alabama psychiatric services lawsuit against blue cross blue shield of alabama
TRANSCRIPT
7/23/2019 Alabama Psychiatric Services Lawsuit Against Blue Cross Blue Shield of Alabama
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IN THE CIRCUIT COURT OF JEFFERSON COUNTY, ALABAMA
MANAGED HEALTH CARE ADMINISTRATION, INC., )
and ALABAMA PSYCHIATRIC SERVICES, P.C. )
))
Plaintiffs, )
) Civil Action No.:
vs. )
) CV-2015-901979.00
BLUE CROSS BLUE SHIELD OF ALABAMA; and )
FICTITIOUS DEFENDANTS A, B, C, D, E, )
F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, )
V, W, X, Y, and Z; )
)
Defendants. )
FIRST AMENDED AND RESTATED COMPLAINT
Plaintiffs, Managed Health Care Administration, Inc. (“MHCA”) and Alabama
Psychiatric Services, P.C. (“APS”), now amend their complaint stating the claims below against
Blue Cross Blue Shield of Alabama (“BCBSAL” or “Defendant”) and Fictitious Defendants A,
B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W, X, Y, and Z. Plaintiffs
specifically limit all claims in this state court action to state law and equitable claims and bring
no claim under federal law.
PARTIES
1. Managed Health Care Administration, Inc. (“MHCA”) is an Alabama corporation with its
principal place of business in Jefferson County, Alabama.
2. Alabama Psychiatric Services, P.C. (“APS”) is an Alabama professional corporation with
its principal place of business in Jefferson County, Alabama.
11/4/2015 11:19 AM01-CV-2015-901979.00CIRCUIT COURT OF
JEFFERSON COUNTY, ALABAMANNE-MARIE ADAMS, CLERK
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3. Blue Cross Blue Shield of Alabama (“BCBSAL”) identifies itself as a domestic non-
profit corporation and in its filings with the Alabama Department of Insurance as a domestic
Health Care Service Plan. At all times relevant hereto, BCBSAL was doing business in Jefferson
County, Alabama.
4. Defendants fictitiously described as A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R,
S, T, U, V, W, X, Y, and Z, are otherwise unknown to Plaintiffs at this time. If their identities
are known to Plaintiffs at this time, their identity as proper party defendants is not known to
Plaintiffs at this time, but their true and correct names will be substituted by amendment when
the aforesaid information is ascertained. Defendant BCBSAL is responsible for the actions or
inactions of the fictitious parties under the doctrines of respondeat superior, joint and several
liability, authority, agency, conspiracy, and/or other doctrines. The fictitious defendants are
responsible for the actions or inactions of Defendants BCBSAL and its agents and employees
under the doctrines of respondeat superior, joint and several liability, authority, agency and/or
other doctrines. The fictitious defendants are also responsible for their own actions or inactions.
JURISDICTION AND VENUE
5. The Court has jurisdiction over BCBSAL because the Defendant does (or has done)
business in the State of Alabama and Jefferson County and has received substantial revenue,
income and profits from its activities conducted within Jefferson County, as well as across the
State of Alabama.
6. Venue in this case is proper in Jefferson County, Alabama, because the Plaintiffs have
their principal places of business here and BCBSAL does substantial business in the County.
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ALLEGATIONS OF FACT
7. BCBSAL, the largest health insurer in Alabama, does not have a preferred provider
network of individual mental health providers. Instead, BCBSAL has utilized MHCA and APS
for over 20 years to manage and provide behavioral health services within Alabama.
8. On Friday, February 13, 2015, APS was forced to close its doors after over thirty years of
providing services to hundreds of thousands of citizens of Alabama. As the Alabama Psychiatric
Physicians Association reported, the closure of APS created shockwaves in the behavioral health
community. Before its closure, APS was a private statewide behavioral health organization with
multiple locations throughout the state. It was the largest statewide psychiatric practice in
Alabama and was owned and operated by practicing physicians. APS operated as the primary
provider for MHCA, a managed behavioral health care company.
