HMSA sued over alleged anti-competition pacts

A Honolulu resident and law firm have filed a federal lawsuit accusing the Hawaii Medical Service Association of using anti-competitive practices to maintain a monopoly that has led to skyrocketing health insurance premiums for more than a decade.

The class-action suit filed Tuesday in U.S. District Court by Sylvia Hakkert-Detaille and Hale­iwa firm Saccocio & Lopez is one of at least 27 similar complaints nationwide, according to Reuters, that also name Blue Cross and Blue Shield Association for anti-competitive agreements among its health plans. HMSA, the state’s largest health insurer, is an independent licensee of Blue Cross.

"We believe this lawsuit has no merit and we will be vigorously defending against it," HMSA spokeswoman Elisa Yadao said in an email. "HMSA is part of the Blue Cross and Blue Shield system, which we believe is pro-competition. The system has created substantial benefits for our customers by providing affordable access to a broad network of doctors and hospitals in Hawaii and on the mainland."

The suit seeks to recover damages from "inflated premium" increases that averaged 61 percent and 74 percent for individuals and families, respectively, from 2003 to 2011, when HMSA controlled at least 69 percent of the market, according to the complaint. High premiums have increased HMSA’s profits and cash reserves to approximately $400 million, the lawsuit said.

The suit is seeking three times the actual damages but did not specify a dollar figure.

"The dominant market share enjoyed by (Blue Cross and Blue Shield-Hawaii) is the direct result of an illegal conspiracy in which 37 of the nation’s largest health insurance companies have agreed that they will not compete … in Hawaii," the suit said. "And that (Blue Cross and Blue Shield-Hawaii) will have the exclusive right to do business in Hawaii so long as it limits its competition with any of its 37 co-conspirators in each of their assigned geographic areas."

The complaint said that greater competition would result in lower premiums for consumers.

Tilden Katz, spokes­man for the Blue Cross and Blue Shield Association, said in an email that the system has worked well for decades in keeping costs down, rewarding medical professionals for quality care, better managing the care of patients with chronic conditions, and encouraging members to make healthier choices to prevent disease.

"The Blue Cross Blue Shield system provides specific advantages: affordable access to a broad network of doctors and hospitals, serviced by a local company with a deep commitment to the community," he added. "Blue Cross Blue Shield companies are committed to keeping health care costs as low as possible for our 100 million members."

In December the federal Judicial Panel on Multidistrict Litigation determined certain cases concerning the licensing agreements between the Blue Cross and Blue Shield Association and its 38 member companies would be consolidated in federal court for the Northern District of Ala­bama.