Class action suit seeks to block possible sale of Blue Cross to Elevance

A lawsuit filed Monday in Baton Rouge state court is seeking to effectively block the potential sale of Blue Cross and Blue Shield of Louisiana to national insurer Elevance Health.

Though the controversial deal is currently on hold, both companies have said they plan to move forward with the sale in early 2024.

Tut Kinney, an attorney and Blue Cross policyholder, filed the suit individually but is seeking to certify it as a class action on behalf of the roughly 92,000 Blue Cross policyholders across the state.

The suit doesn't name Blue Cross or Elevance but, instead, takes aim at the Accelerate Louisiana Initiative, a social welfare foundation that would be funded with some $3.5 billion in sale proceeds and surplus Blue Cross assets.

Kinney, a Metairie lawyer, argues that policyholders, who have individually paid thousands of dollars in premiums to Blue Cross over the years, essentially own Blue Cross, a nonprofit, mutual indemnity company. They, not a foundation, are therefore entitled to proceeds from the sale to Elevance, the suit says.

The Accelerate Louisiana Foundation was created in late 2022 by four members of the Blue Cross board of directors with a mission to "work to improve the health and lives of the people of Louisiana." At $3.5 billion, it would dwarf other charitable and social welfare foundations in the state.

The suit comes two months after Blue Cross tabled its request for regulatory approval to sell to Elevance amid increased scrutiny from policyholders, doctors, hospitals, state lawmakers and Gov.-elect Jeff Landry.

But the company has said it still plans to move forward with the sale. In the meantime, Landry has formed a committee to advise him on the deal. His office declined to comment on the committee or the lawsuit.

Kinney said it is important to file suit now before a new plan to sell the company is filed with the Louisiana Department of Insurance, which, along with two-thirds of Blue Cross policyholders, must approve reorganizing and selling the company before the deal is finalized.

"It's important to stop Accelerate from being part of a plan that they have no business being part of," Kinney said. "I want to stop them from proceeding further with their plan."

Blue Cross did not respond to a request seeking comment.

'Irreparable harm'

Blue Cross announced its plans to sell to Elevance early this year, arguing that a large national insurer with the latest tools and technology could offer better coverage and lower prices to the some 1.9 million Louisiana residents that carry some form of Blue Cross insurance.

The deal called for giving more than 90% of the sale proceeds to the Accelerate Louisiana Initiative and distributing the rest -- about $300 million -- to the 92,000 policyholders, who would receive less than $3,300 each.

Blue Cross customers who are not policyholders--employees on a company-sponsored insurance plan, for instance--would not be entitled to a piece of the payout.

As policyholders and healthcare providers began looking more closely into the deal, they began to question why the foundation was getting the lion's share of sale proceeds and why the foundation would be controlled by four Blue Cross board members.

They also raised concerns about whether selling a local nonprofit insurer to a large, publicly-traded company was in the best interest of a state that has some of the poorest residents with the worst health outcomes in the country.

Kinney's suit speaks to both sets of concerns. It argues that Accelerate Louisiana is trying to unlawfully take property that belongs to policyholders and is interfering with the health insurance provided by Blue Cross.

The suit also cites two expert reports commissioned earlier this year by the state to evaluate the deals that question its fairness.

"Kinney and the class will be harmed by the termination of its member controlled health insurer and will be harmed by Accelerate taking its property," the suit said.

No hearings have been set in the case.