Five Montana Hospitals Pay $6.9 Million to Workers Over Secret Blue Cross Deal

In 2012, five of Montana's largest hospital systems entered a secret arrangement with Blue Cross Blue Shield of Montana. Under the deal, Bozeman Health Deaconess Hospital, Billings Clinic, St. Peter's Health in Helena, Community Medical Center in Missoula, and Northern Montana Hospital in Havre agreed to purchase employee health insurance exclusively from Blue Cross for six years. In return, the hospitals received approximately $26 million from the insurer and two seats on its board of directors.

The problem was that the workers footing the premium bills knew nothing about the arrangement. The hospitals were fiduciaries of their employee health plans, legally obligated to act in the interest of plan participants. Instead, the complaint alleged, the hospitals 'attempted to, and did, profit at the expense of the plans and the participants,' accepting a payment that effectively locked thousands of workers into above-market coverage with no competitive alternatives.

In 2017, eight hospital employees filed suit in U.S. District Court in Great Falls, bringing claims on behalf of the broader class of health-plan participants across all five hospital systems. John Amsden of Beck, Amsden and Stalpes, serving as co-lead counsel, argued that the hospitals had violated their fiduciary duties by subordinating workers' financial interests to their own institutional gain.

The case reached a settlement in late 2019. A federal judge in Great Falls granted preliminary approval on October 17, 2019, and a final approval hearing was set for December 11, 2019. The five hospitals agreed to pay a combined $6.9 million to be distributed among eligible employee health-plan participants. The hospitals denied wrongdoing but agreed to settle to avoid the cost and uncertainty of continued litigation.

Notices were sent to thousands of current and former hospital workers who could be entitled to a share of the fund.