The hospitals made individual statements claiming that they took the money to benefit their employees, and that the settlement avoids an expensive lawsuit. (Photo: iStock)

Five hospitals in Montana are settling a lawsuit that has accused them of inflating health coverage prices on employee health plans for a health insurer that offered them $26 million, to be split five ways.

According to the Bozeman Daily Chronicle, Bozeman Health Deaconess Hospital, Billings Clinic, St. Peter's Health in Helena, Community Medical Center in Missoula and Northern Montana Hospital in Havre all say they did nothing wrong and have agreed to pay $6.9 million to employees in resolution of the case. The settlement won preliminary approval from a U.S. District Court judge in Great Falls on October 17.

The suit, which was filed in 2017 on behalf of eight hospital workers, alleged that in 2012, the hospitals agreed to buy employee health insurance plans exclusively from Montana's largest insurer, Blue Cross Blue Shield of Montana, for six years. In turn, the insurer provided approximately $26 million and two seats on its board of directors to the hospitals.

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The hospitals made individual statements claiming that they took the money to benefit their employees, and that the settlement avoids an expensive lawsuit.

Blue Cross, of course, expected to make back the money and then some, as its benefit from the arrangement. The insurer did not issue a comment on the case because, according to John Doran with Blue Cross Blue Shield of Montana, it was not a defendant in the suit.

According to the report, the complaint said the deal could have hit 11,000 hospital workers with "health coverage plans that paid 'hundreds of thousands to millions' to Blue Cross each year." The complaint was quoted saying that "Defendants attempted to—and did—profit at the expense of the plans and the participants."

A similar arrangement was blocked by a joint federal and state antitrust action in 2011, according to the complaint, which also alleged that the hospitals broke federal law by not prioritizing their workers' interests in the work-based health plans. The complaint also said that 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 paid by Blue Cross to the hospitals in 2018.

Should the settlement win approval, the breakdown of the 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; and Northern Montana Hospital, $348,000.

In statements, some of the hospitals said how they had used the money they received from the insurer—one to keep employee premiums low, another putting it into a trust for future employee benefits—and one disclaimed any wrongdoing for the way it changed insurers "almost a decade ago."

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