9. Prior to its closure, the providers of APS engaged in approximately 17,000 face-to-face
sessions with its patients per month across its 11 statewide offices and intensive out-patient
programs. Over 1,000 new patients per month were entering the APS system. APS employed
approximately 270 employees including approximately 35 psychiatrists, 55 therapists, 7 nurse
practitioners, and 25 psychiatric nurses. Over the years, APS recruited 55 psychiatrists to
Alabama from out-of-state of which 20 were child and adolescent psychiatrists. Many of these
providers were recruited to areas of the state that did not have sufficient availability of
behavioral health providers, including adult psychiatrists and child psychiatrists. In addition,
APS operated specialty programs for chemical dependency, eating disorders, and other
psychiatric disorders occurring in adult and adolescent populations. APS was able to
demonstrate consistently high patient satisfaction relating to the quality of its services and its
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providers. The entire APS behavioral health service delivery structure had been developed over
the course of more than a quarter of a century
10. APS and MHCA had a close long-term relationship with BCBSAL. Over 25 years ago,
the leaders of these companies embarked on a path involving a behavioral health product that
had two missions: to provide efficient, high quality care and to control the spiraling cost of care.
The business model placed the responsibility on the provider to develop, provide, and pay for the
care funded through a payment model called capitation. This form of funding enabled
investments in additional staff, facilities, and programs that met the needs of the patients. In
addition, the providers were accountable to the needs of BCBSAL and its customers. Most
importantly from a clinical perspective, this plan enabled unprecedented access for those seeking
care because there were no co-pays or deductibles for care received in the network.
Consequently, through the delivery of high quality care with unprecedented access to care and
high levels of patient satisfaction, reasonable control of rising costs through added programs and
efficiencies, and added provider accountability, the enrollment grew over the years to over
900,000 members. It was called, by BCBSAL executives, a “pillar of success.”
11. BCBSAL’s behavioral health product was known formally as Expanded Psychiatric
Services (“EPS”). APS first entered into a contract with BCBSAL in 1986 to manage EPS. In
1991, that contract was transferred from APS to MHCA. As a capitated product, BCBSAL
contracted with its members for health insurance, and out of the premiums BCBSAL received,
BCBSAL made a per-month per-member payment to MHCA for EPS. In turn, MHCA arranged
mental health services for these members for that monthly payment, and any leftover amount
was profit to MHCA. MHCA maintained its affiliation with APS and other contracted providers
to provide the full range of clinical services to its capitated customers under the EPS product.
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EPS is a limited provider network that has been managed by MHCA for approximately 26 years.
Both facility and provider contracting, as well as claims payments were provided through
MHCA.
12. At BCBSAL’s insistence, numerous additional APS facilities and providers were added
over the years to enhance services for BCBSAL members. Specifically Joseph Bolen, Jeff
Ingrum, Eddie Harris, and the BCBSAL Marketing Department, insisted that APS add facilities
beyond those operating in the larger metropolitan areas. In doing so, APS expended substantial
resources, including entering into long term leases. In creating these offices, APS was also
required to hire mental health professionals willing to work in these underserved areas and pay
them a salary (rather than on a fee-for-service basis) in order to find qualified professionals.
Because APS was centrally managed and financed, it operated at all levels as one integrated
system, not as 11 stand-alone facilities. While this structure created tremendous efficiencies and
capacity for innovation toward improving behavioral health care, it also created the risk that if
dramatic changes in funding occurred, the system could collapse. In short, the creation and
maintenance of the APS offices was only feasible for MHCA and APS as long as the capitation
agreement between MHCA and BCBSAL existed, and BCBSAL was fully aware of this fact.
13. MHCA also owned and operated a network with 1,400 providers in Alabama and
contiguous counties known as Blue Choice Behavioral Health Networks (“BCBHN”). Through
this network, MHCA provided clinical services to other BCBSAL members whose plans did not
include the EPS capitated product, but rather a fee-for-service benefit plan (i.e. members who
received behavioral health services from a BCBHN provider would be covered by BCBSAL for
a percentage of the cost of the services and would owe the provider a deductible and any costs of
services not covered by their BCBSAL plan).
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14. BCBSAL products accounted for approximately 95% to 100% of APS’s and MHCA’s
revenues.
15. During the time leading up to 2013, BCBSAL decided to change its health insurance
plans insuring thousands of members in Alabama. In doing so, it planned to restructure the
behavioral health care products offered under those plans. In conjunction with BCBSAL’s
projected changes, BCBSAL’s Jeff Ingrum stated that he thought that MHCA needed to begin to
share MHCA financial data with BCBSAL so that MHCA could more fully “tell its story” to
presumably further cement the partnership between MHCA and BCBSAL, including the
possibility of joint venture whereby BCBSAL would have some ownership in the venture. Also,
as explained by Mr. Ingrum and Eddie Harris (also of BCBSAL), this financial data was going to
be used by BCBSAL to help price the products that BCBSAL was going to be placing on the
Health Care Exchange as part of the Affordable Care Act. During these talks, Mr. Ingrum and
Mr. Harris also told MHCA that Griff Docking from New Directions Behavioral Health (“New
Directions”) had been trying to contact Mr. Ingrum to ask for a meeting. New Directions is a
managed behavioral health care company that provides administrative services and operates
similarly to MHCA, but on a regional level. Mr. Ingrum stated that he had not returned Mr.
