Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number COMMONWEALTH OF MASSACHUSETTS, SUFFOLK COUNTY SUPERIOR COURT MASSACHUSETTS LABORERS’ HEALTH & WELFARE FUND, and TRUSTEES OF THE MASSACHUSETTS LABORERS’ HEALTH AND WELFARE FUND, individually and on behalf of all others ee CLASS ACTION COMPLAINT AND DEMAND FOR A JURY TRIAL Plaintiffs, 7 Civil Action No.: BLUE CROSS BLUE SHIELD OF MASSACHUSETTS, Defendant. Plaintiffs, individually and on behalf of all others similarly situated, bring the following complaint against Defendant Bluc Cross Blue Shicld of Massachusetts (“BCBSMA” or “Defendant”, RODUCTIO} 1 Plaintiffs in this action are the Massachusetts Laborers’ Health & Welfare Fund (the “Fund”) and the Trustees of the Fund (“Trustees”) (collectively referred to herein as the “Fund” or “Plaintiffs”). The Fund is a nonprofit organization established to provide health care benefits to over ten thousand hardworking laborers who are members of various local unions. The health plan offered by the Fund (the “Plan”) is self-funded, meaning that the health care services received by workers and their covered family members are paid using money from the Fund, which is collected from participating employers based on hours worked by each union member. 2. The Fund hired BCBSMA as a third-party administrator (“TPA”) to the Plan. The Fund hired BCBSMA to gain access to “exceptional hospital and provider discounts” thatDate Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number BCBSMA touts on its website and to administer the claims handling, including repricing bills from network providers for health care services received by Plan members to reflect these alleged exceptional discounts. See _https://employer.bluecrossma.com/medical-insurance/ppo-plan. BCBSMA’s duties as TPA were governed by the terms of the Administrative Service Agreement (“ASA”), drafted by BCBSMA, and executed jointly by the parties. Despite the fact that they drafted the agreement, BCBSMA consistently and knowingly violated the ASA’s terms by overcharging the Fund for health care benefits and for its own administrative services, until the Fund had no choice but to terminate its contractual relationship with BCBSMA. 3. The root of the problem lies in BCBSMA’s network provider contracts, drafted and entered into by BCBSMA for its own benefit. BCBSMA leads its self-funded customers to believe that BCBSMA’s network providers are paid at the same exceptionally discounted rate for all health plans utilizing BCBSMA’s network. Indeed, accessing an otherwise unavailable discount for health care services is a primary reason why any self-funded health plan enters into an agreement to access a network of providers who have agreed to accept discounted rates. In reality, the BCBSMA provider contracts allow BCBSMA to pay claims on behalf of its self-funded plan clients using whatever contract payment provision that best suits BCBSMA’s financial interests. To keep self-funded plan clients from discovering this, BCBSMA has made a conscious (and successful) effort to hide the payment terms in the provider agreements from them and has adopted various internal policies and practices (also kept hidden from the self-funded plan clients) that allow it to pay claims in a manner inconsistent with the terms of the ASAs. To add to the confusion, the ASAs are peppered with gag clauses and ambiguous alternative payment options so that no matter what price BCBSMA causes self-funded plans to pay for health care services, BCBSMA can point to a vaguely worded, obscure provision that purportedly allows it to adjudicate claims inDate Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number a manner that honors the terms of the provider agreements at the expense of the self-funded plan clients. 4. In addition to hiding the provider contracts that supposedly served as the basis for which benefit payments on behalf of the Fund’s Plan, BCBSMA engaged in frequent practi violated the ASA and its own policies, causing material overpayments to be made by the Fund. For example, the ASA explicitly stated that if provider overpayments were caused by BCBSMA, BCBSMA owed that full overpayment amount to the Fund. Yet BCBSMA repeatedly failed to retum overpayments to the Fund and, instead, actively hid or misrepresented overpayments to avoid paying back the money it owed to the Fund under the ASA. 5. Similarly, BCBSMA overcharged the Fund for administrative fees as well as savings fees it collected for recovering overpayments made to providers due to misbilling or other actions that were the fault of the providers. As one example, the ASA agreement provided that BCBSMA was entitled to a 20% savings fee when it recovered provider overpayments discovered during provider audits, but BCBSMA began applying a 30% savings fee instead. When this was discovered by the Fund, BCBSMA sought to amend the ASA retroactively to authorize its increased fee and allow it to keep the fees it had taken without authorization. 6. Despite having drafted alf of the relevant ASA payment terms, BCBSMA regularly processes claims in bad faith and breaches the terms of its self-funded plan clients’ ASAs, often tain the breach. Only when a self-funded plan client engages or attempts to engage in a review of claim payments do they become aware that their plan is being overcharged for medical costs and service provider fees, but all attempts to address any issues that are uncovered in a claims review or audit are met with an utter lack of cooperation by BCBSMA. That is because BCBSMA treats overpayment recovery as one big piggybank, replacingDate Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number improperly spent funds from one plan with assets from another, unrelated plan, in violation of statutory accounting principles and Massachusetts law. 7. Plaintiffs bring this lawsuit to challenge the unfair and deceptive system BCBSMA has c1 ed. Plaintiffs do not challenge BCBSMA’s right to enter into contracts with providers or promulgate internal policies and practices governing how its Plan claims were paid. Plaintiffs do dl lenge BCBSMA’s refusal to share the terms of the provider contracts that affected the way it paid claims under the ASA, and the internal policies and practices BCBSMA created to reconcile ‘the payment of claims. As the primary drafter of the ASAs, the provider contracts, and the internal policies and practices governing claims payment that BCBSMA self-servingly created, BCBSMA deliberately generates and enters into provider contracts that it knows conflict with the terms of the ASAs it also crafted. This naked conflict of interest causes self-funded plan clients to pay more than they bargained for and more than what BCBSMA promised they would pay while benefitti BCBSMA’s bottom line. 8. To make this house of cards work, BCBSMA insists that the terms in its provider contracts governing payment (and its internal policies and practices reconciling payment provisions in ASAs and provider contracts) are confidential BCBSMA trade secrets, and it refuses to explain the way it pays claims on behalf of self-funded clients. As a direct consequence of the intentionally deceptive system BCBSMA has created—in which it enters into contracts with utes with self-funded providers that it knows directly conflict with provisions in the ASAs it e plan clients—the Fund and class members were harmed by paying millions of dollars in excess of the amounts agreed to in the ASAs, as BCBSMA consistently overcharged them for health care services and administrative fees.Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number PARTIES 9. ‘The Massachusetts Laborers’ Health and Welfare Benefit Fund is a nonprofit organization established to provide health care benefits to over ten thousand union members. The Fund is headquartered at 1400 District Avenue, Suite 200 in Burlington, Massachusetts 01803- 1501. This is also the location where the Fund’s Trustees generally meet and work in their capacity as Trustees. 10. _Atalll times relevant hereto, the Fund has been engaged in trade and commerce within the Commonwealth of Massachusetts. 11. Defendant BCBSMA isa licensed health insurance company in the Commonwealth of Massachusetts and an Independent Licensee of the Blue Cross Blue Shield Association. It is headquartered at 10] Huntington Avenue, Suite 1300, Suffolk County, Boston, MA 02199-7611 12. Atall times relevant hereto, Defendant has been engaged in trade and commerce within the Commonwealth of Massachusetts, including the sale of its administrative services to self-funded health plans like the Fund’s Plan, JURISDICTION AND VENUE 13. This Court has general and specific jurisdiction over this action under G.L. 223A, §2 because Defendant is domiciled in, organized under the laws of, and maintains its principal place of business within the Commonwealth, and the injuries and damages alleged herein exceed the $50,000.00 threshold set forth in Supreme Judicial Court Standing Order dated July 17, 2019 (eff. January 1, 2020). 14. This Court likewise has jurisdiction over this action under G.L. 214, §1 as Plaintiffs also seek injunctive and equitable relief.Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number 15. Additionally, this Court has jurisdiction over Plaintiffs’ claim arising under G.L 93A, §11 because the actions and transac ns giving rise to Plaintiffs’ claim occurred primarily and substantially within the Commonwealth of Massachusetts. 16. Venue in this Court is proper because BCBSMA is headquartered in Suffolk County. FACTUAL ALLEGATIONS A, The Fund Offered a Self-Funded Health Plan to its Union Members and Hired BCBSMA as the Plan’s TPA. 17. The health and welfare benefits provided under the Plan are self-funded, meaning the Fund directly assumes the financial risk for providing healthcare benefits to Plan participants. ‘The money used to finance Plan benefit payments are drawn completely from the Fund, composed of contributions from union members’ employers, negotiated as part of the collective bargaining agreement, and sometimes from direct member contributions. 