The hospitalsmade individual statements claiming that they took the money tobenefit their employees, and that the settlement avoids anexpensive lawsuit. (Photo: iStock)

Five hospitals in Montana are settling a lawsuit that hasaccused them of inflating health coverage prices on employee healthplans for a health insurer that offered them $26 million, to besplit five ways.

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

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

Related: Health plans and Sutter Health to face off incourt

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

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

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

A similar arrangement was blocked by a joint federal and stateantitrust action in 2011, according to the complaint, which alsoalleged that the hospitals broke federal law by not prioritizingtheir workers' interests in the work-based health plans. Thecomplaint also said that two hospitals, St. Peter's and NorthernMontana Hospital, notified people covered by the plans that theywould get "some" or a "portion" of the money paid by Blue Cross tothe hospitals in 2018.

Should the settlement win approval, the breakdown of thehospitals' payments would be as follows: Billings Clinic, $2.5million; Community Medical Center, $2 million; Bozeman Health, $1.3million; St. Peter's Health, $775,000; and Northern MontanaHospital, $348,000.

In statements, some of the hospitals said how they had used themoney they received from the insurer—one to keep employee premiumslow, another putting it into a trust for future employeebenefits—and one disclaimed any wrongdoing for the way it changedinsurers "almost a decade ago."

Read more: 

• Class action suit moves forward against Cigna foralleged overcharging
• Humana sues drug companies for alleged pricefixing
• Walgreens to pay $269 million over insulin fraudallegations