Docking’s calls.
16. However, later in 2012, MHCA was informed by Jeff Ingrum and Eddie Harris that
MHCA should meet with New Directions to see if there was any sort of business relationship
that could be formed between the two companies. MHCA complied with this request. MHCA
was then informed by Jeff Ingrum and Eddie Harris that BCBSAL would be issuing a Request
for Information (RFI) and that MHCA would be contacted by a consultant that BCBSAL had
hired to conduct the RFI process. MHCA, along with New Directions and a third respondent to
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the RFI, American Behavioral Benefits Managers (ABBM), participated in the RFI. The final
part of the process was a presentation to BCBSAL by each of the participants. Notably, the
presentations by MHCA and ABBM were scheduled more than one month after the presentation
by New Directions. Subsequently, MHCA was informed by Jeff Ingrum and Eddie Harris that
BCBSAL had made the decision to contract with New Directions for all its behavioral health
business. It was later learned that BCBSAL has ownership interest in New Directions and that
BCBSAL had no interest in acquiring ownership of MHCA.
17. Thus, in 2013, BCBSAL formally contracted with New Directions to manage BCBSAL’s
behavioral health products and services pursuant to an Administrative Services Agreement. The
Administrative Services Agreement called for New Directions to build, maintain and actively
manage an Alabama statewide provider network for the purpose of providing covered services to
BCBSAL members. However, BCBSAL and New Directions also specifically agreed that due to
MHCA and APS’s longstanding history of providing health and substance abuse treatment to
BCBSAL members, and because MHCA already had the statewide provider network in place
that it had built for BCBSAL, New Directions would contract with MHCA and use MHCA’s
network and APS for a minimum term of four years to continue to provide services to BCBSAL
members. The arrangement would be memorialized ultimately in a Services and Network
Subdelegation Agreement (“Subdelegation Agreement”).
18. Before the Subdelegation Agreement was finalized and as the terms of the new
arrangement were being negotiated, it was revealed that BCBSAL’s restructuring would mean
that the capitated EPS plan would be cut dramatically. Of course, the EPS plan was largely
responsible for APS’s ability to operate in under-served areas throughout the state and all
BCBSAL members benefitted greatly from it. MHCA and APS analyzed the proposed
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restructuring and projected the negative effect it would have on their businesses and specifically
their revenue. Those projections, which included the anticipated closure of some APS offices if
the revenue shortfalls were realized, were shared during negotiations of the Subdelegation
Agreement. BCBSAL actively participated in all negotiations for that agreement and received
the projections.
19. Throughout those negotiations and in light of the projections, BCBSAL convinced
MHCA and APS to continue their relationship with BCBSAL by representing that the changes
were necessary and were being made to improve and expand the access to care for BCBSAL
members. This representation was of utmost importance because both APS and MHCA are
physician-owned businesses and improving access to affordable quality care has always been
their primary concern. Indeed, they have done everything asked of them by BCBSAL for over
twenty years to ensure BCBSAL members across the state had access to quality behavioral
health care services.
20. Along with the stated goal of improving access to care, the Subdelegation Agreement was
premised on MHCA being provided the means by which it could avoid any APS office closures
or loss of providers as had been projected. Toward that end, BCBSAL, through Mr. Ingrum, Mr.
Harris, and other BCBSAL executives, convinced MHCA and APS that BCBSAL was
committed to working with them financially as BCBSAL transitioned its behavioral health plans.
BCBSAL also acknowledged that the transition would take years, not months, and BCBSAL
proposed the arrangement whereby BCBSAL would cover annually, for at least the initial term
of the Subdelegation Agreement, the projected shortfall in revenue necessary to keep APS
offices open and its providers in place for the benefit of BCBSAL members.
