Hospitals Learned They Were Already Suing Their Insurer
Many hospital leaders were surprised to learn they were already suing Blue Cross Blue Shield, and reluctant to leave the group settlement and sue on their own.
Original Jurisdiction · Biglaw’s Embrace Of Contingency LitigationAvi Weitzman, a litigator at the law firm Paul Hastings, spent months going from hospital to hospital with an awkward pitch.
He was asking health care executives to break away from a group settlement in the antitrust case against Blue Cross Blue Shield and pursue their own claims instead. Antitrust here means claims about unfair competition.
In a class action, many similar plaintiffs sue together as one group. That breakaway move is called opting out. It means giving up a share of a negotiated settlement to fight for more on your own.
Weitzman said his firm represents "the largest group of opt-outs in the Blue Cross Blue Shield antitrust litigation." Assembling that group meant visiting dozens and dozens of hospitals.
The response, in meeting after meeting, was disbelief. Hospital leaders heard him out and then asked the obvious question. “Wait, you want us to sue our insurance provider?”
Many administrators did not realize they were already part of a lawsuit against their insurer through the class action. Weitzman recalled replying, “You already sued the insurance provider. You didn't even know it.”
What he was selling was a second decision. The existing settlement, in his view, was a bad settlement. He wanted them to leave it and keep fighting.
That is a difficult ask when the defendant also sends you patients and payments. Hospitals depend on insurers to get paid for care, so executives were reluctant to turn a business partner into an adversary in open court. Weitzman said it took persuading to get past that reluctance.
Clients are slowly changing, he said, as they see that bringing claims can have positive business effects, not just financial ones. A lawsuit can challenge anti competitive behavior or help develop a technology, rather than serving only as a distraction.
According to Weitzman, some hospitals decided to opt out and ask for more.
Questions people ask
What does it mean to opt out of a lawsuit?
In a class action, many people or companies with similar complaints are grouped together in one lawsuit. An opt out leaves that group and its settlement behind to pursue a separate claim, usually in hopes of winning a larger recovery, though with more cost and risk.
Why would a hospital be afraid to sue its insurance provider?
Hospitals treat patients covered by an insurer and then bill that insurer for care. That makes the insurer both a source of revenue and, in this litigation, an opponent, which is why so many hospital executives were uncomfortable with suing.
How do hospitals afford to bring these separate cases?
Contingency means the law firm gets paid mainly if the client wins, usually as a percentage of the recovery, instead of billing by the hour. For hospitals and other plaintiffs, it lowers the upfront cost of opting out and suing on their own. For the firm, it is a bet that the case will pay off.