18. The Trustees hired BCBSMA to provide administrative services for the Plan, and BCBSMA charged the Fund a monthly administrative fee for providing these services, as well as additional fees for certain supplementary services as needed. The contractual relationship between BCBSMA and the Fund began in May 2006 and ended in June 2022, when the Fund terminated the contract as a result of the allegations described herein. 19. In addition to providing Plan participants access to the BCBSMA network of providers, pricing claims was one of the administrative duties the Plan delegated to BCBSMA under the ASA. BCBSMA’s claims pricing responsibilities included calculating the amount the Plan should pay for covered services submitted by providers and facilities via invoices and using the Fund’s money to pay the Plan’s portion of the covered expenses.Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number 20. The coverage available to Plan participants, as well as applicable cost-sharing provisions, exclusions and limitations to coverage, and all other terms gove 1g the coverage provided to participants in the Fund’s Plan are contractually defined in the Plan document. During the entirety of the contractual relationship between the Fund and BCBSMA, the ASA e: tly incorporated by reference all of the terms and conditions of the Plan, and BCBSMA agreed to perform all of its duti s in accordance with the Plan terms. The ASA specified that “[iJn the event of a conflict between the Fund’s Plan of Benefits and the Benefit Description and applicable PPO. Schedule(s), the Fund’s Plan of Benefits governs.” The Plan’s written terms were therefore not only incorporated into the ASA, but in the event the terms of the Plan conflict with the terms in the ASA, the Plan terms were supposed to take precedence. B. _ BCBSMA Breached the Terms of the ASA By Applying Inconsistent Provisions to Reprice Claims 21. The claims handling process, as set forth in the ASA, began with BCBSMA’s receipt of claims from the provider. BCBSMA was required to “reprice all covered claims submitted by network and out-of-network providers to Blue Cross and Blue Shield in accordance with Blue Cross and Blue Shicld’s provider reimbursement arrangements as in effect from time to time and consistent with the terms of this Agreement.” On its face, and without access to the terms of the provider reimbursement arrangements, this seemed like a reasonable provision. But, in actuality, many claims which were repriced in accordance with BCBSMA’s provider reimbursement arrangements were repriced in a manner inconsistent with the terms of the ASA. 22. In fact, oftentimes, instead of being repriced with the “exceptional hospital and provider discounts” that BCBSMA promises its self-funded plans, a much smaller discount was applied, no discount was applied, or, most shockingly, the bill was adjusted to an amount higher ‘than the original billed charges. Any time a claim was not repriced by application of the promisedDate Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number discount, BCBSMA breached the terms of the ASA. BCBSMA concealed the truth from the Fund by keeping the terms of the provider reimbursement agreements a secret and by implying that claims repriced in accordance with BCBSMA’s provider reimbursement agreements were also repriced consistent with the terms of the ASA. BCBSMA further misled the Fund with reporting early on that suggested BCBSMA’s negotiated rates were resulting in massive savings to the Fund. An excerpt from a financial report drafted by BCBSMA after the first year under the ASA informed the Fund that between December of 2006 and November of 2007, BCBSMA’s “negotiated discounts” had saved the Fund “over $42 million.” The report was very misleading, as it provided no context as to what the savings would have been had the BCBSMA negotiated discount been applied as promised without limit ler contracts, or what the mn of any provisions in the pro savings would have been if claims were being processed and paid properly by BCBSMA. ike the above. For 23. The ASA was replete with incongruous payment provisions example, when describing “Claims Processing and Payment,” the ASA again stated that BCBSMA would reprice claims for Plan participants “based on the applicable provider arrangement and in © with 8 accordan tion 4 of this Agreement,” but Section 4 of the ASA stated, in relevant part, that BCBSMA would “administer health care benefits based on the Fund’s Plan of Benefits and the Benefit Description and applicable PPO Schedule(s) of Benefits (to the extent that they do not conflict with the Plan) that are in effect for the Participant at the time the services are furnished and based on contractual agreements with providers and/or vendors.” However, oftentimes when claims were repriced in accordance with the contractual agreements between BCBSMA and providers and/or vendors, they were repriced in a manner that directly conflicted with the contractual payment provisions in the Plan.Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number 24. Critically, the multitude of vague possible payment methodologies set forth in the ASA often resulted in repricing claims in a manner that not only conflicted with but undermined the terms of the Plan. The Summary Plan Description (“SPD”), which served as the Fund’s Plan document and was well-known to BCBSMA, set forth all of the important terms and conditions of the Plan, and it also stated that the repriced claims that were billed to the Plan and Plan participants would “never be more than the negotiated rate” for network providers. 25. The terms of the SPD were detailed in A Summary of Plan Features, also well- known to BCBSMA. With respect to in-network benefits, the Summary also provided that the Plan would pay benefits based on the amount negotiated between the Plan’s administrator and the provider, and that the amount of the billed charges that would be considered “covered expenses” under the Plan would never exceed the negotiated rates, which were described as discounts off providers’ standard billing rates. 26. In fulfilling its duties under the ASA, BCBSMA was at all times obligated to act in a “reasonable and prudent fashion” and in accordance with the Plan's written terms. Instead, BCBSMA acted in a manner calculated to advance its own self-interest and financial interests in contravention of the Plan’s terms, its contractual obligations under the ASA and its duty to perform under the contract in good faith. C. _ BCBSMA Secretly Raised its Recovery Fee in 2018 and Illegally Collected Extra Fees Until the Fund Investigated in 2021 27. — One example of BCBSMA’s blatant disregard for the terms of the ASA and its deceptive business practices can be seen in connection with its decision to unilaterally raise its recovery fees and secretly collect these extra fees for years. The ASA detailed BCBSMA’s obligations when it made an overpayment to a provider for a Plan claim and mandated that if an overpayment was made as the result of an error made in whole or in part by BCBSMA’sDate Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number performance of its duties, then BCBSMA itself must reimburse the Fund for the full amount of the overpayment. 28. ‘The ASA required BCBSMA to conduct periodic payment recovery processes and audits, during which it identified overpayments it made processing Plan claims. When BCBSMA recovered an overpayment that was made due to fraud or abuse, BCBSMA was entitled to keep 20% of the amount recovered on the claim as a “recovery fee.” BCBSMA was only entitled to this 20% recovery fee in situations where the payment was attributable to a third-party error. Under the ASA, the Fund is entitled to receive the full recovered amount for overpayments which were caused in whole or in part by BCBSMA errors, even if BCBSMA caught the error using its own audit process. 29. Without notice to or consent from anyone at the Fund, BCBSMA increased its fee for overpayment recovery from 20% to 30% in 2018. In February 2021, the Fund discovered that something was wrong and inquired about the unauthorized fee inerease. In response to the Fund’s inquiry, BCBSMA presented for the first time a letter dated July 2, 2018, ostensibly authorizing the increase in the recovery fee BCBSMA would collect from 20% to 30% via an amendment to the Plan, effective if and when the Fund returned a signed copy of the proposed amendment to BCBSMA. Since the Fund never received a copy of the letter and proposed amendment, it did not retum a signed copy. BCBSMA raised its recovery fee to 30% anyway, and when the Fund investigated the situation in 2021, BCBSMA acknowledged that it was aware it had never received a signed copy of the amendment from the Fund, in effect admitting that it had no right to increase the recovery fee. All of the hidden, unauthorized fees BCBSMA collected since it raised the recovery percentage without consent were unauthorized and unlawful and all such fees must be retumed to the Plan, 10Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number D. _ BCBSMA Repeatedly Concealed Material Facts from the Fund in Breach of the ASA, Which Caused the Fund to Improperly Overpay for Plan Services 30. BCBSMA has consistently refused to provide the Fund and class members with access to its internal policies and procedures that bear upon in-network claim pricing calculations, as well as to any of the payment provisions in the provider agreements that affect in-network el pricing calculations; these policies, procedures and contractual provisions are the essential inform: in-network ion used by BCBSMA to determine the amount of benefit payments for services. This absence of information left the Fund unable to understand why claims were priced the way they were and whether the pricing terms that were applied to their claims comported with the terms of the ASA and the incorporated Plan terms. 31. The ASA contained impermissil le gag clauses on some of this information, as it specifically stated that it would exclude from all information requested by the Fund “any individual provider contractual discount information” which BCBSMA deemed as proprietary or trade secret data or information. This remained BCBSMA’s position, even after December 27, 2020, when anti-gag clause legislation was passed clarifying that contracts like the ASA, which provide health plans with access to a network of providers, cannot contain clauses which directly or indirectly keep plan sponsors and fiduciaries from accessing cost and quality information, including negotiated rates and the other contractual provisions in the contracts between the TPA and its network providers. 