Blue Shield of California Seeks Damages From Monarch HealthCare

On Tuesday, Blue Shield of California filed a demand for at least $10.5 million in damages from Monarch HealthCare, a physician group under contract with Blue Shield that entered into an agreement with a competing insurer last fall, the Wall Street Journal reports.

The case was submitted for binding arbitration rather than court action, according to the terms of Blue Shield's contract with Monarch (Matthews, Wall Street Journal, 2/29).

Background

In September, Monarch -- a 2,300-member independent practice association in Irvine -- entered into an acquisition agreement with Minnesota-based UnitedHealth Group. According to the deal, UnitedHealth's Optum health services division would acquire the management arm of Monarch (California Healthline, 9/6/11).

Blue Shield said its existing contract with Monarch required that the group ask for consent before entering into a merger or sale. Blue Shield said that it refused to allow the acquisition but that Monarch proceeded with the deal anyway.

Details of Blue Shield Allegations

Blue Shield alleges that, since the acquisition by Optum, Monarch has directed Blue Shield policyholders toward other insurers and that Monarch's physicians have turned down patients with Blue Shield insurance.

The insurer said Monarch's actions violate their contract, which expires May 1.

Monarch's Response

Bart Asner -- CEO of Monarch -- said his group is not aware of any situations where a physician refused to provide care to a Blue Shield member.

He said Monarch "remains focused on helping our patients preserve important relationships with doctors they know and trust."

Asner added that since entering into its relationship with Optum, Monarch "has continued to expand and renew relationships with a number of other local and national health plans."

Optum has said that associated health providers do not work exclusively with United health plans.

United officials said that Optum keeps its operations separate from the parent company.

Blue Shield Comments

Juan Davila, senior vice president for network management at Blue Shield, said Monarch's alleged actions confirmed the company's worries about the acquisition deal with a rival insurer. He said, "It seems crazy to be contracted with someone who's a direct competitor, and share everything you design with them" (Matthews, Wall Street Journal, 2/29).