Pennsylvania Supreme Court Ruling Revives Class-Action Lawsuit Against Independence Blue Cross

December 7, 2006 – 12:52 pm | posted in Health Insurance, Medical Malpractice

Advocacy groups will be able to proceed with a class-action lawsuit alleging that Philadelphia-based insurer Independence Blue Cross keeps excessive surplus funds after the Pennsylvania Supreme Court overturned a commonwealth Court decision that the courts had no jurisdiction in the case, the Pittsburgh Tribune-Review reports. The lawsuit accuses Independence Blue Cross of having an excessive surplus in 2001 and using the money for purposes conflicting with its not-for-profit status, including acquisitions and investments in for-profit subsidiaries. A Pennsylvania county court rejected the insurer’s claim that challenges of its rates and surpluses must be addressed by the commonwealth insurance commissioner. However, a commonwealth Court ruled that the lower court had no jurisdiction over the matter and that the Pennsylvania Department of Insurance was responsible for approving insurer rates and reserves. In the commonwealth Supreme Court’s decision, Chief Justice Ralph Cappy wrote that the challenge to Independence Blue Cross’ financial practices “should proceed … as a civil action in the court of common pleas.” Michael Campbell, director of the Pennsylvania Health Law Project, said that “the principle contained in the [Pennsylvania] Supreme Court ruling against Independence Blue Cross would apply to the other” four Blue Cross insurers in the state, adding, “Whether the state insurance commissioner has absolute power when it comes to rates and surpluses held has been decided by the Supreme Court, and by a 5-1 vote it said no.” Critics of the insurers’ surpluses “have said much of the money should be returned to members” or used to provide health care coverage for uninsured residents, the Tribune-Review reports. Independence Blue Cross said the ruling did not impact the company and in a statement said, “The opinion … was a ruling on procedure, not substance. It addressed the proper jurisdiction for the issues raised and reaffirmed the special role of the Pennsylvania Insurance Department in deciding questions of surplus” (Stouffer, Pittsburgh Tribune-Review, 11/30).

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