Whiteford man sues Blue Cross, EDS over claims

October 01, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

A Harford County businessman has sued Blue Cross and Blue Shield of Maryland and Electronic Data Systems Corp. for more than $50 million, alleging that a 1993 exclusive deal to let EDS take over the Blues' electronic claims processing broke state antitrust laws.

In a case filed Thursday in Baltimore County Circuit Court, Herbert H. Martello of Whiteford said the Blue Cross-EDS combination keeps him from competing for $1.8 million of business annually processing the 35 percent of Blue Cross insurance claims that health care providers file electronically with the Blues.

Mr. Martello contends the electronic claims processing business will nearly triple by 1995, because the state's 1993 health care reform law requires that providers begin filing their reimbursement claims electronically by July 1. Electronic filing cuts processing costs and speeds up payments.

Spokeswomen for both EDS and Blue Cross said the companies had not been served with the complaint and could not comment. Mr. Martello's lawyer, William I. Kitchin of Pylesville, declined to discuss the suit on the record.

The 17-page complaint has three counts: one alleging restraint of trade, another alleging monopoly and conspiracy to monopolize the claims-processing business, and a third charging interference with Mr. Martello's business relations.

Blue Cross allegedly shared reimbursements from the U.S. Health Care Financing Administration with EDS but not Mr. Martello, who the suit says is the only other business person in Maryland competing for electronic claims-processing business.

The suit said Mr. Martello currently does process claims electronically and file them with insurers, including Blue Cross.

The suit said Blue Cross also lets EDS, but not Mr. Martello, house employees and computers at Blue Cross' Owings Mills headquarters.

Free service

Blue Cross also pays EDS for claims processing but won't pay Mr. Martello a commission for the claims he processes and sends to Blue Cross.

EDS's deal with Blue Cross is so favorable that the Dallas firm can offer its services to health care providers at no charge, the suit contends. Mr. Martello says he can't match that price, putting him at a competitive disadvantage that threatens to put him out of business.

"By this combination and conspiracy, defendants BCBSM [Blue Cross and Blue Shield of Maryland] and EDS have wrongfully and maliciously injured and intend to further injure and destroy plaintiff's business by preventing the plaintiff from being able to compete," the suit contends.

Some opposed move

Blue Cross made the decision last year to turn over its troubled internal claims-processing unit to EDS, which built much of its reputation as a processor of Medicare and Blue Cross claims.

At the time, company documents obtained by The Sun indicated that some senior Blue Cross executives opposed the move, saying the company should keep its own processing business while continuing to search for other, lower-cost vendors to increase the number of claims that are processed electronically.

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