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21. On October 1, 2013, MHCA entered into the Subdelegation Agreement with New
Directions. BCBSAL agreed to pay approved claims to MHCA. BCBSAL agreed to be
responsible for making coverage determinations regarding benefits and MHCA would process
the claims and make payments to providers. BCBSAL also agreed to develop annual value based
payment opportunities, including Goals and a Bonus Structure for MHCA and/or additional
payment mechanisms for MHCA in 2015 and subsequent years, in order to allow MHCA to
recoup anticipated losses of revenues resulting from changes to BCBSAL’s behavioral health
products. MHCA and APS clearly identified the anticipated losses and other effects that would
result from the changes BCBSAL was proposing. In turn, BCBSAL, through Jeff Ingrum, Eddie
Harris, and/or Michael Velezis, promised to provide additional funding to minimize the losses
and other negative effects to MHCA and APS’s business. MHCA and APS agreed to the
business arrangement with BCBSAL and New Directions based on the belief that the
representations made by BCBSAL (identified above) were true. The representations were untrue
and were made with the intent to deceive MHCA and APS. Additionally, MHCA and APS
agreed to the arrangement after asking BCBSAL, through Eddie Harris and/or Michael Velezis,
to provide all material facts, including the underlying reasons and intentions of BCBSAL’s
decision to change the business plan involving MHCA and APS. Had BCBSAL, and specifically
its executives including Eddie Harris and/or Michael Velezis, provided the whole truth, and not
suppressed material information in its communications with MHCA and APS, MHCA and APS
would not have agreed to the business arrangement with BCBSAL and New Directions.
22. In 2014, MHCA actively pursued the development of the annual Value-Based Payment
opportunities, Bonus Structure and additional payment mechanisms for MHCA, as promised by
BCBSAL, and as contemplated by the Subdelegation Agreement. In the Spring of 2014, MHCA
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worked with New Directions to provide budget information for behavioral health services for
2015 and beyond. MHCA met with New Directions to discuss a high performance delivery
system and prepared a PowerPoint to present to BCBSAL in May 2014. MHCA informed New
Directions and BCBSAL that it needed specific information about bonuses and goals by
November 1, 2014 to avoid closing APS offices.
23. MHCA’s subsequent attempts to negotiate the goals, bonus structure and payments to
MHCA for 2015 were met with no meaningful offers or good faith on the part of BCBSAL. At
one point, BCBSAL, and specifically through its executives including Jeff Ingrum, Eddie Harris,
Dow Briggs, and/or Tim Vines, informed MHCA that there was no money for bonuses or goals
in 2015. Dr. Richard Akins of MHCA and APS tried to meet CEO-to-CEO with Terry Kellogg
of BCBSAL in an effort to reach a rational solution that would preserve BCBSAL’s subscribers’
access to behavioral care through APS. Despite the looming public health crisis, BCBSAL
continued to reject MHCA’s proposals. BCBSAL refused to operate in good faith and made no
meaningful counter-offers. The offers that were made were all conditioned on MHCA and APS
executing agreements to release BCBSAL from liability arising from its dealings with MHCA
and APS. Although Terry Kellogg failed to work meaningfully with Dr. Akins during this time,
Mr. Kellogg admitted, nonetheless, that he was aware of all material information and events that
had occurred in the lead up to this point.
24. When informed that liquidation of APS was imminent, rather than continue negotiations,
BCBSAL informed MHCA that it was deferring to its partner, New Directions, and that
BCBSAL’s decision was to provide no additional funding to MHCA. As a result, APS has closed
its doors and was forced to lay off approximately 260 employees amongst its several offices.
BCBSAL’s actions have resulted in substantial financial losses and reputational damage to both
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APS and MHCA. More importantly, the course chosen by BCBSAL has imperiled patients and
has significantly impacted the access to quality behavioral care in the State of Alabama.
25. Notably, the significant changes to benefit plans implemented by BCBSAL meant
patients now have higher co-pays and fewer covered services. Couple that with BCBSAL’s
refusal to live up to its promise to work financially with MHCA and APS to provide funding to
cover revenue shortfalls and the result is a direct contradiction to BCBSAL’s representations
made to induce MHCA and APS to continue its relationship with BCBSAL. As projected at the
outset, BCBSAL’s failure to live up to those representations resulted in the financial turmoil that
led to the closure of APS offices across the state, which in turn resulted in a dramatic reduction
in access to care.
26. While BCBSAL attempts to paint a different picture, the truth is that BCBSAL’s actions
have resulted in not only the closure of eleven APS out-patient offices, but there are now nine
fewer treatment programs for adult chemical dependency, four fewer programs for adult
psychiatric behavioral health disorders, four fewer programs for adolescent disorders, and two
fewer programs for eating disorders in the state of Alabama. Also, there are at least eight
psychiatrists who are no longer available to BCBSAL members because they have moved either
out of the state, to cash-only practices, or to other institutions such as the VA. In addition to
these reductions, there is a growing body of evidence indicating that BCBSAL members are
receiving less care as they decide to forego treatment and medication due to BCBSAL’s decision
to change its plans. Whether BCBSAL believes it or not, there is a real mental health crisis in
Alabama and it can be attributed entirely to BCBSAL’s decision making.
