THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Thursday, February 6, 1997 TAG: 9702060332
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY TONY WHARTON, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: 106 lines
Trigon Blue Cross Blue Shield of Virginia has defrauded city and School Board employees of at least $1.2 million in claim payments, the city said in a lawsuit filed Wednesday.
This is the latest in a string of lawsuits about similar practices that have been filed against Trigon by Charlottesville, Lynchburg, the Colonial Williamsburg Foundation and other public and private clients.
Virginia Beach and other cities claimed Trigon was able to save customers money by negotiating discounts with doctors and hospitals, but then concealed some or all of those savings from the customer.
In 1994, the state attorney general fined Trigon $6 million over similar billing practices, and the state ordered a $70 million refund to customers.
Trigon has settled with Lynchburg and Colonial Williamsburg but acknowledged no wrongdoing. The company maintains that it is entitled to keep all or part of the discounts it negotiates.
Randall M. Blow, a deputy city attorney who filed the suit, said Virginia Beach's suit was a result of the others.
``They heard about it through the coverage of the other lawsuits,'' Blow said. ``You can see how anyone in the benefits administration field, upon hearing this, would want to look into it.''
The U.S. Labor Department also is investigating Trigon for possible violations of federal law related to its administration of health-care benefits plans.
The city and School Board's suit, filed in Virginia Beach Circuit Court, described the complaint against Trigon this way:
Virginia Beach and its schools were self-insured at the time, and Trigon managed the accounts and claims. Trigon still provides insurance services to the city.
From at least 1985 through 1994, Trigon handled the self-insurance plan through an operating account out of which claims were paid. Trigon paid claims and its own fees out of that account.
Trigon had told the city and School Board that it could negotiate major discounts with hospitals, doctors and other care providers, and that this was a benefit of using Trigon. Those discounts would be passed on to Virginia Beach and its employees.
Instead, Trigon kept more money from the discounts than it was supposed to, and counted that as revenue on its financial statements, the suit claims. Trigon further followed a `` `no tell' policy'' to conceal this from Virginia Beach.
The net result, Virginia Beach said, was that the city, the School Board and city employees paid more for claims than they needed to.
Virginia Beach does not know the full amount of its losses, the suit said, because it doesn't have access to Trigon's records. It estimated the minimum damages at $1.2 million.
Virginia Beach said Trigon's actions amounted to breach of contract, fraud and other improper behavior. The city is seeking punitive damages against Trigon as well.
In reference to the suit's allegations of fraud, Blow said, ``The city and the School Board are pursuing this from a civil standpoint only. Some other agency would be responsible for investigating any criminal aspects if they chose to do so.''
Blow said the allegations would not come under the jurisdiction of the State Corporation Commission, which regulates insurance, because Trigon was only administering Virginia Beach's self-insurance at the time, not actually providing insurance.
Trigon spokeswoman Brooke Taylor, while declining to comment on Virginia Beach's suit, said, ``We believe that they received the benefits of the contract they negotiated and we fulfilled our obligations under those contracts. We believe our contracts and our policies continue to provide value to our customers.''
While this is the first case of its kind filed against Trigon in South Hampton Roads, it is not the first time Trigon has been under fire for its billing practices.
In 1993-94, Charlottesville retiree Gerald B. Haeckel's complaints about how Trigon handled claims and discounts led to a state investigation that eventually forced the company to refund $70 million to customers and pay a $6 million fine. Trigon also created a consumer advocate office as a result.
In 1995, a new round of lawsuits began, filed by cities, counties and corporations whose insurance plans were administered by Trigon, with complaints nearly identical to those of Virginia Beach.
Trigon has settled the suits by Lynchburg and Colonial Williamsburg for undisclosed amounts. But Taylor said Trigon does not acknowledge any wrongdoing.
``Even in the settlements, we have continued to maintain we have the right to retain all or part of the hospital discounts we obtained,'' she said. The settlements were reached, she said, ``to avoid the significant cost of litigation.''
Trigon is now a for-profit company and its stock is publicly traded. ILLUSTRATION: Graphic
The lawsuit says:
Trigon has defrauded city and school board employees of at least
$1.2 million in claim payments
Trigon negotiated major discounts with hospitals, doctors and
other care providers, but didn't pass these savings on to Virginia
Beach and its employees as agreed.
Trigon followed a `` `no tell' policy'' to conceal this from
Virginia Beach.
The result: The school board and city employees paid more for
claims than they needed to according to the suit.
Virginia Beach does not know the full amount of its losses, the
suit said, because it doesn't have access to Trigon's records. It
estimated the minimum damages at $1.2 million.
KEYWORDS: TRIGON BLUE CROSS BLUE SHIELD LAWSUIT FRAUD
VIRGINIA BEACH VIRGINIA BEACH SCHOOL BOARD <