Blue Cross Affiliate Takes Supplier Defamation Suit to SCOTUS

Blue Cross and Blue Shield of Louisiana asked the U.S. Supreme Court to make it easier for health plans to block lawsuits from doctors seeking payment.

The insurer, formally known as Louisiana Health Service & Indemnity Co., wants the justices to consider a Fifth Circuit opinion in favor of a medical equipment and staffing company that sued the insurer for failing to pay benefits and defamation. The Fifth Circuit’s opinion wrongly disregarded a term in Blue Cross’s health plans blocking plan participants from assigning their right to sue to medical providers, the insurer said.

Specifically, the Fifth Circuit said Blue Cross couldn’t rely on this anti-assignment provision to defeat a lawsuit by Encompass Office Solutions, because Blue Cross previously processed claims from Encompass and sent the company payments. In holding that Blue Cross waived the anti-assignment provision, the Fifth Circuit created a conflict with the Third and Ninth circuits, the insurer said.

Blue Cross also urged the justices to undo the Fifth Circuit’s ruling for Encompass on defamation claims tied to a letter Blue Cross sent in-network doctors directing them to stop working with Encompass. This claim was tried before a jury and resulted in an $8.5 million for Encompass.

In allowing Encompass’s defamation claim to proceed, the Fifth Circuit took a “guess” at how the Louisiana Supreme Court would handle an underlying question about the deadline to file suit. But the Fifth Circuit guessed wrong, because it expanded liability without clear guidance from Louisiana courts, Blue Cross said.

Blue Cross represents itself, along with Miller & Chevalier.

The case is La. Health Serv. & Indemnity Co. v. Encompass Office Solutions, Inc., U.S., No. 19-196, petition for certiorari 8/14/19.