GHC Sues Anthem, Alleges Clients Were Poached

July 06--Group Health Cooperative of Eau Claire is suing one of the nation's largest health insurance companies, which began enrolling Medicaid clients in western and central Wisconsin residents earlier this year in an HMO plan.

The local nonprofit filed a lawsuit in June in Eau Claire County against Indianapolis-based Anthem and a couple of its Wisconsin subsidiaries that provide health plans for the government program for low-income families and people with disabilities.

The lawsuit alleges that Waukesha-based Compcare Health Insurance Corp. began enrolling Medicaid clients in an HMO plan with its parent companies, Blue Cross Blue Shield of Wisconsin and Anthem, despite a contract that GHC claims gave it exclusivity to those clients in this market.

"Compcare is causing GHC to suffer irreparable harm by allowing Anthem to provide Medicaid contract services to Compcare enrollees in the Common Service Area," GHC CEO Peter Farrow said in a May 25 affidavit.

GHC has had a contract with Compcare for more than 20 years to provide an HMO plan in 35 western and central Wisconsin counties. In December, Compcare's parent company, Blue Cross Blue Shield of Wisconsin, which is owned by Anthem, told GHC that it would be ending that contract. While GHC acknowledged that Compcare is within its rights to end the contract, the Eau Claire-based nonprofit health plan says the contract requires two years between notice and expiration.

"While the BCBSWi letter purported to terminate the agreement effective Dec. 31, 2018, Compcare is currently taking action that breaches the express terms of the agreement and the implied covenant of good faith and fair dealing," wrote Gregory Everts, an attorney with Madison firm Quarles & Brady representing GHC in the lawsuit.

Blue Cross Blue Shield of Wisconsin and Anthem publicly announced in February that they would expand Medicaid HMO coverage in Wisconsin, which included several counties that GHC serves.

Since then, GHC noticed Medicaid clients auto-assigned to it has been cut in half in several counties and some clients have enrolled by choice in other plans. GHC believed that by the start of July, it would get no auto-assigned Medicaid clients in some counties.

The financial damage is both the short-term loss of money Medicaid paid the company on a per-client basis, Everts wrote, and long-term damage is the loss of enrollments for years.

"This harm is irreparable," he wrote.

GHC is seeking a temporary restraining order or injunction to return the clients it would've gotten if Compcare hadn't begun sending them to its parent companies this spring.

Attorneys representing Anthem and its subsidiaries responded on Friday in a series of legal filings, including one that urges an Eau Claire County judge to dismiss the parent companies from the lawsuit.

"For reasons that are not entirely clear, GHC has sued Compcare's parent company, Blue Cross Blue Shield of Wisconsin, and its ultimate parent company, Anthem, Inc.," wrote attorneys from Milwaukee firm Foley & Lardner.

Calling them "construed claims," the attorneys said GHC failed to produce facts showing that Compcare's actions were directed by its parent companies.

Compcare is the only party with alleged breach of contract, the legal brief stated, adding that its contract with GHC states the agreement between them stipulates they should handle disputes in arbitration.

The attorneys also deny the GHC-Compcare contract actually has an exclusivity clause, saying that GHC "contorts language" in the contract to create exclusivity when it's actually an administrative subcontractor under one of Compcare's HMO plans.

Attorneys for the larger insurers also claim that finding for GHC would not be in the public interest.

Granting the temporary injunction with GHC's request to take back enrollments from Anthem "would cause significant disruption to the Medicaid benefits of approximately 1,000 Wisconsin residents and to the state of Wisconsin Medicaid program," attorney David Lucey wrote.

Apart from those auto-enrolled in the new plan, some of the 1,000 now in it "almost certainly" chose Anthem, the Foley & Lardner attorneys said.

"GHC has no right to deprive Medicaid recipients of a choice of an alternate provider," they stated in the reply brief.

GHC stated that by taking those clients, the larger insurers have done financial damage and a lasting impact in a business where loyalty is very important.

"The reduced revenues and decreased profitability related to losses of customer relationships and goodwill is real and significant, but difficult to quantify," Farrow stated in his affidavit.

That inability to put a dollar figure on the loss was criticized by attorneys for the larger insurers who wrote that GHC knows the per-client fee it gets from Medicaid and should've been able to calculate a dollar figure as part of its lawsuit.

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