A proposed settlement between Highmark and attorneys representing some of its customers would restrict the insurer's business decisions through 2014, and arms the lawyers for a court fight with UPMC.
The settlement, filed Thursday afternoon, must be approved by U.S. District Judge Joy Flowers Conti, and she is expected to hold a hearing on its fairness within the next several months. If approved, it would eliminate Highmark as a defendant in a case launched by Whitehall-based real estate firm Royal Mile Co. alleging that the region's biggest insurer and biggest health system conspired to jack up rates.
The remaining defendant would be UPMC. Royal Mile's attorneys, meanwhile, would be armed with documents and cooperation from Highmark, plus a $4.5 million war chest provided by the insurer to cover legal costs and fees.
The settlement puts Royal Mile and co-plaintiffs "in a much better position to continue litigating those claims" against UPMC, said Scott M. Hare, one of the real estate firm's attorneys, on Friday. "We've now got cooperation from Highmark and access to information and evidence that it might otherwise be difficult for us to reach."
Though Highmark received the premium payments at issue, he said, UPMC was the ultimate beneficiary of their collusion.
A UPMC spokesman could not be reached for comment. Highmark declined comment.
Royal Mile sued in 2010, shortly after an appeals court breathed new life into a lawsuit in which West Penn Allegheny Health System alleged collusion between the region's dominant insurer and hospital system. The collusion, according to Royal Mile, quashed competition and boosted premiums.
Royal Mile has been joined by an individual, Pamela Lang, and another company, Coles Wexford Hotel. They seek Judge Conti's approval to represent everyone who has paid premiums to Highmark, some of which go on to flow to UPMC, since 2006.
Besides providing the plaintiffs' attorneys with an escrow account of $4.5 million and lots of documents, Highmark as part of the settlement would make two promises about how it would conduct its business through 2014.
First, Highmark would not enter into so-called most-favored-nation contracts with medical providers. Such contracts allow the insurer to pay the provider less than other insurers pay for the same services. Mr. Hare said that such pacts stifle competition.
Second, Highmark would continue to offer its recently revived, low-cost Community Blue product. One of Royal Mile's contentions was that Highmark nixed Community Blue in 2002 at UPMC's behest, depriving employers of a low-cost insurance option.
As a result of those provisions, the settlement "has value to the class members in the tens of millions of dollars," said Mr. Hare. He said his side will bring an expert witness to the fairness hearing to document that.
Judge Conti is also overseeing two other cases related to UPMC and Highmark.
In one, West Penn Allegheny Health System is suing UPMC, claiming it unlawfully sought to stifle competition. Highmark was a defendant until it reached an agreement to buy West Penn Allegheny -- a proposal that West Penn Allegheny has canceled.
In the other lawsuit, UPMC sued Highmark, claiming it used unlawful means to try to siphon business from the region's dominant hospital system.
Rich Lord: rlord@post- gazette.com or 412-263-1542.