Update 7 health systems sue to halt OMNIA advertising

A new lawsuit has been filed against the state’s largest insurer, Horizon Blue Cross Blue Shield of New Jersey, by seven hospital systems in the state.(Editor’s note: This report was updated at 4:47 p.m. with comments from Horizon Blue Cross Blue Shield of New Jersey.)

A new lawsuit has been filed against the state’s largest insurer, Horizon Blue Cross Blue Shield of New Jersey, by seven hospital systems in the state.

This suit calls for a halt to the advertising of Horizon’s controversial new tiered network plan and the OMNIA Health Alliance.

The seven health systems were designated Tier 2 in the OMNIA tiered network plan that Horizon announced in September and is slated to activate in January.

But the attorney representing the group, Michael Furey with Day Pitney, said the way the OMNIA alliance has been structured is unfair.

“Effectively, they were frozen out of (OMNIA). Under the agreements with Horizon, they have a right to participate in new products Horizon comes out with if they choose to,” Furey said.

The plaintiffs in the civil suit filed Thursday in Bergen County Superior Court include Capital Health System, CentraState Medical Center, Holy Name Medical Center, JFK Medical Center, St. Luke’s Warren Hospital, Trinitas Regional Medical Center and Valley Hospital.

Horizon responded in an emailed statement: “Horizon Blue Cross Blue Shield of New Jersey received both state and federal approvals with respect to our low-cost, high-quality OMNIA Health Plans, so it is unfortunate that certain hospitals are now working against us — rather than with us — in our mission to provide relief to residents from the crushing cost of health care in New Jersey. We are disappointed by the actions of these network hospitals, but we will vigorously defend consumers against another meritless lawsuit, as we have successfully done thus far.”

If successful, the lawsuit wouldn’t be able to effect a change prior to the rollout of the product at the end of this year, but Furey said the marketing for next year could be affected.

The hospitals have already experienced “significant injury to their businesses and reputations, threatening the stability of the hospitals over time,” according to the complaint.

 “In all of its marketing, regardless of media, in all of its direct mail and email communications to existing or potential customers and in all of the public statements made by its executives, Horizon has been loudly beating the same drum: Tier 1 hospitals and the Alliance provide the highest quality of care and the cost of that care to its insureds will be less than at Tier 2 hospitals through lower premiums, lower deductibles and lower co-pays,” the hospitals said in the complaint.

Additionally, the hospitals said patients have commented and asked about why their hospitals are “somehow inferior to Tier 1 hospitals.”

Removing this misconception and ensuring the marketing from Horizon doesn’t present the Tier 2 hospitals as lower quality is the goal of the lawsuit, Furey said.

This causes a problem for physicians, who will be asked by patients who have signed up for the OMNIA plan to refer them to a Tier 1 hospital, rather than any of the plaintiffs, according to the complaint.

Clearly, the stated purpose of the plan is to shift customers from Tier 2 to Tier 1 hospitals, Furey said, echoing comments from prior legislative hearings.

The plaintiffs are asking for an injunction to require Horizon to discuss entry options for the interested hospitals into Tier 1 or to be a part of the OMNIA Alliance.

“These hospitals believe that their designation as Tier 2 hospitals in the OMNIA network breaches the contracts that each has with Horizon and is contrary to various representations Horizon representatives made to the hospitals when those contracts were negotiated,” according to a statement from the hospitals’ spokesman, Gene Mulroy.

This is the third lawsuit filed against the state’s largest insurer, which currently covers more than 3.8 million lives.  Previously, a lawsuit filed by 11 health systems to halt the rollout of the OMNIA product was denied by an appellate court this week.

No hearing date has been set.