A 3-judge panel on the 9th U.S. Circuit Court of Appeals has ruled on a Montana case involving a conflict between the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) and a Montanta state law known as the “little HIAA law.”
One of the lawyers representing the consumers involved in the case — Dale Fossen et al. vs. Blue Cross and Blue Shield of Montana Inc., a health service corporation (Number 10-36001) – is John Morrison, a former Montana insurance commissioner.
Dale Fossen and other plaintiffs in the case, including two brothers, the brothers’ wives, and a family business, Fossen Brothers Farms, sued Blue Cross and Blue Shield of Montana Inc., Helena, Mont., over whether health insurers operating in Montana can charge different premiums to similarly situated participants on account of factors related to the participants’ health status.
In 2006, Montana Blue said it would increase the Fossens’ premiums by more than 20%. After the Fossens complained to insurance regulators, Montana Blue reduced the increase to 4%, Judge Milan Smith Jr. writes in an opinion discussing the court’s ruling.
In 2008, Montana Blue increased the Fossens’ premiums by more than 40%. The insurer refused to reduce that increase, and the Fossens sued in state court in September 2009.
The Fossens argued that the 40% increase violated a Montana little HIPAA provision that prohibits state-regulated group health plans from taking health status-related factors into account when setting small group rates.
The Fossens also argued that the increase violated the Montana Unfair Trade Practices Act, which prohibits discimination in disability insurance prices. In Montana, a related law defines the term “disability insurance” to include insurance that protects against medical expenses resulting from accident or sickness, Smith says.
In addition, the Fossens said the 40% increase amounted to a breach of their contract with Montana Blue.