Health insurance giant faces lawsuit
PITTSBURGH — Two Valencia residents are part of a federal lawsuit filed against Highmark, Blue Cross and Blue Shield claiming collusion and violations of antitrust laws in Highmark’s attempt to maintain a health care insurance monopoly in Western Pennsylvania.
The suit, which requests a jury trial, was filed Wednesday in U.S. District Court on behalf of Valencia residents Kathryn Scheller and Michael Spreng, along with Mount Lebanon resident Matthew Rutkowski and Moss Architects and Iron Gate Technology, that are both based in Pittsburgh.
All of the plaintiffs are Highmark clients and are seeking class-action status to represent other customers of the insurer.
In addition to Highmark, the Blue Cross and Blue Shield Association, Independence Blue Cross and the Hospital Service Association of Northeastern Pennsylvania, which does business as Blue Cross of Northeastern Pennsylvania were named defendants in the case.
Because of agreements with the Blue Cross Blue Shield Association and its fellow Blues insurers, Highmark does not compete for business in the Philadelphia region, home to Independence Blue Cross, or the northeast, where Blue Cross of Northeastern Pennsylvania operates.
Spreng, who is chairman of the Middlesex Township supervisors and operates a well drilling contracting business, did not return a call seeking comment. Scheller was unable to be reached for comment.
The suit is seeking to recoup damages in the amount of three times the amount of the premiums charged by Highmark in addition to costs and legal fees.
The suit alleges an illegal conspiracy in which 37 of the largest health care insurance companies have agreed that they will not compete with Highmark in Western Pennsylvania.
Highmark officials deferred comments on the suit to the Blue Cross Blue Shield Association.
“We believe this litigation is without merit and we will vigorously defend our system and the benefits it provides to customers,” said Tilden Katz, spokesman for the Blue Cross Blue Shield Association.
This class action suit is one of a set of similar class action suits that have been filed in several states against the Blue Cross and Blue Shield Association by the attorneys representing the Western Pennsylvania case claiming the same violations. Hearings are being held to determine if the similar cases might be consolidated.
The Western Pennsylvania suit alleges that Highmark enjoys unrivaled market dominance within Western Pennsylvania. Based on its own documents, including surveys of the insurance market, Highmark estimated that by 2011, it enrolled at least 65 percent of the subscribers.
The defendants claim in the suit the illegal conspiracy has resulted in “skyrocketing premiums for Western Pennsylvania Highmark enrollees for over a decade.”
Small employers in the Pittsburgh area found their premiums rising to the point that their health care insurance costs were as much as 25 percent above the national average, the suit alleges.
From 2000 to 2009, the average employee-sponsored health insurance premiums for families in Pennsylvania increased by 95.2 percent, where median earnings rose only 17.5 percent during the same period, according to the suit.
“These inflated premiums would not be possible if the market for health insurance in Western Pennsylvania were truly competitive,” the suit alleges.
“Full and fair competition is the only answer to artificially inflated prices and competition is not possible so long as Highmark and Blue Cross and Blue Shield are permitted to enter into agreements that have the actual and intended effect of restricting the ability of 37 of the nation’s largest health insurance companies from competing in Western Pennsylvania.”