Highmark Sues Pa. Insurance Department Over Its Examination of Blue Cross and Blue Shield Companies

Highmark Inc. has sued the Pennsylvania Insurance Department, saying the regulator has overstepped its legal authority in its examination of the state’s Blue Cross and Blue Shield companies.

The health insurer said it's troubled by the regulator's plan to analyze the Blue Cross and Blue Shield Association licensing agreements.

"It’s apparent that the Insurance Department intends to challenge the licenses that Highmark holds to use the Blue Cross and Blue Shield brands and to deprive Highmark of the benefit of the brands, which Highmark has promoted for more than 70 years," the company said.

John McDermott, a spokesman for the Pittsburgh-based Highmark, declined to comment beyond the statement. The department "has very limited authority to review competition issues, and that authority does not include any jurisdiction over BCBSA licensing agreements," Highmark said in a statement about its lawsuit, filed in Pennsylvania Commonwealth Court.

Attempts to speak to the department weren't immediately successful. However, Insurance Commissioner Joel Ario expressed concern in a statement "that this lawsuit comes on the heels of our attempts to investigate some specific allegations of anti-competitive behavior -- issues having nothing to do with licensing -- these have to do with their treatment of brokers and unfair pricing of insurance."

Last July, regulators said they would look into the state's four Blue Cross and Blue Shield health insurance companies -- Highmark, Independence Blue Cross, Capital Blue Cross and Blue Cross of Northeastern Pennsylvania -- to determine if any took part in anticompetitive or unfair trade practices (BestWire, July 20, 2009).

Highmark has 4.6 million policyholders, with its Blue Cross Blue Shield plans covering 29 counties of western Pennsylvania and its Blue Shield plans covering 21 counties of central Pennsylvania and the Lehigh Valley regions of the state.

In January of 2009, Highmark and the Philadelphia-based Independence Blue Cross withdrew their applications to the department to merge. A combined Highmark-Independence would have created the biggest health insurer in Pennsylvania (BestWire, Jan. 21, 2009).

In its statement, Highmark said it lawfully owns licenses to use Blue Cross and Blue Shield marks, including rights to use those marks in exclusive service areas as granted by the association.

Highmark Inc. currently has a Best Financial Strength Rating of A (Excellent).

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)