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PLAINTIFFS’ CLAIMS
Fraudulent Misrepresentations and Suppression of Material Facts
27. Plaintiffs re-allege all prior paragraphs of the Complaint as if set out here in full. To the
extent this claim is inconsistent with others, it is pleaded in the alternative.
28. During the course of business and throughout negotiations leading to the consummation
of the Subdelegation Agreement (and specifically from December, 2012 through October, 2013),
BCBSAL induced MHCA and APS to enter into the arrangement with BCBSAL and New
Directions by making misrepresentations and suppressing material facts as described above and
including, but not limited to, the following:
a. BCBSAL, through Jeff Ingrum, Eddie Harris, and/or Michael Velezis, misrepresented
that it was restructuring its behavioral health services products in an effort to provide
better services and access to care for its members, who were MHCA and APS’s patients.
Instead, BCBSAL’s primary reason for restructuring its behavioral health services
products was to increase its own profit at the expense of and to the detriment of its
members, and to ultimately dismantle the statewide provider network MHCA and APS
had created. BCBSAL, and specifically its executives including Jeff Ingrum, Eddie
Harris, and/or Michael Velezis, suppressed this information from MHCA and APS;
b. BCBSAL, through Jeff Ingrum, Eddie Harris, and/or Mary Smith, misrepresented that
confidential and proprietary information was needed from MHCA and APS for the
purpose of developing a business model that included BCBSAL, New Directions, and
MHCA working as partners. This representation was untrue, in part, because BCBSAL
used the confidential and proprietary information to unilaterally change the benefit plans
offered to BCBSAL members to eliminate a capitation plan for behavioral health
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services. As a result, BCBSAL eliminated a substantial portion of the revenue stream
MCHA used to maintain the statewide network of providers it had created at BCBSAL’s
insistence. BCBSAL, and specifically its executives including Jeff Ingrum, Eddie Harris,
and/or Mary Smith, suppressed this material information from MHCA and APS;
c. BCBSAL, through Jeff Ingrum, Eddie Harris, and/or Mary Smith, misrepresented that it
needed MHCA to provide confidential and proprietary information to New Directions so
that a business plan could be constructed in which MHCA and APS’s relationship with
BCBSAL would remain intact. The representation was untrue, in part, because
BCBSAL’s true intention was to put a business model in place that would significantly
undermine MHCA and APS’s ability to conduct their business and provide care for
patients, and to dismantle the statewide network of behavioral health services providers
MHCA and APS had created. BCBSAL, and specifically its executives including Jeff
Ingrum, Eddie Harris, and/or Mary Smith, suppressed this material information from
MHCA and APS;
d.
BCBSAL, through Jeff Ingrum, Eddie Harris, Becky Patterson, Jason Rocks, and/or Ross
Bartee, misrepresented that the costs associated with the EPS capitation plan were higher
than a fee-for-services model due to “out-of-network leakage” and this fact necessitated a
change to the business model as it existed prior to New Directions entering the picture.
The representation was untrue, in part, because “out-of-network leakage” had not
occurred to the degree BCBSAL indicated and was not a material reason for BCBSAL’s
decision to drastically reduce or eliminate the capitation plan offered to its members.