32, The Fund has never had even limited access to BCBSMA’s provider contracts, which contain the negotiated rates and set forth the conditions for deviation from those rates and from the rules, rates, and policies in BCBSMA’s operative payment policies. BCBSMA has denied every request the Fund ever made to see these provider contracts, willfully refusing to disclose information it knew or should have known was material for the Fund to meet its own Plan ulDate Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number obligations. This refusal made it impossible for Plaintiffs to properly supervise and review BCBSMA’s performance under the ASA, necessitating the Fund to ultimately terminate the contract, yet the Fund remains unable to verify the full extent to which BCSMA improperly interpreted and applied Plan term including the provision which stated that the amount paid for in-network benefits could not exceed the negotiated charges, 33. BCBSMA willfully and knowingly con: ed all documents and information that governed its methodology for determining the amount of covered charges under the Plan and the amounts it paid to network providers, which left the Fund unable to properly perform in its role as a fiduciary to the Plan, such as its responsibility for monitoring the performance of vendors hired to perform covered services, in addition to leaving the Fund unable to determine whether BCBSMA was paying claims properly and in accordance with the terms and conditions of the Plan. 34. BCI IA has consistently refused to provide the Fund with access to this information, even after the passage of a spate of transparency laws in December 2020 making clear it was obligated to do so; instead, it has always responded to such requests from the Fund with empty (and false) assurances that the claims were being processed correctly. BCBSMA appears to be acting in contravention of wha knows to be true, judging by the self-funded plan page on the site of Blue Benefit Administrators of Massachusetts (“BBA”), a wholly owned subsidiary of BCBSMA. BBA’s self-funded plan page sets forth the plan’s ownership of its claims data as one of the advantages of self-funding. See https:/vww.bluebenefitma.conywhy-bba/about-self- funding. If BCBSMA knows the Plan owns its claims data, it must also know that claims data includes information such as billed charges, allowed amounts, and any payment provisions inDate Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number provider agreements that impact how claims are paid under the Plan, but it still refuses to allow the Fund and its other self-funded plan clients access to this data, E, The Fund Hired a Payment Integrity Vendor and Uncovered Massive Contractual Violations by BCBSMA 35. As claim costs continued to increase, the Fund performed regular audits and attempted to otherwise review BCBSMA’s performance of its responsibilities under the ASA. As a result of those audits and reviews, the Fund identified numerous instances where BCBSMA overpaid covered claims in amounts that exceeded the negotiated rates, a violation of the Plan terms incorporated into the ASA. Every time the Fund tried to discuss its findings with BCBSMA, however, BCBSMA steadfastly and self-servingly rejected the Fund’s findings and concerns and refused to provide the Fund with material information necessary to address these concerns. BCBSMA’s conduct in overcharging the Plan for covered claims and flagrantly disregarding the contractual provisions of the ASA and incorporated contractual provisions contained in the Plan were ongoing breaches of BCBSMA’s contract with the Fund and violations of statutory and common law. 36. As part of the Fund’s regular audits of its contractors, the Fund hired ClaimInformaties, LLC (“ClaimInformatics”), a claims data analytics company, to perform a payment integrity review of the Fund’s claims. ClaimInformaties undertook a review of all benefits paid under BCBSMA’s claims handling protocol between 2016 to 2018, in order to evaluate BCBSMA’s performance under the ASA and identify and recover any overpayments. 37. After just the first stage of its review, ClaimInformatics identified 5,574 claims that had been paid in error, and concluded that the Plan had overpaid providers by at least $1,402,687.57 in conn jon with the errors. ClaimInformatics also found that Plan participants and beneficiaries had been overcharged (through deductibles and coinsurance, for example) by at 13Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number least $32,810.74. Considering the limited scope of this review—comprising only the first two years of claims data, for which there is still missing/hidden information—the Fund was shocked by these results. ClaimInformatics also found that BCBSMA was overcharging and/or causing the Plan to overpay for health care services fora variety of reasons, including: (i) paying claims that exceeded the gross billed charges; (ii) paying claims in error for certain readmissions; (iii) overpaying for observation claims; (iv) overpaying claims with major red flags as submitted; (v) overcharging and collecting an improper recovery fee percentage; and (vi) overcharging and collecting improper fees related to non-network claims; each is discussed briefly in turn: (i) Paying Claims That Exceed Gross Billed Charges. Claimlnformaties’ review of the claims data identified a striking pattem of BCBSMA repricing covered charges in amounts higher than the amounts healthcare providers actually billed. In just one of many examples, a hospital billed the Plan $38,786 for a claim, and BCBSMA repriced the claim at $120,614—more than three times the billed charge and a direct violation of the terms of the ASA. (ii) Paying Claims in Violation of the Readmission Policy. The terms of the Plan and BCBSMA’s inpatient readmission policy were consistent—if a patient was readmitted to a hospital within seven days of discharge and the readmission was for a related diagnosis, the cost of the second hospital stay was to be included in the price of the first. BCBSMA did not follow the terms of the Plan as required under the ASA, nor did it follow its own internal policies and practices; instead, ClaimInformatics found that BCBSMA processed many claims incorrectly as two separate hospital admissions, which caused the Fund to pay for both. Incredibly, once informed of its error, BCBSMA would not seck recovery of the overpayments until it conducted its own intemal audit. When it eventually conducted its 14Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number own intemal audit later in 2019, BCBSMA found it had made additional similar errors. Furthermore, when the claims were reprocessed, BCBSMA improperly retracted the first admission to the hospital and rebilled the Fund and patient for a larger amount for the second admission (BCBSMA’s policies and the Plan required the opposite—that only the first admission be charged). Worse, BCBSMA improperly collected a 30% recovery fee along the way that was not disclosed to or and approved by the Fund and wa: inappropriate since the fault for the overpayment lay with BCBSMA. The Fund told BCBSMA that this fee was improperly collected in September of 2019, since BCBSMA itself had caused the error. It was not until Plaintiffs filed a lawsuit against BCBSMA in federal court in 2021 that BCBSMA finally issued the refund, (iii) Overcharging and Overpaying for Observation Room Stays. BCBSMA’s observation room billing policy at all relevant times was to charge a one-day rate for observation room stays up to 24 hours and a two-day rate for stays longer than 24 hours, with an absolute cap at the two-day rate, The number of hours a patient spent in an observation room was included on the claim the provider submits to BCBSMA. Claiminformaties found numerous observation room stays that were shorter than 24 hours, but that BCBSMA processed and paid as two-day stays at the two-day rate, in violation of its own billing policies. These claims were misprocessed; whenever an observation room visit began before midnight on one date and ended after midnight on the next date, BCBSMA processed them incorrectly as two days stays instead of one. BCBSMA knew it was supposed to process these claims using the number of hours, not date span, but instead of repaying the Fund in full as required by the ASA terms, BCBSMA disclaimed any responsibility to refund the overpayments and pursue partial recoveries on behalf of the 15Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number Plan. BCBSMA reimbursed the Fund only $124,000 between September 2017 and September 2018 to resolve this issue, but ClaimInformatics found an additional $505,612 of Observation Room claims improperly paid by BCBSMA. To date, BCBSMA refuses to credit the Fund for the outstanding $505,612.00, and only 20% of the overpayment caused by BCBSMA has been recovered, despite BCBSMA’s knowledge of its error. When an overpayment was the fault of BCBSMA in whole or in part, the ASA required BCBSMA to pay the full refund to the Plan. (iv) Severity of Illness (“SOI”) Overcharges. Hospitals use SOI codes—levels 1, 2, 3, and 4 (minor, moderate, major, and extreme)—to identify how sick a patient is and what burden of illness the patient presents, with level | as the most minor form and a level 4 SOI indicating catastrophic manifestations of illness. The contracts BCBSMA negotiates with hospitals charge more for healthcare services with higher SOls, and BCBSMA prices level 4 SOI claims higher than those with lower ranked SOI codes. BCBSMA negligently ignored the statistically improbable number of level 4 SOI claims it was processing in making the benefit determinations for the Plan under the ASA. Discovery will show that BCBSMA frequently improperly processed claims at level 4 SOI and caused the Fund to overpay by paying hospitals more than they were entitled to under their nego ited rates, in contravention of BCBSMA’s obligations under the ASA. (¥) Inconsistent and