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Highmark sues UPMC to stop ad campaign

| Thursday, July 14, 2011

Highmark Inc. wants federal judges to stop what it says are misleading advertisements by UPMC Health Plan designed to scare employers and insurance consumers.

Highmark, the state's largest health insurer, says the advertisements suggest that its Blue Cross Blue Shield members will lose all access to UPMC after June 30, 2012, when contracts with UPMC doctors and most of UPMC's hospitals expire. Highmark members will continue to have access to all UPMC facilities for one year, until June 2013.

In a lawsuit filed on Wednesday in U.S. District Court in Pittsburgh, Highmark asks judges for a preliminary injunction to stop UPMC from running its advertisements, which the insurer said are misleading and violate contracts between the two giant nonprofits.

"The misinformation campaign is designed to panic employers and health care consumers into thinking that they have to sever all ties with Highmark immediately," the lawsuit says.

UPMC has notified Highmark it intends to end the doctors' contract effective June 2012. Separately, Highmark contracts expire with UPMC Hamot hospital in Erie in June 2013, with UPMC Mercy hospital in June 2015 and with Children's Hospital of Pittsburgh in June 2022.

Highmark contends in the suit that although its contract with UPMC's doctors can be terminated with 60 days' notice, UPMC has to provide members with access to physician services at agreed-upon rates through the one-year, run-out period at no additional cost.

"No employer or health care consumer need make any decisions regarding the potential impacts of those changes for at least another year," the lawsuit says.

UPMC interprets its obligations during the run-out differently, UPMC spokesman Paul Wood said. He added that the lawsuit makes it clear both nonprofits agree the contracts are expiring and will not be renewed.

"As for Highmark's interpretation of contractual provisions governing the run-out period, UPMC strongly disagrees and looks forward to presenting the court and the public with the actual contract language," Wood said.

UPMC's top lawyer sent a letter to Highmark last week, seeking to negotiate how the termination of the contracts will proceed, the Tribune-Review reported first on Sunday. Highmark has, so far, refused to talk about ending the contracts, Wood said.

"Perhaps this lawsuit will bring them to that table," he said.

Highmark argues the ads violate a clause in each of its contracts with UPMC hospitals, barring them from steering patients to competing insurers. "Simply put, each of the hospitals agreed not to try to lure Highmark's customers away from it, directly or indirectly, much less by false and misleading means," the suit says.

UPMC has started a "malicious campaign" to retaliate against the insurer for its plans announced last month to spend $475 million to take over the West Penn Allegheny Health System, the lawsuit says. The region's second-largest hospital system will fail without its aid, Highmark says.

The campaign promoting UPMC's deals with four national insurers includes print advertisements that have appeared in the Tribune-Review and other publications, radio advertisements that ran more than 100 times during the first week of July, a website and direct solicitations, the lawsuit says. The plan started in April, the suit says, with emails to employers who have Highmark contracts.

Highmark "will have an uphill battle in winning the lawsuit" and proving that the ads are false rather than just slanted, said Andy Thurman, a health care attorney who once worked as counsel for Allegheny Health Education and Research Foundation, the former parent of Allegheny General Hospital.

If the nonprofits do not extend the contracts, there will be limits for Highmark subscribers seeking access to UPMC, he said. By filing the suit, however, the insurer must believe it can win.

"Highmark has good lawyers," he said. "The fact that they filed the lawsuit at all means that they think the ads are truly misleading."

Staff Writer Luis Fábregas contributed to this report.

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