Judge rejects suit against CareFirst

1998 case concerned insurer's policy for denying HMO claims

October 03, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

A 1998 suit accusing the state's largest health insurer of violating federal law by not making clear its policies on denying HMO claims has been dismissed by a federal judge in Baltimore.

In a written decision dated Friday but released yesterday, Judge Benson Everett Legg ruled that the unnamed plaintiffs did not have standing to sue CareFirst BlueCross BlueShield.

"Plaintiffs do not allege that their insurance contracts were breached," he ruled. "Plaintiffs instead contend that their insurance contracts would have been breached, had performance been required."

The plaintiffs said they were paying higher premiums than they would have if CareFirst's rules were clear, but the judge noted that plaintiffs have never been given class action standing based on a "diminished market value theory."

Margaret Farrell, a Washington lawyer for the plaintiffs, said an appeal is being considered.

The case is one of a number over the past few years testing new legal theories in attempting class action lawsuits against HMOs.

"I need to sit down and really parse it before I could say what its implications are for other litigation," Farrell said yesterday.

David Sorensen, a Philadelphia lawyer involved in HMO litigation, said court rulings so far have been mixed on allowing class action cases to proceed and that the legal issues may have to be resolved on appeal.

He is aware of no case that has resulted in damages being awarded. His firm and Farrell's are working on a similar federal suit against Magellan Health Services Inc. of Columbia.

Erin Somers, a Magellan spokeswoman, said the suit against it "raises many similar issues, and we intend to bring similar arguments to the judge's attention. Obviously, we're hoping for a similar outcome."

Livio R. Broccolino, deputy general counsel for CareFirst, said the decision "justifies our defense that the claim was without merit."

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