Blue Cross Blue Shield of Alabama, hereinafter referred to as BC/BS, brought in $4.1 billion dollars of revenue during 2011 – more than several of the state’s largest publicly traded companies. I was shocked to learn that BC/BS has accumulated total assets of $2.4 billion dollars by the end of 2011 with $1.8 billion easily converted to cash. Additionally, the company has a surplus account of $991 million that BC/BS refers to as “unassigned funds.” Despite going through the worst recession since the Great Depression, BC/BS is doing extremely well. In fact, it would be hard to imagine how it could be doing any better.
None of BC/BS’s financial success has “trickled down” to the average Alabamian. The rates of employer workplace plans have risen an average of 6.2% for the past five years for small business owners with fewer than 50 employees. The average BC/BS policyholder has seen double-digit rate increases at a time where BC/BS has benefited financially and accumulated a record surplus. That’s rather hard to understand and even harder to justify.
BC/BS is technically one of 45 local state chapters each of which is a member of the BC/BS Association. The BC/BS Association has consistently lobbied politicians across the political spectrum in order to make it harder to penalize companies for defrauding the American taxpayer. Since 1993, local Blue Cross/Blue Shield chapters have paid $340 million dollars to the federal government to settle Medicare fraud charges alone. Political contributions from the Association have increased greatly since the recent passage of healthcare reform and the Supreme Court’s decision in Citizens United. In 2011, the BC/BS Association spent nearly $22 million dollars on lobbying alone. It has hired 131 lobbyists and spent millions of dollars in contributions to candidates and members of Congress, regardless of political affiliation.
Although the federal government has been able to settle with the BC/BS Association for hundreds of millions of dollars over allegations of Medicare fraud and false claims, Alabama currently doesn’t have the necessary legislative tools to fully protect the state. Alabama is not immune to healthcare fraud, government contractor fraud, and many other forms of fraud committed against state government. Unfortunately, however, unlike many sister states in the Union, Alabama does not have a State False Claims Act to empower whistleblowers to stand up and recover millions of dollars the state loses in fraud over the years.
As we have written on numerous occasions, the federal False Claims Act allows whistleblowers to file a cause of action to recover money that has been falsely paid to government contractors and healthcare providers. An Alabama False Claims Act would empower state whistleblowers to recover money that is falsely paid out by the state to those who wish to profiteer on the backs of Alabama’s taxpayers. As all Alabamians know, our state is suffering through a financial crisis and would benefit from every dollar that it can save or recover. A State False Claims Act would allow private whistleblowers to assist the State Attorney General’s Office in recovering money that has been illegally paid to corrupt healthcare providers and state contractors.
One has to wonder what BC/BS does with all of this “extra” money that it has accumulated in its $991 million surplus. It certainly doesn’t reduce insurance rates for folks with their policies. BC/BS has no incentive to reduce rates since it has a virtual monopoly in Alabama. The American Medical Association found that Alabama has the least competitive market for medical insurance, with BC/BS having a strangle hold with its market share at 90%. Several federal antitrust cases have been filed against BC/BS, but without a great deal of success thus far.
The Alabama Legislature needs to give Alabamians some relief by reforming the State Antitrust Act. The current State Antitrust Act is an outdated law that restricts its application to antitrust violations that occur completely within the state. Any hint of interstate commerce precludes Alabama’s Act from being effective. The vast majority of states with antitrust laws allow the laws to apply so long as the interstate commerce occurred in state. The State Legislature has the power and ability to reform Alabama’s Antitrust Act and gave it the teeth required to prevent monopolies in Alabama.
BC/BS seems interested in one thing and that’s accumulating money and lots of it. For some reason I have great difficulty understanding how a non-profit can be so profitable. As a non-profit, the company has a duty to maximize every dollar it receives to reduce the burden that Alabamians face each and every day in their healthcare costs. The State Legislature must act in order to empower Alabama citizens with the ability to stop monopolies and companies profiteering from taxpayer’s money in our state. Our legislators should do the right thing and pass both a reformed State Antitrust Act and a brand new State False Claims Act in the 2013 Legislative session.
If you have any information regarding antitrust violations including but not limited to: tying arrangements, price fixing, anticompetitive agreements, and/or attempted monopolization, contact Andrew Brashier, a lawyer in the Consumer Fraud Section of our firm, at Andrew.Brashier@BeasleyAllen.com or by phone 800-898-2034. Andrew is currently investigating violations of the federal False Claims Act. If you have information involving False Claims that need to be submitted to the federal government, you can also contact Andrew.
Sources: AL.com and opensecrets.org
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