State high court demands files in Blue Cross case

January 22, 1994|By Patricia Meisol | Patricia Meisol,Staff Writer

In an extraordinary move, the state's highest court directed an intermediate appeals court to deliver files and records from a lawsuit against Blue Cross and Blue Shield of Maryland so it can quickly decide who has the right to sue the giant insurer.

The Court of Appeals issued a writ of certiorari earlier this week even before lawyers in the case asked for special review. That action will allow the court to decide directly whether customers have the right to sue the insurer for allegedly misusing premium money.

"The subscribers are encouraged by this," Stephen J. Nolan, a lawyer in the class action suit, said yesterday. He said the action saves time and money and predicted a ruling within six months.

If the court rules in favor of subscribers, the case would return to Baltimore County for trial.

The case, which seeks $160 million in damages, was filed in March 1993 after revelations that Blue Cross executives spent money lavishly and hid the company's true financial picture from the public.

It charges executives of the company with gross mismanagement of premium money that in turn led to tens of millions of dollars in losses.

The issue arose Nov. 30 when a trial judge in Baltimore County Circuit Court dismissed a lawsuit by five subscribers because of uncertainty over whether they could sue. Under Maryland law, such action is usually left to shareholders. Blue Cross has no shareholders, however, and is instead run by a board of directors. The directors reappoint themselves or choose successors. The directors claim that only they can sue for damages against the company.

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