Bon Secours sues insurer Anthem for $93 million

Health system Bon Secours has filed a lawsuit against the state's largest insurer, Anthem Blue Cross and Blue Shield, alleging the insurer owes tens of millions of dollars in unpaid claims in the past four years.

In a suit that demands $93 million, Bon Secours said that Anthem has arbitrarily denied, downgraded or delayed claims. While Bon Secours has worked to receive payment, meeting and sending letters dozens of times, the suit paints Anthem as obstinate and trying to overwhelm the health system with records requests.

At one point, the number of claims Bon Secours said were denied or left unpaid reached 18,000.

"Anthem's slow-pay and no-pay tactics have caused and are causing significant damage to (Bon Secours)," the system said in the suit.

Bon Secours filed the suit Monday in Henrico Circuit Court. It operates five hospitals in greater Richmond - St. Mary's Hospital, Memorial Regional Medical Center, Richmond Community Hospital, St. Francis Medical Center and Southside Medical Center. It also owns Southern Virginia Medical Center in Emporia, Rappahannock General Hospital in Kilmarnock and three others in Hampton Roads.

About one in three Virginia residents has Anthem health insurance.

In recent months, the two sides have tried to negotiate new contracts, but discussions have come to a stalemate. Patients with Anthem's Medicare Advantage policy became out of network at Bon Secours facilities in July. Anthem patients who receive Medicaid are due to go out-of-network this fall if a deal isn't reached. The rest of Anthem's customers are in network at Bon Secours until the end of 2024.

But Bon Secours says Anthem hasn't paid $73 million in old claims dating back to 2019. Their contract requires Anthem to pay claims between 30 and 60 days, but some went more than 90 without Anthem cutting a check.

The two sides met at some point, but they were unable to reduce the number of unadjudicated claims, Bon Secours said. The health system sent a letter to Gail Boudreaux, CEO of Elevance, in June 2020, notifying her of the issue. The two companies began speaking weekly, but the issues didn't resolve.

Bon Secours tried to work with Anthem for almost two years, the health system said. But by 2022, Anthem had denied a higher number of claims, and the percentage of claims that were unpaid by 90 days reached almost half.

According to Bon Secours, Anthem devised a number of tactics to pay less or delay payment. It asserts that Anthem deployed a special investigations unit to make requests for medical records and unnecessarily audit emergency room claims.

It also downcoded emergency room claims – if a patient arrives at an ER with a cough, the staff might conduct a series of tests to rule out significant illness. If the final diagnosis is something relatively minor, like a cold, the insurer can attempt to pay according to the final diagnosis, disregarding the tests needed to achieve that diagnosis.

At the Emporia hospital, Anthem demanded extra information about patients and treatment before agreeing to pay, despite any evidence of fraud or abuse, Bon Secours said. The extra requirement caused an "extreme administrative burden" on the hospital, the health system said.

By March 2023, the situation still hadn't improved, and Bon Secours notified Anthem it would terminate contracts for Anthem's Medicare Advantage customers in August and Anthem's Medicaid Managed Care customers on Oct. 1.

Bon Secours is owned by parent company Bon Secours Mercy Health, a nonprofit, Catholic system that operates 47 hospitals in seven states and Ireland. The system lost $1.2 billion in 2022, it said in the suit.

Bon Secours employs more than 14,000 people in the state, including 820 doctors, and it contracts even more.

Meanwhile, Anthem's parent company, Elevance Health, posted a profit of nearly $8 billion. A spokesperson for Elevance did not immediately respond to a request for comment.

Monday's lawsuit is the latest issue Anthem has faced as health systems claim they're not being paid on time.

In April, the state of Virginia ordered Anthem to pay $300,000 to settle a finding that Anthem wasn't paying claims as quickly as state law requires. Anthem neither admitted nor denied violating the law.

That same month, Valley Health System and Anthem came to an undisclosed settlement after the health system sued the insurer for $15 million for unpaid claims.

Anthem affiliates in Georgia and Indiana also had to pay a fine or damages for failing to reimburse health systems, Bon Secours said.

Anthem owes Bon Secours Mercy Health $85 million in unpaid claims in Ohio and $6 million in Kentucky.