Inflated Claims. BCBSMA processed without question a benefit claim under the Plan that was billed as two distinct healthcare services: the hospital billed it as a foot amputation and the doctor billed it as a toc amputation. BCBSMA processed and allowed the claim in that form, ignoring the fact that it had reecived clear red flags and it knew or should have known that the hospital had incorrectly overbilled for an 16Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number amputation. BCBSMA’s failure to catch this incorrect billing caused excess payments by the Fund, (vi) Unauthorized Recovery Fees. In one instance, a hospital rebilled a claim— essentially retracting the original bill and issuing a revised one. This did not result in any credit or refund, so there was no overpayment. Not only was there nothing to recover, but also the rebilling was entirely handled by the hospital, meaning BCBSMA conducted no recovery process at all. Nevertheless, BCBSMA processed this claim as a recovery of $21,270.71 (the amount originally billed) and caused the Fund to pay BCBSMA $6,381.21 as aresult, In another instance, BCBSMA corrected a claim originally priced at $20,998.90, which resulted in a partial recovery of $4,518.40. Instead of assessing its fee on the recovery amount, BCBSMA wrongly charged its unilaterally inflated 30% fee on the entirety of the $20,998.90 claim, paying itself 30% of the total, $6,299.67, for a $4,518.50 recovery that BCBSMA had no part in obtaining, There are numerous additional instances found by ClaimInformatics where BCBSMA caused an error itself, discovered the error, fixed it, and collected a recovery fee to which it was not entitled (vii) Coding Advisor Program Fee. In March 2021, the Fund discovered that in October 2020, BCBSMA began to charge a quarterly 19% commission fee on purported savings to the Fund from BCBSMA’s audits of out-of-network claims that it had processed under the Plan, BCBSMA had never notified the Fund about this new Coding Advisor Program Fee and the Fund never consented to it, Further, many of the affected claims were not out-of- network and therefore not subject to the Coding Advisor Program Fee as defined by BCBSMA. In June 2021, BCBSMA admitted that the Fund had never signed the 2019 ASA amendment containing the Coding Advisor Program, even though it continued to bill the 17Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number Fund for the fee; instead, BCBSMA requested the Fund sign a backdated contract to when the fee first started being improperly charged. (viii) Post-Pay Audit Policies. While this unfair and deceptive business practice by BCBSMA did not result i it taking an unauthorized or excessive fee, or cause the Plan to overpay benefits, BCBSMA’s Post-Pay Audit Policies allowed many poorly adjudicated claims to be paid. In May 2021, the Fund challenged BCBSMA’s decision to process a claim after it accepted without question a provider's bill charging three hours for a procedure known to take just one to five minutes, resulting in a substantial payment by the Fund. In response to the Fund’s dismayed reaction regarding the obvious overpayment, BCBSMA said it would flag the issue, but that the auditing policy for claims like this (specifically “all same day surgery with observation claims”) was to review them only “on a post pay basis.” Thus, regardless of how implausible any such claim data appeared, once BCBS) MA had priced the claim, it had a stated policy against reviewing it for error until the money had been paid to the provider. This was a slipshod, careless method of addressing overpayments, not what a reasonable and prudent administrator would have done. Moreover, history suggests that BCBSMA would subsequently collect an undeserved recovery fee when finally conducted a post-pay audit. In other words, BCBSMA intentionally avoided handling claims properly upfront so as to avoid obvious overpayments, in which case BCBSMA would not carn a “savings” fee for just doing its job as a claims administrator, and would instead defer any analysis until after the fact, so that it could claim such a “savings” fee by recovering the amounts that BCBSMA had allowed to be overpaid. 18Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number F. _ BCBSMA Blocked the Fund from Recovering Overpayments Made in Excess of the Plan’s Written Terms 38. In addition to its failures to accurately determine benefit amounts and to regularly review past benefit payments for errors or fraud, BCBSMA’s efforts to pursue payment recovery, as was also required under the terms of the ASA, were abysmal. BCBSMA recovered less than 1% of $245 million in claims payments, notwithstanding the fact that more than 80% of medical d, BCBSMA did not billings reviewed are found to contain errors. Unlike what it had promis conduct recovery efforts on an ongoing basis; it engaged in the overpayment and recovery process only when it was convenient for BCBSMA and if it served its own financial interests, in conflict with its obligations to the Fund under the ASA. Since BCBSMA never bothered to try recovering overpayments it made using money paid by the Fund, in 2019 the Fund authorized ClaimInformaties to pursue recovery of the initial $1.4 million in overpayments. In March 2019, Claiminformatics and the Fund sent letters to each provider believed to have been overpaid, setting forth the suspected overpayment, providing the basis for the belief that an overpayment was made Informatics was in direct and providing an opportunity to appeal, and by April 2019, Clai communication with a majority of these providers and had started receiving refund checks from providers who agreed that the Fund had overpaid them. Within the first thirty days of recovery, ClaimInformaties collected $77,337.83 from providers. To date, ClaimInformaties has collected $204,772 in refund checks that were returned to the Plan. 39. On April 2, 2019, BCBSMA demanded that the Fund cease its recovery efforts. Christopher May, the Fund’s account representative at BCBSMA, told the Fund to immediately stop communicating with providers, claiming that such communications were “not allowed” under the ASA, even though the ASA contained no such prohibition. Even though the Fund did not agree with BCBSMA that its effort to collect the overpayments was improper, it complied with 19Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number BCBSMA’s demand to keep the peace and protect its members. Fearing that conflict with BCBSMA would threaten the business relationship and endanger Plan members’ continuity of healthcare with BCBSMA network providers, the Fund instructed ClaimInformaties to cease its collection efforts, lea! ing the remaining $1.2 million of Stage 1 overpayments unrecoverable. 40. Around this time, BCBSMA contacted all of its network providers and instructed them to ignore any notices of overpayments sent by the Fund. Some providers reached out to ClaimInformaties and shared that BCBSMA had advised them not to send any refund checks to the Fund, even though those providers agreed that they had received overpayments. Notably, while BCBSMA took the time to ensure its client would have no avenue to recover overpayments BCBSMA erroneously made, BCBSMA never followed up on the identified overpayments to ensure that they would be returned to the Fund. So BCBSMA intervened to stop the Fund from collecting undisputed overpayments, and then took no steps itself to recover such overpayments, to the Fund’s clear detriment 41. On April 24, 2019, Brian Fox, Assistant General Counsel of BCBSMA, wrote a letter reiterating that the Fund should not contact any providers directly. This complete blockade by BCBSMA of Fund communication with network providers eliminated the only other source of information the Fund could look to when trying to determine if claims were paid properly and eliminated the only way to collect overpayments made by BCBSMA that BCBSMA chose not to recover. G. _ BCBSMA Continued to Obstruct the Fund from Recovering Overpayments Until the Fund Ultimately Switched to a New TPA 42. ClaimInformatics continued to identify claims handling errors and irregularities. Despite their best efforts, the Fund and ClaimInformatics were unsuccessful in getting BCBSMA to work with them to resolve errors and recoup overpayments, BCBSMA eventually took the 20Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number position—without providing any evidence in support—that it was not making the errors ClaimInformatics was detailing; for example, it said that it had audited all of the claims where the level of SOI was an issue and found it had processed the claims properly the first time. Yet it fion whatsoe\ provided no proof, or any substa er, that it had engaged in any effort to verify its conclusions. 43. Contrary to its contractual promise to administer its duties to the Fund in a “reasonable and prudent” manner, BCBSMA did a terrible job administering the Plan’s claims, overcharging the Fund by millions of dollars and failing to obtain recovery of improperly paid claims. Had BCBSMA properly exercised its obligations to the Fund, it would have identified these problems in advance, so as to avoid causing the Fund to make overpayment. BCBSMA is duty-bound to put systems in place to monitor and thwart provider fraud or error. But BCBSMA. fell far short of this obligation and blocked attempts to review even the most obviously incorrect claims, thereby allowing such errors to remain hidden. 44. One such claim, identified above, was billed by the hospital as a foot amputation and by the doctor as a toc amputation. ClaimInformatics asked BCBSMA to audit this claim, as one of the charges was necessarily incorrect. BCBSMA later asserted that it conducted an audit, which purportedly revealed that the doctor erred and that the amputation was of the foot. Based on its experience in the field, ClaimInformatics doubted that the doctor had made such a glaring error and billed a less complex procedure than actually performed. Indeed, logic and experience suggest it was far more likely that the hospital had upcoded the charge in order to bill more, not the reverse, as that would result in a lower payment. ClaimInformatics accordingly requested to review the audit report and medical records on behalf of the Fund in order to verify BCBSMA’s finding. 2Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number BCBSMA refused to provide any documentation, and therefore blocked the Fund from verifying a blatant claim error. 45. Throughout the parties’ communications, the Fund and ClaimInformatics made clear that they would be unable to validate BCBSMA’s findings without the necessary documentation, including BCBSMA’s individual contracts with network providers, as well as BCBSMA’s internal payment policies, audit reports, and medical records. 46. Throughout these discussions, BCBSMA steadfastly maintained that Claiminformatics’ findings were wrong. BCBSMA repeatedly asserted, without any substantiation, that it had processed claims correctly in accordance with confidential contracts with in-network providers. Based on BCBSMA’s representations, each of these provider contracts sets forth a rate schedule particular to that provider and distinet from BCBSMA’s operative billing policies. But despite the importance of these provider contracts for setting the Covered Expenses under the Plan, and the applicable billing policies BCBSMA applied in interpreting the contracts to establish the amount of benefits to be paid by the Fund, and not ithstanding the Fund’s repeated requests to see them, BCBSMA refused to let the Fund review this information to confirm that BCBSMA had not caused the Fund to overpay claims. 47. BCBSMA also repeatedly brushed aside other concems by claiming—without any proof or opportunity for the Fund to verify these assertions—that it had conducted audits that showed that BCBSMA did not err and that no payment recovery would be necessary. Despite the clear answers supposedly uncovered in BCBSMA’s audits, BCBSMA refused to show the Fund the audit records or related medical records to verify BCBSMA’s findings. H. Improperly Offsetting Recouped Benefits 48. As part of its role in processing claims under self-funded and fully insured health plans, BCBSMA frequently conducts post-payment audits of health care providers to determine if 22Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number the benefit payments it authorized were appropriate or whether there were overpayments that the providers should return. 49. This process was detailed in a class action that was filed against BCBSMA in 2014 See Quigley v. Blue Cross Blue Shield of Massachusetts, Civ. Act. No, 1:14-cv-13808 (D. Mass. Oct. 7, 2014) (“Quigley”). In Quigley, the named plaintiff, a chiropractor, alleged that as part of BCBSMA’s regular course of conduct it audited the claims that had been paid to the chiropractor for services provided to 20 patients, after which it concluded that there had been an overpayment for those 20 patients of approximately $12,500, But then, BCBSMA extrapolated that overpayment to the full amount that had been paid to the chiropractor over the prior three years, leading to a total overpayment demand of approximately $188,000. Prior to Quigley filing the lawsu BCBSMA started recouping funds from the chiropractor by withholding benefit payments that were otherwise due and applying the withheld amounts against the total extrapolated overpayment. By the time Quigley filed suit, BCBSMA had recouped over $111,000. This is not the way TPAS are required to adjudicate claims. First of all, the $111,000 that had been recouped against the total repayment demand of $188,000 reflected services that the chiropractor had provided to hundreds of patients under hundreds of different benefit plans that BCBSMA had administered. Second, BCBSMA never made a plan-by-plan assessment of the overpayments, because it merely extrapolated, a.k.a. guessed at, a total amount that had purportedly been overpaid. Third, when withholding benefit payments for a member of one plan to address real or extrapolated overpayments made from other plans, it is offsetting the liabilities of one plan using the assets of another. 50. This manner of offsetting perceived overpayments is in direct conflict with the Statement of Statutory Accounting Principles (“SAPs”) crafted by the National Association of 23Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number Insurance Commissioners (“NAIC”) and directly incorporated into Mass. Gen. Laws (*MGL”) ch. 175 § 25. SSAP No. 47 governs the recording and reporting of transactions under administrative service contracts for self-funded plans like the contract between the Fund and BCBSMA. More specifically, SSAP 47 requires that “fa] liability shall be established for funds held by an administrator in its general assets for the benefit of an insured plan, or for funds which may be owed by the administrator in connection with the administration of an uninsured plan, A liabili relating to one plan shall not be offset by an asset relating to a different plan.” (emphasis added). BCBSMA’s 2022 annual report acknowledges that BCBSMA must follow the accounting principles prescribed and permitted by the Massachusetts Division of Insurance and draft its financial statements in conformity with the SSAPs. 51. Each self-funded plan that had overpaid the chiropractor in Quigley, then, was entitled to receive back any funds by BCBSMA that were recovered, less any potential recovery fee that BCBSMA charged under its ASA. On information and belief, this rarely happens because BCBSMA does not determine on a plan-by-plan basis what overpayments were made. Here, the amount of overpayments that BCBSMA returned to the Fund was de minimis. Discovery will show that BCBSMA recovered substantial sums for overpayments made with the Plan's assets that were never properly returned. This means that BCBSMA is recovering and keeping funds that are due to the self-funded plans, in violation of the language of the ASAs, the directives in the SSAPs and M.GLL. ch. 175, § 25 ASS ALLEGATIONS 52. BCBSMA serves s the TPA for many other self-funded plans, pursuant to ASAs that are substantially similar to the one it entered into with the Fund. BCBSMA drafts the ASAs and permits few, if any, changes requested by the plans. 24Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number 53. Upon information and belief, all of the misconduct alleged herein, including but not limited to BCBSMA’s failure to pay back overpayments that it caused, or to retum recouped funds recovered as a result of BCBSMA’s post-payment audits, applies not just to the Fund but to the other self-funded plans for which BCBSMA served or serves as a TPA. Thus, each of these self-funded plans have been injured in the same way as the Fund, due to the same or comparable misconduct by BCBSMA. 54. Asa result, Plaintiffs bring claims on behalf of themselves and on behalf of a class (the “Class”) defined as “all self-funded plans for which BCBSMA has served as a TPA in Massachusetts” within the applicable statute of limitations. 55. The members of this proposed Class are so numerous as to make joinder of all members impractical. At year-end 2022, BCBSMA acted as TPA to 224 self-funded plans comprising 1,161,723 participants and beneficiaries. See https://www.mass.gov/doc/2022-vear- rollment/download. 56. BCBSMA has acted on grounds that apply generally to the Class, as BCBSMA has engaged in a uniform practice of causing overpayments by the self-funded plans it administers and charging excessive and/or unauthorized administrative fees. 57. Inits role asa TPA for the plans in the Class, BCBSMA maintains records relating to all of the self-funded plans it administers, as well as when and how it receives, processes, pays, or refuses to pay claims for services. Moreover, BCBSMA has copies of all of the contracts it enters into with its in-network providers, as well as all of its internal policies and procedures that it contracted to apply when making benefit determinations. Accordingly, the members of the Class, and potential damages, can be readily and objectively ascertained through use of BCBSMA’s records, 25Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number 58. The wrongful acts and omissions by Defendant set forth above have caused Plaintiffs and the putative class to suffer actual, consequential, and pecuniary damages. 59. Plaintiffs, as Class representatives, will fairly and adequately protect the interests ined of the members of the Cla ion; have ret ; are committed to the vigorous prosecution of this a counsel competent and experienced in class action litigation and the prosecution of health insurance claims; and have no interests antagonistic to or in conflict with those of the Cla 60. Plaintiffs’ claims are typical of the claims of other members of the putative class, as all members of the class have been similarly affected by Defendant’s wrongful acts and practices as described herein. 61. Common questions of law and fact exist and predominate over any questions of law or fact which may affect only individual Class members. 62. Common questions of law and fact include whether Defendant breached the ASA contracts, breached the covenant of good faith and fair dealing, was unjustly enriched, committed negligent and/or fraudulent misrepresentation, violated G.L. c. 93A, §11, owe Plaintiffs and the putative Class an accounting, and caused compensable damages to Plaintiffs and the putative Class and, if so, the proper measures of damages. 63. A class action is superior to other available methods for the fair and efficient adjudication of this controversy, since: (i) The financial harm suffered by individual Class members is economically unfeasible for them to individually litigate their claims; (ii) ‘The factual and legal issues common to all Class members far outweigh any individual questions; 26Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number (iii) The prosecution of separate lawsuits by individual Class members would entail the risk of inconsistent and conflicting adjudications; (iv) Class members are identifiable through Defendant's business records; and (v) There will be no unusual or extraordinary management difficulties in adi this case as a Class action. (vi) A Class action will foster economies of time, effort, and expense to ensure uniformity of decisions, presenting the most efficient manner of adjudicating the claims set forth herein, COUNT ONE (Breach of Contract) 64, Plaintiffs incorporate by reference the preceding paragraphs as though such paragraphs were fully stated herein. 