BCBSAL, and specifically its executives including Jeff Ingrum, Eddie Harris, Becky
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Patterson, and/or Ross Bartee, suppressed the true reasons for making changes to its
behavioral healthcare products;
e. When New Directions informed MHCA and APS that BCBSAL had decided to reduce
by half the number of members enrolled in the EPS capitation plan, MHCA explained
that the financial losses associated with this type of cut to the EPS program must be
addressed because a number of programs would not survive. MHCA asked how
BCBSAL planned to address this concern and BCBSAL, through Jeff Ingrum, Eddie
Harris, and/or Michael Velezis, responded with misrepresentations explaining that under
the arrangement with New Directions and MHCA, BCBSAL planned to develop annual
Value-Based Payment opportunities and a Bonus Structure for MHCA and/or additional
payment mechanisms to allow MHCA to recoup losses of revenues resulting from
changes to BCBSAL’s behavioral health products. The representation was untrue, in part,
because BCBSAL had no intention of developing such payment opportunities, bonus
structure or payment mechanisms for any year other than 2014. BCBSAL, and
specifically its executives including Jeff Ingrum, Eddie Harris, and/or Michael Velezis,
suppressed these material facts from MHCA and APS;
f. BCBSAL, through Jeff Ingrum and/or Eddie Harris, misrepresented that it had no interest
in the control or management of New Directions. This representation was untrue because
BCBSAL did have an ownership interest in New Directions. BCBSAL, and specifically
its executives including Jeff Ingrum and/or Eddie Harris, suppressed the true nature of its
relationship with New Directions from MHCA and APS;
g. BCBSAL, through Jeff Ingrum, Eddie Harris, and/or Mary Smith, misrepresented that it
was considering acquiring an ownership interest in MHCA and/or APS and in doing so
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gained access to MHCA and APS’s confidential and proprietary information. The
representation was untrue, in part, because BCBSAL had no interest in acquiring an
ownership interest in MHCA and, instead intended to dismantle the provider network and
business model MHCA and APS had created to benefit itself as an owner of New
Directions. BCBSAL, and specifically its executives including Jeff Ingrum, Eddie Harris,
and/or Mary Smith, suppressed BCBSAL’s true intentions from MHCA and APS;
h. BCBSAL, through Jeff Ingrum, Eddie Harris, Ross Bartee, and/or Deborah Miller,
misrepresented that its customers were demanding fee-for-service plans rather than the
EPS capitation plan. This representation was untrue, in part, because overall customer
satisfaction with EPS was extremely high and no such demand existed; and/or
i. BCBSAL, through Jeff Ingrum and/or Eddie Harris, misrepresented that the arrangement
with New Directions was necessitated by the enactment of the Affordable Care Act. This
representation was untrue, in part, because there was no such necessity created by the
Affordable Care Act and BCBSAL’s true intention was to put a business model in place
that would cost its BCBSAL’s members substantially more money while providing less
benefits through plans with higher co-payments and deductibles, and generate more
profits for BCBSAL. BCBSAL, and specifically its executives including Jeff Ingrum
and/or Eddie Harris, suppressed these material facts from MHCA and APS.
29. Unless otherwise stated, BCBSAL, through its executives, made the misrepresentations
and suppressed material facts identified above in the period between December, 2012 and
October, 2013. The fraudulent conduct was committed, in part, at BCBSAL’s headquarters,
during telephone conversations, and in meetings with the Plaintiffs, including those held at the
offices of BCBSAL and Plaintiffs.
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Fraudulent Misrepresentations
30. BCBSAL committed actionable fraud by making misrepresentations to the Plaintiffs. The
above representations were material and false, and were deliberately, negligently or recklessly
presented to Plaintiffs by BCBSAL with full knowledge of their falsity and/or with reckless
disregard as to their truth or falsity.
31. The above representations were made by BCBSAL’s employees, representatives, and/or
agents while acting within the line and scope of their agency with BCBSAL.
32. Plaintiffs entered into the business arrangement with BCBSAL as described above based
on the negligent, reckless and/or intentional material representations made by BCBSAL and its
employees, representatives, and/or agents as stated above. These representations were false, and
at the time they were made BCBSAL did not intend to do what was promised and, in fact,
intended to deceive Plaintiffs.
33. Plaintiffs reasonably relied on the representations made by BCBSAL and its employees,
representatives, and/or agents in deciding to enter into and/or continue the business arrangement
with BCBSAL as described above.
34. As a proximate consequence of BCBSAL’s fraudulent conduct described above,
Plaintiffs were injured and damaged as described above.
35. Plaintiffs demand judgment against BCBSAL for compensatory and punitive damages
caused by BCBSAL’s fraudulent misrepresentations, plus prejudgment interest and costs.
Fraudulent Suppression
36. BCBSAL also committed actionable fraud by suppressing material facts from the
Plaintiffs.
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37. At the aforesaid times and places as described above, BCBSAL and its employees,
representatives, and/or agents had a duty to disclose, but fraudulently failed to disclose to
Plaintiffs the material information identified above. The duty to disclose arose from the fact of
the parties’ relationship that spanned over 25 years. The duty also arose from the fact BCBSAL
voluntarily undertook to provide material information to Plaintiffs, but failed to provide
complete and truthful renditions of the facts, instead providing only half-truths or
misrepresentations in an effort to deceive Plaintiffs. The duty to disclose also arose from the fact
Plaintiffs asked specific questions about the matters at issue and BCBSAL offered in response
only incomplete or untruthful answers as described above.
38. Plaintiffs reasonably relied on BCBSAL and its employees, representatives, and/or agents
to tell the truth and the whole truth in its dealings with Plaintiffs.
