Wendell Potter is a former CIGNA executive who became a healthcare industry whistleblower. He is an outspoken critic of the US private health insurance industry–“particularly HMOs, and the sometimes-hidden tactics insurers can use to increase their profits by creatively denying policyholders their healthcare benefits when needed the most.” He has advocated for reforms in the healthcare industry in this country. Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.
Potter has an interesting article about Blue Cross Blue Shield of Michigan titled Court Case Shows How Health Insurers Rip Off You And Your Employer over at Crooks and Liars. In his article, Potter said that many Americans “blame Obamacare for every hike in premiums despite the fact that the rate of increase for most folks was actually greater before 2010, the year the law went into effect.” Potter noted that health insurers are delighted that many people “blame Obamacare for rate increases because it deflects attention away from them and, according to documents made public in a recent lawsuit against a big Blue Cross plan, the questionable activities they’ve been engaging in for years to boost profits.” Potter added that one of the reasons workers have been paying more for health insurance “is allegedly a common practice among insurers: charging their employer customers unlawful hidden fees.”
According to Potter, the unlawful fees “came to light when Hi-Lex Controls, an automotive technology company, took Blue Cross Blue Shield of Michigan (BCBSM) to court in 2013” after the company became suspicious that BCBSM had been systematically cheating it over the course of nearly twenty years.
After reviewing evidence in the case, a judge ordered that BCBSM stop charging the hidden fees and pay Hi-Lex $6.1 million.
Documents filed in the case showed that in 1993 BCBSM implemented a scheme through which it would collect additional revenue by adding certain mark-ups to hospital claims paid by its self-insured customers. Most of the country’s largest employers self-insure, which means that they are on the hook for medical claims when employees and their dependents get sick or injured. Self-insured companies hire firms like BCBSM to do the paperwork. It is the employer’s money—not the insurance company’s—that is “at risk” in such arrangements.
After suing and getting documentation from BCBSM, attorneys for Hi-Lex were able to show the court that BCBSM marked up hospital claims by as much as 22 percent. BCBSM didn’t disclose the markups, however. As part of the scheme, regardless of the amount BCBSM was required to pay a hospital for a given service, it reported a higher amount to Hi-Lex and pocketed the difference.
Potter said that the hidden fees had been “listed in internal BCBSM documents under a variety of names: provider network fees, contingency/risk fees, retiree surcharges, and—my personal favorite—other-than-group subsidy fees.” He noted that internal company emails “showed that BCBSM knew customers were unaware of the markups and that the company actually trained its employees to downplay the hidden fees should customers suspect they were being gouged.”
Potter reported that the Court of Appeals affirmed the $6.1 million fraud judgment–and agreed with the lower court that “BCBSM committed fraud by knowingly misrepresenting and omitting information about the disputed feeds in contract documents.” The court said that the misrepresentation “helped sustain the illusion that BCBSM was more cost-competitive” than its competitors.
According to Potter, SCOTUS refused to take up the case–which means that the lower court’s ruling will stand. Potter said that as a consequence of the Supreme Court’s decision, as many as 50 of BCBSM’s other customers have also filed suit. Potter added that the health insurer is now reportedly trying to settle with some of the other companies rather than “risking a similar fate in the courts.”
NOTE: In his article, Potter noted that BCBSM was not the only insurer who engaged in these type of fraudulent practices.
Court Case Shows How Health Insurers Rip Off You And Your Employer (Crooks and Liars)
Wendell Potter (Wikipedia)