6S. BCBSMA and cach member of the Class are parties to ASAs that govern BCBSMA’s responsi ity asa TPA. 66. The ASA is a valid, legal, binding, and enforceable contract entered into for consideration. The ASA incorporates the plan document applicable to each plan, and BCBSMA is required to follow the terms of the SPD as part of its obligation under the ASA, 67. As described above, BCBSMA acted in breach of the express terms of the ASA through conduct including but not limited to: collecting unauthorized fees, overpaying network providers, and failing to reimburse the Fund for amounts BCBSMA overpaid providers due to its own errors. 68. Asaresult, the Fund and each member of the Class have suffered significant losses, including but not limited to: (a) the overpayment of benefits; (b) fees the Fund paid BCBSMA for unperformed services; (c) the money lost because of the failure of BCBSMA to recoup or to return 27Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number recouped benefit payments; (d) the money lost because of the failure of BCBSMA to directly reimburse the Plan and Class members for all overpayments made due to an error by BCBSMA in whole or in part; (e) the hidden fees collected by BCBSMA when it raised its percentage of the recovery and other fees without properly amending the ASAs; (f) interest on those amounts aceruing at the applicable statutory rate; (e) costs; and (f) attorney fees. (Breach of the Implied Covenant of Good Faith and Fair Dealing) 69. Plaintifls incorporate by reference the preceding paragraphs as though such paragraphs were fully stated herein 70. BCBSMA and each member of the Class are parties to ASAs that govern BCBSMA’s responsibility as a TPA. 71. The ASA is a valid, legal, binding, and enforceable contract entered into for consideration. The ASA incorporates the SPD applicable to each plan. 72. A covenant of good faith and fair dealing is implied in all contracts in Massachusetts, 73. The implied covenant prevents a party from doing anything that will have the effect of destroying or injuring the right of the other party to the fruits of the contract. 74. Based on the intentionally misleading language of the ASAs, each Class member reasonably understood the ASA to permit ither BCBSMA or the Fund to pursue claim recovery for erroneous payments. of the ASAs, 75. Based on the intentionally misleading langua; reasonably understood the ASA to include implied promises that neither it nor BCBSMA would obstruct the other’s efforts to pursue payment recovery. 28Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number 76. Based on the intentionally misleading language of the ASAs, each Class member reasonably understood the ASA to establish an agency relationship in which the Fund is the principal and BCBSMA is the agent in pricing claims, directing payments to be made out of money contributed by the Fund, and pursuing payment recovery. 77. Based on the intentionally misleading language of the ASAs, each Class member reasonably understood the ASA to include implied promises that BCBSMA would share with the Fund all foundational information governing BCBSMA‘’s discharge of its duties under the contract. 78. _ BCBSMA, the drafter of the ASAs, intentionally included provisions regarding the payment of claims allowing it to pay claims in an unreviewable manner untethered to any of the promised discounts with providers. 79. When questioned about how claims were repriced, BCBSMA refused to provide inform; ion to the Fund or other members of the Class explaining which provision in the ASA, provider contracts, or BCBSMA’s own internal policies and procedures governed. 80. BCBSMA refused to share information regarding the discount applied to the Fund and Class member claims on the grounds that such information was confidential and proprietary, in violation of applicable law regarding the requirements of service providers to share information With trustees and fiduciaries. 81. BCBSMA also acted in bad faith when it unilaterally amended the ASA to increase its share of recovery and other fees, in direct contravention of the terms of the ASA requiring any amendment to the ASA to be signed by both parties 82. As detailed above, BCBSMA acted in bad faith through conduct including but not limited to concealing and withholding material documents and information; obstructing Plaintiffs" and other Class members’ recovery efforts; collecting recovery fees in unauthorized situations; 29Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number recovering overpayments by offsetting claims payable under other self-funded and fully insured plans and failing to credit the Fund with the amount recouped; and collecting excess fees beyond what is permitted under the ASA 83. Asaresult, the Fund and each member of the Class have suffered significant losses, including but not limited to: (a) the overpayment of benefits; (b) fees the Fund paid BCBSMA for unperformed services; (c) the money lost because of the failure of BCBSMA to recoup or to return recouped overpayments; (d) the money lost because of the failure of BCBSMA to directly reimburse the Plan and Class members for all overpayments made due to an error by BCBSMA in whole or in part; (e) the hidden fees collected by BCBSMA when it raised its percentage of the recovery and other savings without properly amending the ASAs; (f) interest on those amounts aceruing at the applicable statutory rate; (e) costs; and (f) attorney fees. ‘T THREE (Unjust Enrichment, in the Alternative) 84, Plaintiffs incorporate by reference the preceding paragraphs as though such paragraphs were fully stated herein 85. When BCBSMA caused the Fund and each member of the Class to overpay benefits, BCBSMA was unjustly enriched. 86. When BCBSMA caused the Fund and each member of the Class to pay it fees for services it promised but failed to perform, it was unjustly enriched. 87. When BCBSMA failed to recover overpayments it caused to be made by the Fund and cach member of the Class and failed to directly reimburse the Plan and Class members for all overpayments that were made because of an error by BCBSMA in whole or in part, it was unjustly enriched, 30Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number 88. When BCBS MA recovered overpayments by offsetting claims payable under other self-funded and fully insured plans and failed to reimburse the Plan and Class Members with the amounts recouped, it was unjustly enriched. 89. When BCBSMA began collecting additional fees after unilaterally amending its ASAs to increase its fees for recovery and without obtaining the signature of the Fund and members of the class, BCBSMA was unjustly enriched. 90. Asaresult, the Fund and each member of the Class have suffered significant losses, including but not limited to: (a) the overpayment of benefits; (b) fees the Fund paid BCBSMA for unperformed services; (c) the money lost because of the failure of BCBSMA to recoup or to return recouped overpayments; (d) the money lost because of the failure of BCBSMA to directly reimburse the Plan and Class members for all overpayments made due to an error by BCBSMA in whole or in part; (c) the hidden fees collected by BCBSMA when it raised its percentage of the recovery and other savings without properly amending the ASAs; (f) interest on those amounts accruing at the applicable statutory rate; (e) costs; and (f) attorney fees. COUNT FOUR (Negligent Misrepresentation) 91. Plaintiffs incorporate by reference the preceding paragraphs as though such paragraphs were fully stated herein. iffs and members of the 92. BCBSMA made negligent misrepresentations to Plait Class regarding the services it would provide under the ASA to its self-funded clients. 93. BCBSMA omitted information necessary for Plaintiffs and Class members to evaluate the value of the services BCBSMA was providing and to understand how claims were being paid. 31Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number 94. BCBSMA’s negligent misrepresentations and omissions caused the Plaintiffs and cach member of the Class to incur significant damages, as their reliance on BCBSMA‘s neg! representations resulted in Plaintiffs and Class members failing to have a true understanding of what the costs of health care and the admi istrative fees collected by BCBSMA would be. 95. BCBSMA failed to exercise reasonable care and competence in its drafting of all relevant documents and in communicating material information to Plaintiff and Class members 96. BCBSMA failed to exercise reasonable care and competence in its continuous practice of offsetting overpayments made using one plan’s assets by diverting another plan’s assets and failing to credit the original plan with the amounts recovered, in contravention of SSAP No. 47 and M.G.L. ch. 125 § 25. 97. The Fund and each member of the Class were injured by BCBSMA’s negligent misrepresentations in several ways, including, but not li ited to: (a) overpaying for health benefits because undisclosed payment terms were applied to the repricing of claims; (b) paying fees for services that BCBSMA represented itself as performing but did not perform; (c) losing out on overpayments that BCBSMA communicated would be returned either by provider recovery efforts or directly from BCBSMA when it made the error that caused the overpayment; and (d) failing to communicate and properly adjust the fees it charged for recovery and other services under the ASA. 98. Asaresult, the Fund and each member of the Class have suffered significant losses, including but not limited to: (a) the overpayment of benefits; (b) fees the Fund paid BCBSMA for unperformed services; (c) the money lost bec c of the failure of BCBSMA to recoup or to retum recouped overpayments; (d) the money lost because of the failure of BCBSMA to directly reimburse the Plan and Class members for all overpayments made due to an error by BCBSMA inDate Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number whole or in part; (e) the hidden fees collected by BCBSMA when it raised its percentage of the recovery and other savings without properly amending the ASAs; (f) interest on those amounts accruing at the applicable statutory rate; (e) costs; and (f) attorney fees. col (Fraudulent Misrepresentation) 99. Plaintiffs incorporate by reference the preceding paragraphs as though such paragraphs were fully stated herein 100. BCBSMA intentionally made false representations to Plaintiffs and members of the Class regarding the services it would provide under the ASA to its self-funded clients. It also intentionally omitted critical information that Plaintiffs and Class members needed to have a full understanding of how costs of care would be determined and what fees would be paid from. 101. The purpose of BCBSMA’s intentional misrepresentations was to cause Plaintiffs and each member of the Class to enter into an ASA that was financially advantageous to BCBSMA. 