Md. Blue Cross is sued over 'discount' Practices in other states basis for class-action filing

October 04, 1995|By Sheridan Lyons | Sheridan Lyons,SUN STAFF

A Towson lawyer has filed a class-action lawsuit against Blue Cross and Blue Shield of Maryland, alleging that the insurer does not give subscribers the benefit of a "secret discount" it receives on bills from health care providers.

But the lawyer, Philip O. Foard, said yesterday that he does not know for sure that the practice -- the subject of lawsuits in other states -- is taking place in Maryland. He said he filed the case on behalf of William J. Gilleland III, a Dundalk businessman, to find out whether the practice exists locally.

Nonetheless, the suit filed in Baltimore County Circuit Court says there is reason to believe the Owings Mills company "has used its significant market leverage to negotiate discounts from health care providers below the 'market rate' " but has not passed on the savings.

The affected subscribers are those obligated to pay a portion of a bill, referred to as a co-payment.

Mr. Foard said the practice could have dire effects on subscribers who reach the maximum payment of benefits accorded by their policies, calculated on the undiscounted rate. "By using these maximum rates," he said, "that lifetime maximum is reached sooner, especially with people who are very, very sick."

The lawsuit alleges fraud, civil conspiracy, breach of fiduciary duty, breach of duty of good faith and breach of contract. It seeks unspecified damages for the company's 1.4 million subscribers affected by the policy -- if it exists.

Linda Wilfong, a spokeswoman for Blue Cross, said the company had not received the lawsuit filed in court Friday and could not comment on it.

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