For some reason, people still think of the Blues as kindly non-profits. What they really are? Shell non-profits, with dozens of for-profit subsidiaries – with cutthroat business practices:

Blue Cross Blue Shield of Michigan is facing a wave of lawsuits across the state accusing the insurance giant of pocketing millions of dollars in hidden fees from local governments and others to administer their health care plans.

The state court suits — which already have cost the Blues several million dollars in verdicts and settlements — are independent of an antitrust lawsuit filed last month in federal court by the U.S. Justice Department.

Although the focus of the federal suit differs, the lawsuits all contend that Blue Cross’ business practices resulted in unfair and higher costs to others.

Troy attorney William Horton has won a $1.5-million jury verdict for the City of Pontiac and settlements in three other cases. Eleven others are pending.

Blue Cross, Michigan’s largest insurer, vehemently denies the charges, saying its practices were well known to the plaintiffs, are common in the industry and have saved millions of dollars for these employers, which continue to contract with the Blues to run their health plans. The company is considering appeals.

At a time when health reforms call for openness in the health industry, Blue Cross Blue Shield of Michigan is defending itself against accusations that it passed along millions in hidden costs to local governments and employers.

Most recently, Oakland County Circuit Judge Daniel P. O’Brien approved a $1.4-million jury verdict last Tuesday against the Blues for the City of Pontiac, which also will receive deeper discounts for years on its Blues contract.

The day before, Calhoun County Circuit Judge James Fisher agreed Blue Cross had added millions in extra fees since 1994 to administer a contract with the Calhoun County government without telling the county. That case is to resume March 1 over the issue of whether the insurer fraudulently hid fees.

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  1. The Blues once were good not-for-profits, but as the healthcare field became hot, they began changing and going for-profit. I agree that most people do not know when the landscape changed or even that it did change.

    The same thing happened to the mutual insurance companies and mutual banks — almost all of them were bought out by their executives and made into for-profit companies. AXA was once a mutual, the Dime Bank of Williamsburgh split into two companies, one stayed mutual, the half that became for-profit (Dime Bancorp) was later bought by First Boston, which in turn was bought out. Ghod, that I still remember all these transactions that changed the corporate philanthropy field and what they supported and to what amounts… (Let’s not mention the mergers that changed the national banks.)

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