The court stressed that “[t]he fact that [Blue Cross] could make claim payments only with the Fund’s authorization, along with the fact that the Fund retained full control over the appeals process, weighs toward finding that [Blue Cross] lacked authority respecting the disposition of the working capital amount.”
The Massachusetts Health & Welfare Fund, a self-funded multiemployer group health plan, sued its former third-party administrator, Blue Cross & Blue Shield of Massachusetts, after an audit uncovered that Blue Cross had made overpayments of more than $1.4 million in over 5,000 medical claims. These overpayments were usually followed by recoupment efforts which, if successful, resulted in Blue Cross retaining a significant percentage of the recovered amounts as “savings” to the plan. The audit also revealed that, despite negotiated payment rates in its contracts, Blue Cross would “reprice” the amounts it would pay to the medical providers in its networks and pocket the difference.