Ohio Court Finds Blue Cross Liable for Misleading Copayment Charges

Extract

On August 29, 1995, the United States District Court for the Northern District of Ohio ruled that certain practices of Blue Cross and Blue Shield of Ohio (BCBSO) relating to the calculation of copayments on insurance claims violated provisions of ERISA, and thus BCBSO could be liable for unpaid benefits and breach of fiduciary duty (McConocha v. Blue Cross & Blue Shield of Ohio, 1995 WL 561444 (N.D. Ohio Aug. 29, 1995)). According to BCBSO's Explanation of Benefits and Schedule of Benefits, beneficiaries were responsible for a 20 percent copayment for hospital charges, and the remaining 80 percent of the Provider's Reasonable Charges would be paid by BCBSO. BCBSO negotiated with the hospitals to create discount agreements whereby the actual charge to BCBSO was less than 80 percent of the total amount of the hospital's charges. By this arrangement, BCBSO paid less than 80 percent of what patients were billed; concurrently, patients paid more than 20 percent of the amount ultimately paid to hospitals for their services.