102. Plaintiff’ and members of the Class reasonably relied on BCBSMA’s intentional misrepresentations when entering into contracts with BCBSMA to provide administrative services. 103. BCI |A’s fraudulent representations and omissions caused the Plaintiffs and reliance on BCBSMA’s inter each member of the Class to incur significant damages, as the nal representations and omissions kept Plaintiffs and Class members from having a truc understanding of what the costs of health care and the administrative fees collected by BCBSMA would be. 104, BCBSMA understood that it was making fraudulent representations and omissions to Plaintiffs and Class members and did so intentionally for the purpose of enticing Plaintiffs and each Class member to enter into predatory, disadvantageous contracts that inured to the financial benefit of BCBSMA. 33Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number 105. The Fund and each member of the Class were injured by BCBSMA’s fraudulent misrepresentations and omissions in several ways, including, but not limited to: (a) overpaying for health benefits because undisclosed payment terms were applied to the repricing of claims; (b) paying fees for services that BCBSMA represented itself as performing but did not perform; (c) losing money in overpayments that BCBSMA obligated itself to return either by provider recovery efforts or directly from BCBSMA when it made the error that caused the overpayment when it failed to do so; and (4) failing to obtain the requisite signatures to amend the ASA and raise the fees it charged for recovery and other services under the ASA 106. Asaresult, the Fund and each member of the Class have suffered significant losses, including but not limited to: (a) the overpayment of benefits; (b) fees paid BCBSMA for unperformed services; (c) the money lost because of the failure of BCBSMA to recoup and/or return benefit payments; (4) the money lost because of the failure of BCBSMA to directly reimburse the Plan and Class members for all overpayments made duc to an error by BCBSMA in whole or in part; (c) the hidden fees collected by BCBSMA when it raised its percentage of the recovery and other savings without properly amending the ASAs; (f) interest on those amounts accruing at the applicable statutory rate; (e) costs; and (f) attorney fees. COUNT SIX (Fraudulent Inducement) 107. Plaintiffs incorporate by reference the preceding paragraphs as though such paragraphs were fully stated herein. 108. BCBSMA fraudulently induced Plaintiffs and members of the Class to hire BCBSMA and to provide administrative services to their health plans under an ASA by intentionally making false representations to Plaintiffs and members of the Class regarding the 34Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number discount that would be applied to covered claims. BCBSMA also intentionally omitted critical information that Plaintiffs and Class members needed to have a full understan¢ 1g of how costs of care would be determined and what fees would be paid; specifically, that the negotiated discounts were not determinative of how claims would ultimately be paid, as the final allowed amount was based on a combination of the negotiated discount and other contractual provisions in the agreements between BCBSMA and the providers, which meant in many cases the final amount was higher than it would be if the negotiated discount was applied and no other contractual provisions then adjusted the price. 109. The purpose of BCBSMA’s intentional misrepresentations and omissions was to induce Plaintiffs and cach member of the Class to enter into an ASA that was financially advantageous to BCBSMA. nal 110. Plaintiff's and members of the Class reasonably relied on BCBSMA’s intentis misrepresentations and omissions and as a result were induced into entering into contracts with BCBSMA to provide administrative services. 111, As a result of the fraudulent inducement to enter into the ASAs caused by BCBSMA’s fraudulent representations and omissions, Plaintiffs and each member of the Class incur significant damages, as their relianee on BCBSMA’s fraudulent misrepresentations and omissions induced Plaintiffs and Class members to enter into ASAs with BCBSMA under which they paid far more for health care and administrative fees than they had anticipated. 112. BCBSMA understood that it was making fraudulent misrepresentations and omissions to Plaintiffs and members of the Class and did so intentionally for the purpose of enticing Plaintiffs and each Class member to enter into predatory, disadvantageous contracts that inured to the financial benefit of BCBSMA. 35Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number 113. The Fund and each member of the Class were injured by BCBSMA’s fraudulent inducement in several ways, including, but not limited to: a) overpaying for health benefits because undisclosed payment terms were applied to the repricing of claims; (b) paying fees for services that BCBSMA represented itself-as performing but did not perform; (c) losing money in overpayments that BCBSMA obligated itself to return either by provider recovery efforts or directly from BCBSMA when it made the error that caused the overpayment when it failed to do so; and (d) failing to obtain the requisite signatures to amend the ASA and raise the fees it charged for recovery and other services under the ASA. 114, Asaresult, the Fund and each member of the Class have suffered significant losses, including but not limited to: (a) the overpayment of benefits; (b) fees paid BCBSMA for unperformed services; (c) the money lost because of the failure of BCBSMA to recoup and/or return benefit payments; (4) the money lost because of the failure of BCBSMA to directly reimburse the Plan and Class members for all overpayments made duc to an error by BCBSMA in whole or in part; (c) the hidden fees collected by BCBSMA when it raised its percentage of the recovery and other savings without properly amending the ASAs; (f) interest on those amounts accruing at the applicable statutory rate; (e) costs; and (f) attorney fees. COUNT SEVEN (Unfair and Deceptive Business Practices, M.G.L. 93A § 11) 115. Plaintiffs incorporate by reference the preceding paragraphs as though such paragraphs were fully stated herein. 116, This claim is brought under M.G.L. 93 § 11. 117. Plaintiffs and Defendant are and were at all relevant times engaged in trade or business within the Commonwealth of Massachusetts 36Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number 118. BCBSMA committed unfair and deceptive business acts and practices through the conduct detailed herein, including but not limited to: (i) overpaying network providers; (ii) collecting fees under the ASA for services that were not performed; (iii) intentionally concealing and withholding material documents and information; (iv) fraudulently representing that by entering into a contract with BCBSMA, Funds such as Plaintiffs would receive discounts off the billed charges from network providers; (v) fraudulently representing or gross negligence in representing the manner in which claims would be priced and how overpayments would be handled; (vi) continuously disregarding the terms of the ASA for its own financial gain; (vii) obstructing Plaintiffs’ and other Class members’ recovery efforts; (viii) unilaterally amending the ASA and collecting unauthorized fees as a result and refusing to return them; (ix) refusing to collect, or collecting and refusing to return, overpayments, (x) offsetting overpayments made using one plan’s assets by diverting another plan’s assets and failing to credit the original plan with the amounts recovered, in contravention of SSAP No. 47 and M.G.L. ch. 125 § 25; and; (xi) entering into improper settlement agreements with network providers for the benefit of BCBSMA’s insured line of business at the expense of its self-funded plans and in direct contravention of the terms of the ASA. 119. On January 15, 2020, Plaintiffs, through their counsel, delivered to BCBSMA a written demand for relief that set forth the unfair and deceptive business acts and practices 37Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number committed by BCBSMA against Plaintiffs. BCBSMA refuses to provide the relief requested in that letter. 120. BCBSMA’s unfair and deceptive business acts and practices have injured Plaintiffs and the Class by (1) causing the Fund and other Class members to overpay claims and fees: (2) frustrating their ability to discover and recover Plan overpayments; and (3) increasing the Plan’s administrative costs by requiring them to spend time and resources addressing BCBSMA’s malfeasance. 