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Judge allows St. Peter's case against Horizon to proceed

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A court decision in Middlesex County will allow a hospital to continue a legal fight with the state's largest insurer.

St. Peter's University Hospital had filed several motions claiming unfair competition practices and fraud by Horizon Blue Cross Blue Shield of New Jersey. While Judge Frank Ciuffani dismissed those motions, he did not dismiss the entire case, as had been requested by Horizon.

The decision by the judge read, "There was no deception by Horizon aimed at consumers."

Saint Peter’s was the first to bring a suit against Horizon after the rollout of the insurer’s new OMNIA health plan. The new plan splits the state's hospitals into two groups, Tier 1 and Tier 2.

The former includes hospitals, health systems and the state's largest physicians group, and patients who go to these designated sites end up with a low or no copay.

Tier 2 hospitals have been upset about the effect this plan will have on their ability to attract patients. Another case involving six Tier 2 systems is also sitting in New Jerseys courts.

Saint Peter’s attorney Jeffrey Greenbaum said the decision Friday pleased the hospital.

"Saint Peter's University Hospital is gratified that Judge Ciuffani sustained the heart of its case seeking to be admitted to Tier 1," he said. "We have alleged that our contract entitled us to have a fair shake to be in Tier 1, including three protections: that any separate tier had to be created based on objective criteria of quality, cost and similar factors; that we were entitled to 60 days’ prior written notice of any tier decision to challenge it; and that we ‘shall participate’ if we meet these objective criteria.

“In contrast, Horizon argued the contract entitled it to set any criteria it wanted and we had no right to be in Tier 1. The court rejected Horizon's arguments and found our complaint stated viable contract claims, including the right to specific performance to be in Tier 1.”

Horizon, however, was also pleased with the judge's decision.

"The ruling is a win for the hundreds of thousands of people who have chosen OMNIA and a clear rebuke to St. Peter's," the insurer said. "The hospital"s case was effectively gutted and what remains amounts to no more than a garden variety contract dispute. We will continue to focus on providing high-quality, affordable health insurance that transforms the health care system to one focused on the quality of outcomes and the value of care. We welcome anyone, including St. Peter's, to join us."

Ciuffani also found that another case, being used to compare another fight with Horizon and Saint Peter’s, was not relevant to the current case.

Nevertheless, this case will continue with the discovery phase.

Saint Peter’s has also been fighting for access to the McKinsey & Co. report that was used to create the OMNIA plan.

“The court also sustained our claim that Horizon violated the duty of good faith and fair dealing inherent in every contract and that it also tortiously interfered with our relationships with treating physicians and patients. Finally, he sustained from attack the claim that Horizon defamed Saint Peter's and engaged in trade disparagement by advertising Tier 1 hospitals as providing better care when it knew those allegations to be false as to Saint Peter's," Greenbaum said.

“We look forward to continuing with vigorous discovery to obtain all the evidence we need to proceed to a prompt trial on our entitlement to be put into Tier 1 as soon as possible.”

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