Regence Seeks to Dismiss Class Action Lawsuit
As predicted, Regence BlueCross BlueShield is seeking to dismiss the class action lawsuit that contends the insurance giant has spent millions of dollars paying high ranking executives rather than spending $150 million in excess profits on policyholders. Regence asserts the plaintiffs lack standing, and therefore the lawsuit should be thrown out.
Darian Stanford, the Portland lawyer, who filed the complaint, is determined to fight, and expects Multnomah County Circuit Court Judge Stephen Bushong to rule on this case in early September.
Last year, Mark Ganz, CEO and president of Cambia Health Solutions, the parent company of Regence, earned $856,976 in Oregon, according to documents filed with the Oregon Insurance Division, while his total compensation in Oregon, Utah and Washington reached $2.4 million, while Jared Short, president of health insurance services, saw his compensation rise by 50 percent, reaching $396,118 in Oregon and $476,970 from BlueShield of Washington.
Other Regence executives in Oregon and Washington saw hefty paychecks after receiving bonuses ranging from $111,321 to $286,755. Included in that pack were Angela Dowling, CEO; Donald Antonucci, past market president for Oregon; Kerry Barnett, executive vice president of corporate services; Vincent Price, executive vice president and chief financial officer; Murphy Hensley, past market president for Washington, and Christopher Gorey, vice president of sales for Washington.
For its part, Regence remains the dominant insurer in Oregon. At last count, it had 476,439 members on March 31, growing by 4.3 percent with its nearer competitor, Kaiser, trailing slightly behind with 467,515 members, while Providence had 185,863 live, PacificSource, 182,150 and Moda, 15,036. None of these enrollment numbers include the self-insured employers in Oregon.
In an earlier interview, Stanford contended 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.”
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.”
Regence has hired the law firm of Stoel Rives LLP to defend itself, and 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.”
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.”
Diane can be reached at [email protected].