A Texas hospital has filed a lawsuit against Blue Cross Blue Shield of Texas (BCBS) for wrongfully denying coverage for emergency services and post-stabilization care. According to Memorial Hermann Health System, BCBS instituted a policy of denying coverage for services that it unilaterally deemed non-emergency, despite its contractual and moral obligations. Even though the hospital previously resolved a related dispute with BCBS in 2017, BCBS has again refused to properly reimburse the hospital for covered services, costing the hospital more than $3 million in unpaid claims.

The allegations levied against BCBS are harrowing. According to the complaint, the insurance provider has been denying coverage for patients that it deemed were not in need of proper “emergency care” because it classified the hospital as out-of-network. The complaint explains that BCBS was essentially forcing its customers to leave the defendant hospital and transfer to an in-network hospital to continue care, “even if it disrupts the patient’s continuity of care, endangers patient safety, and subjects Memorial Hermann to potential liability for improper transfers or medical malpractice.” BCBS went from denying around one claim a month on the basis that it was not “emergency care” to denying upwards of 40 claims a month.

The complaint alleges that BCBS’s motivations were clear: The health insurance company lost more than $400 million in Affordable Care Act (ACA) Exchange plans in Texas in 2014 and another $300 million in 2015. BCBS then sought to shift some of its losses by “wrongly denying hundreds of valid Blue Advantage and MyBlue Health claims.” BCBS had previously agreed to pay the hospital at an agreed rate provided to BCBS members who came to the hospital with emergent conditions, either for emergent or continuing treatment, but after suffering losses relating to ACA exchange claims, BCBS unceremoniously changed its policy and began denying claims wholesale.

The hospital was left with an untenable dilemma: Continue with important, potentially life-saving treatment, or proceed with a transfer to another location in the midst of treatment that might result in damage or even life-threatening harm to the patient. The complaint describes the health insurance company as explicitly and deliberately “prioritizing profits over patient well-being and its obligation to pay for emergency and subsequent care.” According to the complaint, BCBS’s improper claim denial policy “not only financially injured Memorial Hermann and unjustly enriched BCBS, but it also endangered patient care and safety.” Memorial Hermann is seeking damages as well as injunctive relief forcing BCBS to implement a more reasonable policy that will not result in unnecessary harm to patients.

The policy instituted by BCBS is reminiscent of the heavily-lambasted plans by UnitedHealthcare to start retroactively denying coverage for emergency medical care should the insurer decide that the reason for the care was not actually an emergency. Patients with no medical training suffering from symptoms that might be heartburn or might be a burst appendix were discouraged from obtaining emergency medical care for fear that they might guess wrong and have to pay out of pocket. Anthem has been attacked for actually implementing such a policy, basing coverage decisions on whether the patient actually was near-death rather than whether their symptoms merited an emergency room visit.

The effects of such policies are chilling and dangerous. Patients are dissuaded from seeking medical care when they might be facing life-threatening conditions, and medical care providers are forced to choose between making the best decisions for patients and eating the cost of care. If Memorial Hermann’s allegations are borne out and the hospital prevails in court, the outcome may discourage other health insurance providers from instituting such policies in the future.