121, BCBSMA performs these unfair and deceptive business acts and practices on Plaintiffs and the members of the Class by (1) drafting contracts of adhesion where self-funded clients have no choice but to blindly rely on BCBSMA’s pricing of claims and make payments in accordance with BCBSMA’s pricing if they want to secure access to the providers and facilities in the Fund the BCBSMA network; (2) instructing network providers not to communicate regarding overpayment recoveries upon threat of risking their status as a network provider; and (3) gatekeeping crucial and foundational documents through the imposition of ambiguous payment provisions in the ASA and the imposition of gag clauses in its contract with network providers and self-funded plans. Together, these actions prevent Plaintiffs and the Class from identifying the extent of BCBSMA’s misdirection of Plan funds and recovering all of the monies they are owed. 122. Asarresult, the Fund and each member of the Class have suffered significant losses, including but not limited to: (a) the overpayment of benefits; (b) fees paid BCBSMA for unperformed services; (¢) the money lost because of the failure of BCBSMA to recoup and/or return benefit payments; (d) the money lost because of the failure of BCBSMA to directly reimburse the Plan and Class members for all overpayments made due to an error by BCBSMA in whole or in part; () the hidden fees collected by BCBSMA when it raised its percentage of the 38Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number recovery and other savings without properly amending the ASAs; (f) increasing the amount of administrative costs spent by the Fund and Class members trying to address BCBSMA’s malfeasance; (g) exposing Plaintiff's and Class members to regulatory and civil litigation as the ies; (h) interest on those amounts accruing at the result of its grossly improper claim pricing poli applicable statutory rate; (i) costs; and (j) attorney fees, COUNT EIGHT (Accounting) 123. Plaintiffs incorporate by reference the preceding paragraphs as though such paragraphs were fully stated herein. 124, As described above, BCBSMA is obligated to perform a number of managerial and discretionary responsibilities with respect to the applicable plans for cach Class member. It must act in accordance with the documents and instruments governing the plans and to provide an accounting to the Fund and the Class upon request. 125. BCBSMA has repeatedly refused the Fund’s and other such requests for the documents and instruments that BCBSMA has indicated govern the plans and any financial information regarding the administration and management of the plans, 126. BCBSMA’s refusal to provide the Fund and other Class members with this documentation, information, and an accounting of processed claims has harmed plan members by concealing the extent of BCBSMA’s misconduct and mismanagement and preventing the Fund and the Class from recovering overpaid amounts. Furthermore, BCBSMA has inflated the cost of healtheare, requiring union members’ employers to contribute more towards health benefits and thus withhold more money from union members” paychecks. 127. Plaintiffs, on behalf of itself and other Class members, seeks an accounting of: (a) all benefit payments authorized by BCBSMA; (b) an explanation of how each payment was 39Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number repriced with supporting documentation in the form of the relevant section(s) of an ASA, provider agreement, or specific internal policy and practice supporting the determination; (c) an identification of all overpayments identified under Plaintiffs’ and Class members’ ASAs; (4) identifi iff and ion of the amount of overpayments recovered by BCBSMA on behalf of Plai the Class; (e) identification of all fees collected pursuant to unauthorized raises in fees under the ASA as described herein; (£) results of other claims processing errors and/or overpayments made by BCBSMA and found in any audit during the class period broken down into categories explaining the error or overpayment; the totals for each category broken down into self-funded and fully insured; and the amounts recovered for each category for self-funded and fully insured plans. COUNT NIN (Declaratory Relief) 128. Plaintiffs incorporate by reference the preceding paragraphs as though such paragraphs were fully stated herein. 129, There exists an actual controversy as to whether Defendant engaged in an assortment of contractual breaches, negligent and fraudulent behavior, and deceptive business practices, including, but not limited to: failing to follow the terms of the ASAS; intentionally drafting documents in a manner that benefits BCBSMA by misleading its self-funded clients; causing clients to overpay providers for covered services; failing to recover overpayments or recovering overpayments but failing to disperse them to the plans they are owed in violation of M.GLL. ch. 125 § 25; collecting fees for services not performed; failing to reimburse clients for overpayments made due to BCBSMA error; collecting unauthorized fees; interfering with the ability of the Pla {Ts and Class members to recover overpayments directly from providers; and 40Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number unilaterally amending the ASA and the extent to which Plaintiffs and the putative class members have been damaged as a result thereof. 130. Asa result, the Fund and each member of the Class have suffered significant losses, including but not limited to: (a) the overpayment of benefits; (b) fees paid BCBSMA for unperformed services; (c) the money lost because of the failure of BCBSMA to recoup and/or rotum benefit payments; (d) the money lost because of the failure of BCBSMA to direct reimburse the Plan and Class members for all overpayments made due to an error by BCBSMA in whole or in part; () the hidden fees collected by BCBSMA when it raised its percentage of the recovery and other savings without properly amending the ASAs; (f) increasing the amount of administrative costs spent by the Fund and Class members trying to address BCBSMA’s malfeasance; (g) exposing Plaintiffs and Class members to regulatory and civil litigation as the result of its grossly improper claim pricing policis '; (h) interest on those amounts accruing at the applicable statutory rate; (i) costs; and (j) attorney fees, 131, The class is entitled to declaratory orders, inter alia, that the Court: (a) enter judgment against BCBSMA on Counts I through VI; (b) declare that BCBSMA’s accounting practices of offsetting overpayments made from one self-funded plan when paying claims under another self-funded plan violate M.G.L. ch. 125 § 25; (¢) enter and order that Defendant provide to Plaintiffs all relevant claims data in a format to be provided by the Plaintiff’; (4) award damages to the Fund and each member of the Class for the losses outlined above; (¢) award costs; (f) award attorneys’ fees; (g) award multiple damages under G.L. ¢. 93A sec. 11; (h) order an accounting as set forth in Count VI; and (i) enter any and all additional orders as this Honorable Court deems just and fair. 4Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number SURY DEMAND Plaintiffs hereby demand a Jury Trial for determination of BCBSMA’s liability and appropriate remedies on all counts so triable. PRAYER FOR RELIEF WHEREFORE, Plaintiffs and the putative Class respectfully demand the following relief: (i) Anorder certifying the putative Class with Plaintiffs as its representatives; (ii) An order appointing below signed counsel as legal representatives of the putative Class and any potential sub-Classes; (iii) An order determining that Defendant's acts and omissions as described herein constitute any or all the following: breach of contract, breach of implied covenant of good faith and fair dealing, unjust. enrichment, negligent __ misrepresentation, intentional/fraudulent misrepresentation and deceit, negligence, fraudulent inducement, and unfair and deceptive business practices; (iv) An order awarding the Class damages, together with interest, costs, and reasonable attorneys’ fees as applicable; (») _ Anorder entering the accounting requested in Count Eight; (vi) An order entering the declaratory relief requested in Count Nine; (vii) An order requiring BCBSMA to reimburse the Fund and Class member plans for all overpayments that are the result in whole or in part of an error by BCBSMA, plus interest; (viii) An order requiring BCBSMA to repay all unauthorized fees it took, plus interest; (ix) _ An order requiring BCBSMA to repay all fees it collected for services that it failed to perform, plus interest; (x) An order requiring BCBSMA to account for and repay to the Fund and Class member plans all funds it recovered through offsets or recoupments from claims paid by or on behalf of other plans due to overpayments BCBSMA concluded had previously been made by or on behalf of the Fund and Class member plans; (xi) An order requiring BCBSMA to provide access to BCBSMA’s provider contracts and other back-up documentation relating to how BCBSMA has processed Plan and Class member claims; (xii) A declaration that the Fund and members of the Class are entitled to independently, pursue claim payment recovery for all claim payments made in error and not recovered in this action; (xiii) Award the e: this Action; sts associated with uncovering BCBSMA’s malfeasance and bringing (xiv) Award treble and/or punitive damages in an amount to be determined at trial; 42Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number (Xv) _ Injunetive relief to require BCBSMA to perform an accounting of paid claims including all categories set forth in Paragraph 127; (xvi) Reasonable attorneys’ fees in accordance with the foregoing; and (xvii) Such other and further relief as the Court deems just and proper. Respectfully submitted, ‘Counsel for Massachusetts Laborers’ Health & Welfare Fund, Trustees of Massachusetis Laborers’ Health & Welfare Fund 's! Jonathan D, Sweet Jonathan D. Sweet, BBO# 634755 Patrick J. Nelligan, Esq., BBO# 682849 KECHES LAW GROUP P.C. 2 Granite Avenue, Suite 400 Milton, MA 02186 Tel: (508) 822-2000 [email protected] [email protected] D. Brian Hufford, Esq. (pro hac vice pending) Jason Cowart, Esq. (pro hac vice pending) Leila Bijan, Esq. (pro hac vice pending) ZUCKERMAN SPAEDER LLP 485 Madison Avenue, 10th Floor New York, NY 10022 |: (212) 704-9600 917) 261-5864 [email protected] [email protected] [email protected] Julie S. Selesnick, BBO # 650968, Karen L. Handorf (pro hac vice pending) BERGER MONTAGUE PC 2001 Pennsylvania Ave., NW Suite 300 Washington, DC 20006 Tel: (202) 559-9740 Fax: (215) 875-4604, [email protected] [email protected] 43Date Filed 9/26/2023 4:17 PM Superior Court - Surtlk Docket Number Dated: September 26, 2023 44 Shanon J. Carson (pro hae vice pending) Abigail J. Gertner (pro hac vice pending) BERGER MONTAGUE PC 1818 Market Street, Suite 3600 Philadelphia, PA 19103 (215) 875-3000 215) 875-4604 [email protected] [email protected]