Judge Dismisses Attempted Class-Action Suit Against Regence BlueCross BlueShield of Oregon

Ruling: Plaintiffs did not have standing to sue over profits, executive pay.

Multnomah County Circuit Court Judge Stephen Bushong on Tuesday dismissed a class-action lawsuit against Regence BlueCross BlueShield of Oregon. The civil suit, filed in June, alleged that the Regence is not meeting its obligations as a nonprofit, that its profits are too high and pay to executives is too much.

But Dischinger Orthodontics, Tanya March and March’s two children, who collectively filed the suit against Regence, did not have standing to bring those claims, Judge Bushong wrote in the opinion he issued Tuesday.  

To bring a case against Regence, the plaintiffs would have to meet certain requirements. They might have had standing if they’d been affected in specific – not abstract – and measurable ways by the company’s decisions, or if they’d owners or directors – rather than insurance policyholders – at Regence, Bushong wrote. He dismissed the case with prejudice, meaning that the ruling is final.

“We’re pleased with the court’s decision,” Regence spokesman Jared Ishkanian said in an emailed statement. “Regence has a more than 70 year history of providing Oregonians with access to quality, affordable health care, and we’ll continue operating in this spirit as a nonprofit dedicated to serving our members.”

Reached by phone several hours before Bushong’s ruling, on Tuesday plaintiff’s attorney Darian Stanford declined to speculate on the outcome of the case. “"The judge asked tough questions of (lawfirm) Stoel Rives for Regence, and he asked tough questions of us.”

The dismissed claims had accused Regence, a nonprofit subsidiary of Portland-based Cambia,  of amassing profits of more than $600 million in recent years, with $150 million of this constituting “impermissible excess profits.” The suit also criticized $3.5 million in bonuses paid to Regence executives over the course of three years, often as a reward for financial performance, and noted that some of these leaders also received additional bonuses from companies related to Regence.

“A 'non-profit' public benefit corporation and $150 million in excess profits and seven-figure executive salaries are oxymoronic,” the civil complaint read. “Regence should be compelled to behave as Oregon law and Regence's Articles of Incorporation require - for the benefit of its policyholders such as Plaintiffs and all other similarly situated."

“There is no substance to the complaint,” Regence’s attorneys at Stoel Rives countered in their motion to dismiss the suit.

"While claiming to be wearing a 'white hat,' Plaintiffs, in fact, filed this lawsuit in complete disregard of Oregon law, and, it appears, with no understanding of the regulatory oversight to which Regence is subject or the function of Regence as a taxable health insurance company authorized to engage in any 'lawful purpose for which a corporation may be formed under the Oregon Nonprofit Corporation Law,” the motion said, pointing out that state regulators already closely monitor profits and other financial decisions at Regence.

Regence’s attorneys also argued that the plaintiffs were attempting to build a case based on a false premise, that a number of laws made the civil suit invalid, and that the plaintiffs did not have standing to file the suit.

Judge Bushong wrote in his opinion that he was only ruling on standing, not on Regence’s other reasons for dismissal, and not on the merits of the plaintiff’s arguments. “Dismissal here is consistent with the results reached in similar cases brought in other states,” he wrote.

Courtney Sherwood can be reached at [email protected].

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