39. As a proximate consequence of BCBSAL’s fraudulent conduct described above,
including its failure to disclose material facts, Plaintiffs were injured and damaged as described
above.
40.
Plaintiffs demand judgment against BCBSAL for compensatory and punitive damages
caused by BCBSAL’s fraudulent suppression of material fact, plus prejudgment interest and
costs.
Breach of Implied Contract
41. Plaintiffs re-allege all prior paragraphs of the Complaint as if set out here in full. To the
extent this claim is inconsistent with others, it is pleaded in the alternative.
42. In obtaining MHCA’s and APS’s consent to maintain and operate their provider networks
and to provide quality behavioral heath care services for the benefit of BCBSAL members in a
manner dictated by BCBSAL, BCBSAL impliedly agreed to fairly compensate Plaintiffs and to
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provide funding to minimize the losses and other negative effects to MHCA and APS’s business
resulting from BCBSAL’s decision to change its behavioral health care products and benefit
plans. BCBSAL also impliedly agreed to compensate Plaintiffs for their disclosure of
confidential and proprietary information relative to the creation, management, administration and
control of their provider networks. The agreement was supported by consideration in the form of
MHCA and APS’s expenditures of money, time and resources. Specifically, MHCA and APS
continued to provide and manage their provider networks in the manner chosen and dictated by
BCBSAL and provided all information requested by BCBSAL. During its performance of the
implied agreements, BCBSAL failed to act in good faith and to deal fairly by evading the spirit
of the transaction and by refusing to develop annual Value-Based Payment opportunities and a
Bonus Structure for MHCA and/or additional payment mechanisms for MHCA, in order to allow
MHCA to recoup losses of revenues resulting from changes to BCBSAL’s behavioral health
products. Moreover, by engaging in the misleading and deceptive practices described herein
BCBSAL has successfully taken advantage of Plaintiffs
43.
The Plaintiffs fully performed their obligations owed to BCBSAL.
44. Defendant BCBSAL breached the agreements.
45. As a proximate consequence of said breaches, Plaintiffs have been damaged and have
incurred losses.
46. Plaintiffs demand judgment against BCBSAL for compensatory damages, plus
prejudgment interest and costs.
Promissory Estoppel
47. Plaintiffs re-allege all prior paragraphs of the Complaint as if set out here in full. To the
extent this claim is inconsistent with others, it is pleaded in the alternative.
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48. BCBSAL made promises to the Plaintiffs and in so doing reasonably expected to induce
action or forebearance of definite and substantial character on the part of the Plaintiffs.
49. BCBSAL’s promises did, in fact, induce action or forebearance on the part of the
Plaintiffs.
50. The Plaintiffs detrimentally relied on the promises made by BCBSAL.
51. Specifically, the Plaintiffs incurred substantial costs in developing and maintaining
behavioral health service facilities in underserved areas for the benefit of BCBSAL and its
subscribers. Those facilities were not sustainable on a stand-alone basis and could be operated
only within system that included a number of facilities state-wide. The Plaintiffs built the
statewide system and network at the request and demand of BCBSAL, and based on BCBSAL’s
promise that its relationship with the Plaintiffs would be maintained in a manner that would
justify the costs incurred by the Plaintiffs, and that would allow recoupment of those costs.
52. Additionally, after BCBSAL decided to change its behavioral health care products and
services as described above, BCBSAL knew the effect the changes would have on the Plaintiffs
and promised to annually develop Value-Based Payment opportunities and a Bonus Structure for
MHCA and/or additional payment mechanisms for MHCA and APS, in order to allow MHCA
and APS to recoup losses of revenues resulting from changes to BCBSAL’s behavioral health
products. MHCA and APS continued to provide and manage their provider networks based on
the promise of BCBSAL. BCBSAL breached its promise and as a result Plaintiffs incurred
substantial losses.
53. Injustice can only be avoided by enforcement of the promises made by BCBSAL.
54. Plaintiffs demand judgment and/or relief for all losses derived from the breach of
BCBSAL’s promises, plus prejudgment interest and costs.
