by Regence will get paid whether they win or lose.”
The lawsuit, filed on behalf of Tanya March and Dischinger Orthodontics –who are Regence policyholders – is not about being denied care. However, these plaintiffs have encountered problems with Regence. “Beyond that, I don’t want to reveal what otherwise would be considered protected information, but the case isn’t about denial of care specifically,” Stanford said. “It concerns how much money Regence has and whether that’s being used for the benefit of all its members.”
In December 2013, Regence had $150 million in excess profits, according to the financial statement filed with the Oregon Insurance Division. According to its bylaws, Regence says, “We maintain our status as a not-for-profit corporation to remain focused on providing value to our members,”
“If that’s the case, then let them come to court and prove it,” Stanford said. “I can’t see any appreciable way given these numbers how Regence is any different than NIKE, Precision Castparts or Coca Cola. Where’s the non-profit benefit here? What are they doing with all this money?”
Any excess profits Regence has -- beyond its actuarially required reserves -- should be spent on policyholders, giving them extra benefits such as waiving co-payments and deductibles for physician visits or providing generic drugs without charging a fee, Stanford said.
Regence’s medical reserves currently equal about $1,260 per member, Ishkanian told The Lund Report. That’s “enough to provide an ambulance ride to the emergency room, but far short of what members would need to receive treatment. Over the past decade, we've earned on average less than one-third of one percent (0.3%) of the premium dollar from our insurance operations.”
Stanford, who calls himself a trial attorney, admitted he likes taking swings at corporate America. “One thing our partners talk about, is that we might not win but at the end of the day, and I’m not trying to sound like George Bailey or Jimmy Stewart, but it’s the right thing to do. I didn’t go to law school to make money and move paper from one side of the desk to the other. I’m someone who needs to ask the hard questions.”
Corporate America keeps its keep doors closed to people who challenge their bad behavior – discouraging them from asking questions,” said Senoff, who’s known as a healthcare attorney, having filed lawsuits against insurance companies over the past 20 years representing plaintiffs who’ve been denied bone marrow transplants and chemotherapy to ward off cancer.
“This case against Regence seemed like a natural progression for me, to look at the bigger picture rather than an individual claim situation, and I’m determined to fight,” he added.
Diane can be reached at [email protected].