Settlement scuttled in class-action lawsuit claiming Highmark inflated charges

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Class-action plaintiffs against Highmark and UPMC today filed a motion to withdraw a proposed settlement with the region's dominant insurer, saying the information they relied on to justify the pact included misrepresentations.

Attorneys for Royal Mile Co., Cole's Wexford Hotel and Pamela Lang wrote in their motion that a key plank of the proposed settlement -- Highmark's promise to maintain its low-cost Community Blue product -- was really no concession at all.

Those attorneys have argued that UPMC and Highmark used their dominance of the region's markets for medical care and health insurance to inflate charges.

UPMC, in documents filed under seal in the case yesterday, showed the plaintiffs that Highmark "was already bound to reintroduce the Community Blue insurance product prior to the execution of the [settlement] Agreement, contrary to Highmark's express warranty," according to the motion.

In an emailed statement, one of the attorneys representing Royal Mile, Benjamin J. Sweet, wrote: "It appears that the covenants regarding the reintroduction of Community Blue that we believed Highmark exchanged for a release of the Class's claims were entirely illusory and in direct contravention of Highmark's representation that the terms of the settlement are 'new undertakings and not otherwise binding upon it as pre-existing obligations.'"

Highmark spokesman Aaron Billger called the plantiffs' interpretation of the settlement agreement's validity "flawed and inaccurate."

"We stand behind our offer," he said.

He said the insurer's attorneys would file a detailed response in court by Jan. 28.

The settlement between Highmark and the plaintiffs would have provided the plaintiffs' attorneys with $4.5 million and documents they could use to pursue claims that UPMC used its market power to gouge ratepayers.

The plaintiffs' attorneys had argued that the pact also provided prompt benefits, to the tune of tens of millions of dollars in savings, to ratepayers.

Highmark, they said, would pledge to not give some medical providers higher reimbursements than others through 2014, thus enhancing competition. And Highmark would guarantee to continue to offer Community Blue.

Without those planks, the settlement offers little immediate benefit to ratepayers.

A Highmark spokesman could not be immediately reached.

A hearing on the proposed settlement which had been set for this afternoon before U.S. District Judge Joy Flowers Conti has been cancelled.

The judge is handling two other lawsuits involving the region's feuding medical institutions.

In one, West Penn Allegheny Health System is suing UPMC, claiming it unlawfully sought to stifle competition. In the other, UPMC sued Highmark, claiming the insurer used unlawful means to try to siphon business from the region's dominant hospital system.

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Rich Lord:, 412-263-1542 and on Twitter: @richelord.


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