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Fictitious Defendants
55. To the extent the following allegations and claims of liability conflict with other portions
of the Complaint, the following is pleaded in the alternative. All of the relevant foregoing
paragraphs and factual allegations made throughout the Complaint are incorporated by reference
to the following section. In addition to the facts alleged throughout the Complaint, the following
factual allegations serve as additional basis for Plaintiffs’ claims against Fictitious Defendants A,
B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W, X, Y, and Z:
56. There may be other entities whose true names and identities are unknown to Plaintiffs at
this time who may be legally responsible for the claim(s) set forth herein. These Defendants
described as “Fictitious” may be added by amendment by Plaintiffs when their true names and
identities are discovered. Until that time, Plaintiffs designate these parties in accordance with
Rule 9 (h) of the Alabama Rules of Civil Procedure. The word “entity” as used herein is intended
to refer to and include all legal entities, including individual persons, any and all forms of
partnerships, and any and all types of corporations and unincorporated associations. The symbol
by which these party defendants are designated is intended to include more than one entity in the
event that discovery reveals that the descriptive characterization of the symbol applies to more
than one “entity”. In the present action, the party Defendants which Plaintiffs must include by
descriptive characterization are as follows:
a. Defendants “A”, “B”, “C”, and “D” are those individuals or corporations,
whether singular or plural, being that person, firm, entity, alter ego or the
predecessor or successor in interest to any other Defendant, including thatnamed above as Blue Cross Blue Shield of Alabama;
b. Defendants “E”, “F”, “G”, and “H” are those individuals or corporations
whether singular or plural, being that person, firm or entity who was the principal of any of the named or above described Defendant and/or who is
vicariously liable for the acts and omissions of the named Defendant;
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c. Defendants “I”, “J”, and “K” are those individuals or corporations,
whether singular or plural, being that person, firm or entity who conspiredwith the named defendants (and/or others) to commit the unlawful and
wrongful conduct alleged in this Complaint, and/or who contributed in any
way to cause the damages and injuries of which Plaintiffs complain;
d. Defendants “L”, “M” and “N” are those individuals or corporations,
whether singular or plural, being that person, firm, or entity who violated
state law and from whom Plaintiffs are rightfully entitled to remedy andrecovery under such laws or regulations;
e. Defendants “O”, “P” and “Q” are those individuals or corporations,whether singular or plural, being that person, firm, or entity whose
fraudulent acts caused Plaintiffs’ injuries and damages complained of
herein and/or contributed to Plaintiffs’ injuries and damages complainedof herein;
f. Defendants “R”, “S” and “T” are those individuals or corporations,
whether singular or plural, being that person, firm, or entity whose breachof duty caused Plaintiffs’ injuries and damages complained of herein
and/or contributed to Plaintiffs’ injuries and damages complained of
herein;
g. Defendants “U”, “V” and “W” are those individuals or corporations,
whether singular or plural, being that person, firm, or entity who conspiredwith the Defendant to cause Plaintiffs’ injuries and damages complained
of herein and/or contributed to Plaintiffs’ injuries and damagescomplained of herein; and
h. Defendants “X”, “Y” and “Z” are those individuals or corporations,whether singular or plural, being that person, firm, or entity who were
unjustly enriched at the expense of Plaintiff and/or whose breach of
contract caused Plaintiffs’ injuries and damages complained of herein
and/or contributed to Plaintiffs’ injuries and damages complained ofherein;
DEMAND FOR RELIEF
57. WHEREFORE, premises considered, Plaintiffs respectfully demand judgment against
BCBSAL and fictitious defendants for compensatory and punitive damages in amounts to
determined by a jury, as well as any all other relief or recovery to which Plaintiffs may be
entitled.
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58. The loss and damages suffered by Plaintiffs were caused by each of the Defendants’
wrongdoing. The Defendants are jointly and severally liable for the damages caused.
59. Plaintiffs have tried in good faith, but unsuccessfully, to resolve their disputes with the
Defendants prior to resorting to litigation.
Plaintiffs demand a trial by struck jury.
Respectfully submitted,
s/ Michael Yancey .P. Michael Yancey (YAN006)
J. Matthew Stephens ( STE153)Rodney E. Miller (MIL126)
MCCALLUM, METHVIN & TERRELL, P.C. 2201 Arlington Avenue South
Birmingham, Alabama 35205
Telephone: (205) 939-0199Facsimile: (205) 939-0399
CERTIFICATE OF SERVICE
I hereby certify that on this day, November 4, 2015, I electronically filed the foregoing pleading with the Clerk of the Court using the AlaFile system, which will send notification of
such filing to the following:
Cavender C. Kimble, Esq.Thomas R. DeBray, Jr., Esq.
BALCH & BINGHAM, LLP
1901 6th Avenue North, Suite 1500Birmingham, Alabama 35203
Telephone: (205) 251-8100
(Attorneys for Blue Cross Blue Shield of Alabama)
/s / Michael Yancey .
OF COUNSEL