BOZEMAN HEALTH FILE

Five Montana hospitals, including Bozeman Health, are settling a lawsuit that accuses them of making a deal with a health insurer to inflate employee health coverage prices in return for $26 million split between the hospitals.

Five Montana hospitals are settling a lawsuit that accuses them of making a deal with a health insurer to inflate employee health coverage prices in return for $26 million split between the hospitals.

The hospitals maintain they did nothing wrong and agreed to pay $6.9 million to employees to resolve the case. A U.S. District Court judge in Great Falls preliminarily approved the settlement Oct. 17.

Notices went out last week to thousands of hospital employees who could receive money from the settlement.

The hospitals involved include Bozeman Health Deaconess Hospital, Billings Clinic, St. Peter’s Health in Helena, Community Medical Center in Missoula and Northern Montana Hospital in Havre.

The complaint was filed in 2017 on behalf of eight hospitals workers.

The complaint alleges the hospitals agreed in 2012 to exclusively buy employee health insurance plans from Blue Cross Blue Shield of Montana — the state’s largest insurer — for six years. In exchange, the hospitals received roughly $26 million and two seats on the insurer’s board of directors, according to the complaint.

In individual statements Friday, hospitals said they took the money to benefit their employees and that the settlement avoids an expensive lawsuit.

The complaint alleges the deal could have impacted 11,000 hospital workers’ with health coverage plans that paid “hundreds of thousands to millions” to Blue Cross each year.

“Defendants attempted to — and did — profit at the expense of the plans and the participants,” according to the complaint.

Blue Cross expected to make back the money it paid to the hospitals and then some through the deal, according to the complaint which cites the insurer’s 2012 annual statement.

John Doran with Blue Cross Blue Shield of Montana said the insurer can’t comment on the case because it’s not a defendant.

The complaint alleges the agreement between the hospitals and Blue Cross was similar to a plan blocked by a joint federal and state antitrust action in 2011. It also claims the hospitals broke federal law by not prioritizing their workers’ interests in the work-based health plans.

Two hospitals — St. Peter’s and Northern Montana Hospital — notified people covered by the plans that they would get “some” or a “portion” of the money Blue Cross paid the hospitals in 2018, according to the complaint.

The workers weren’t told how much of the money the hospitals kept. No other hospitals are known to have offered payments to their employees from the money it received from Blue Cross, according to the complaint.

The plaintiffs’ attorney John Amsden, of Bozeman, said he couldn’t comment before the settlement was final.

If the settlement is approved, hospitals’ payments would be as follows:

• Billings Clinic: $2.5 million

• Community Medical Center: $2 million

• Bozeman Health: $1.3 million

• St. Peter’s Health: $775,000

• Northern Montana Hospital: $348,000

Neither Community Medical Center or Northern Montana Hospital offered statements on the case before deadline.

A statement from Bozeman Health on Friday said the hospital disagrees it should have invested the money from Blue Cross in its employees immediately. Bozeman Health said it used the money as a reserve for its health plans to keep employees’ premiums low.

“Bozeman Health continues to prioritize the health, safety, and wellness of all Bozeman Health employees and patients, and we’re pleased to have settled this matter,” the statement said.

Billings Clinic said in a statement the money from the agreement went into a trust for the benefit of employees. It said that money remains available for future employee benefits.

“Along with our insurance company, we decided the most responsible way to resolve this time-consuming and expensive legal matter was to enter into a settlement,” the statement said. “We will continue offering our employees excellent benefits that are extremely competitive with our peers across the nation.”

St. Peter’s said in a statement the claims in this lawsuit relate to the hospital changing its insurance company “almost a decade ago.”

“We have continued to deny any wrongdoing and believe we exceeded our legal obligations, sharing the monies we received from Blue Cross Blue Shield of Montana with our employees who were participants in the health plan,” the statement said.

A hearing on the final approval of the settlement is scheduled for Dec. 11. If approved, the hospitals will be protected from any further litigation related to the claims.

Support quality local journalism. Become a subscriber.

Subscribers get full, survey-free access to the Bozeman Daily Chronicle's award-winning coverage both on our website and in our e-edition, a digital replica of the print edition.