Blue Cross retirees sue over changes to benefits

February 16, 1996|By M. William Salganik | M. William Salganik,SUN STAFF

Blue Cross and Blue Shield retirees are suing the health insurer for cutting their health insurance.

"This is a company built entirely on its promise to pay benefits, and they have failed to keep that promise to their own people," said Frederick A. Burdette, one of the plaintiffs in the case and president of the Blue Cross and Blue Shield Retirees Club.

In two related lawsuits filed this month in Baltimore Circuit Court, the retirees charge that Blue Cross and Blue Shield of Maryland failed to keep written and implied promises to maintain benefits for retirees.

John A. Picciotto, chief counsel for the Blues, confirmed that benefits had been cut, but said, "We do not believe any binding promises were made."

Mr. Picciotto said the benefits reduction, which came last July, stemmed from company efforts in 1994 to reduce administrative costs because "we need to be competitive."

Of about $40 million in administrative savings, he said, about $2.5 million came from reducing health benefits to employees who had retired before 1990.

The insurance changes, he said, gave those retirees coverage comparable to active employees and to workers who retired after 1990. He said 250 to 300 people were affected.

"We saved our company and our subscribers a couple of million dollars, and we still provided substantial benefits to our retirees," Mr. Picciotto said.

The companion lawsuits represent two groups of retirees from Blue Cross and Blue Shield of Maryland. One group received incentives to take early retirement in 1986, and now claims that part of the retirement offer included a written pledge to continue benefits. The other group is composed of employees who took normal retirement at age 65 before 1990.

The lawsuits claim that the Blues previously gave retirees "complete health benefits with little or no out-of-pocket costs."

After the change, the Blues' system included some deductibles and co-payments or forced the retirees into health maintenance organization plans.

Also, the retirees claimed, the Blues stopped paying Medicare Part B premiums of $46 a month, which the retirees now must pay.

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