Highmark today told a federal judge that there is value in a proposed class action settlement that the plaintiffs no longer want, setting up another round in a three-year-old court battle over insurance premiums and healthcare costs.
U.S. District Judge Joy Flowers Conti said that the question of whether a proposed settlement between plaintiffs including Royal Mile Co., and defendant Highmark, is too complicated for anyone but a court-appointed "special master" who should probably be a healthcare economist with statistics skills.
"I think this settlement is fraught with problems in terms of valuation," Judge Conti told the 20 legal professionals assembled before her. "This question of value has to go to the special master."
Royal Mile and other plaintiffs sued UPMC and Highmark in 2010, saying they colluded to jack up rates. Last year Royal Mile and Highmark agreed that the insurer would pay up to $4.5 million to cover the plaintiffs' legal costs, provide information they could use against UPMC and take two measures to improve healthcare competition and lower costs to ratepayers.
The settlement agreement is imperiled, however, by a disagreement on whether Highmark's decision to reintroduce its lower-cost Community Blue product, and its pledge to keep that product in place for at least two years, brings sufficient value to the deal.
The plaintiffs have said the pledge is not enough and want to withdraw the settlement, while Highmark wants the settlement to move forward.
"How do I know [Community Blue] wouldn't be in effect for two years anyway?" Judge Conti asked. She said the special master could evaluate not only Highmark's claim that Community Blue saves the region's ratepayers $30 million over two years, but the likelihood that the product would be in existence for two years even without the settlement and the extent to which it benefits the lawsuit's class members, versus the public at large.
Judge Conti gave the two sides until Monday to suggest a special master. A hearing including testimony on the valuation issue would follow.
The plaintiffs' attorneys have said they could show that UPMC inflicted nine-figure damages on the region's ratepayers.
Rich Lord: email@example.com, 412-263-1542 or Twitter @richelord.