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Judge allows lawsuit against Horizon to proceed, but dismisses breach of contract charge

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The Superior Court in Bergen County ruled late Thursday that a lawsuit against Horizon Blue Cross Blue Shield of New Jersey, the state’s largest health insurer, may proceed on good faith and fair dealing, but dismissed the plaintiffs’ claim that Horizon breached its contract with them when it barred them from the Tier 1 portion of its Omnia health plan.

Bergen County Superior Court Judge Robert Contillo will allow the request from CentraState Healthcare System, Holy Name Medical Center and Valley Health System for performance metrics so they may be, in their estimation, fairly judged as to whether they qualify for the Tier 1 portion of Horizon's popular OMNIA plan.

The hospitals brought the original lawsuit against Horizon in 2015, claiming that the company had breached its contract when it omitted them from Tier, which ensures lower-cost or no co-pays for consumers. The three, instead, were placed in Tier 2 of the plan, a move that the hospital systems claim has unfairly cost them patients due to higher co-pay charges.

Saint Peter’s University Hospital is pursuing its own lawsuit against Horizon on similar claims.

“The Court is unpersuaded that Horizon breached the contract simply by the mere fact that Plaintiffs CentraState and Holy Name were not included in Tier 1 of the OMNIA or selected as Alliance Partners. There is no right to participate … Horizon cannot be found to have breached the [contracts with] CentraState and Holy Name because Horizon did not violate its obligations under the contract when it failed to select these two hospitals to participate in OMINA as Alliance partners or as non-Alliance partner Tier 1 participants. Rather, Horizon complied with its contractual obligations,” Contillo wrote in his ruling.

Horizon introduced the OMNIA Plan in 2015 and included larger hospital systems and physician networks in Tier One, like RWJBarnabas Health, Summit Medical Group and Hackensack Meridian Health. It chose the Tier 1 partners based on metrics demonstrated in a McKinsey & Co. report that it claims shows that the partners better demonstrated value and cost savings in their health care delivery.

Both sides are claiming victory in the ruling.

“Today’s ruling is a win for Horizon’s members. What started over two years ago as a case brought by seven hospitals with six claims has been reduced to three hospitals with one claim,” said a Horizon spokesperson in a prepared statement. “While the court is allowing a narrow issue to proceed, the court’s opinion casts serious doubt over the hospitals’ ultimate ability to succeed on this claim at trial. Horizon will continue its fight to offer affordable health coverage options to consumers.”

“Today’s decision by the court to allow the hospitals’ lawsuit to proceed to trial is a clear indication that the hospitals have a strong case against Horizon and its ill-conceived OMNIA plan,” said Michael Furey, the attorney representing Valley Health, CentraState and Holy Name in a public statement.

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Vince Calio

Vince Calio

Vince Calio covers health care and manufacturing for NJBIZ. You can contact him at vcalio@njbiz.com.

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