In a characteristically brilliant and deep investigative story, *Propublica*'s T Christian Miller explains how Blue Cross of Louisiana colluded with other Blue Cross franchises around the country to steal hundreds of millions of dollars by denying claims they'd already approved:

propublica.org/article/blue-cr…

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Blue Cross Defrauded Breast Cancer Center, Must Pay $421M, Jury Finds

Blue Cross authorized mastectomies and breast reconstructions for women with cancer but refused to pay the full doctors’ bills. A jury called it fraud and awarded the practice $421 million.

^ProPublica

The hospital at the center of this controversy is the Center for Restorative Breast Surgery in New Orleans, founded by two surgeons, Frank DellaCroce and Scott Sullivan. DellaCroce and Sullivan are pioneers of an advanced form of breast reconstruction called "autologous tissue reconstruction," which eschews implants in favor of the patient's own fat to construct new breasts.

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While other surgeons perform this surgery, DellaCroce and Sullivan are acknowledged as national leaders, having invented many innovative techniques and trained many of the other surgeons who perform the procedure. As a result, patients travel from all over America to the Center for Restorative Breast Surgery.

DellaCroce and Sullivan's procedure is extremely precise and labor-intensive, and it comes at a high cost.

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Accordingly, patients seek pre-approval from their insurer before undergoing the procedure, and in Louisiana, that usually means calling up Blue Cross, the state's largest insurer. Despite pre-approving the procedure, Blue Cross of Louisiana has held back over 90% of the payments it owed to the hospital.

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Rather than throwing their patients into the Blue Cross meat-grinder, DellaCroce and Sullivan carried the unpaid balance on its books, repeatedly suing Blue Cross for the unpaid amount. Finally, last week, the a jury ordered Blue Cross to pay $421m to the hospital (Blue Cross is appealing).

The case dragged Blue Cross's sleazy behavior - normally confined to bureaucratic memos and telephone denials - into the public, and *boy* is it ugly.

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Blue Cross's official excuse for denying the claims was that it was acting in the best interest of the millions of Louisianans it insures: *DellaCroce and Sullivan are simply too expensive - it's not realistic for people in an insurance pool to expect that kind of care*. However, Blue Cross executives repeatedly signed one-off, "single case agreements" so that their own wives could get the procedure from DellaCroce and Sullivan.

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In addition to this argument, Blue Cross insisted that the fact that it had pre-approved all of these procedures did not oblige it to pay for them after the fact. Rather, an "approval" is a bureaucratic, heavily disclaimed term of art that means, *maybe we'll pay for this and maybe we won't*.

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In court, however, the company was forced to admit that an "approved" procedure has to be paid for in all but the most exceptional instances, for example, when the patient cancels their insurance between getting approved and going in for surgery.

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The insurer also claimed that there were checks and balances to prevent arbitrary claims denials, but then Blue Cross executive VP Paula Shepherd acknowledged that "an appeal is not available to review an underpayment." As Miller writes, "The insurer simply issued an edict — the payment was correct."

Meanwhile, Blue Cross didn't just *save* money by denying the claims it had approved - it *made* money.

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Other Blue Cross organizations in different states would Cross 16% kickbacks to the Louisiana Blue Cross, splitting the take every time it denied a payment.

All of this added up to means, motive and opportunity to engage in unbelievably sleazy - and fraudulent - behavior. Overall, Blue Cross paid $43m on $500m worth of invoices from the hospital. In 60% of claims, it paid *nothing*.

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Blue Cross is one of the nation's largest health insurers, and Blue Cross's argument for stiffing this hospital *is* the argument for letting insurers buy one another up and grow to unimaginable scale. In David Dayen's amazing 2020 book *Monopolized*, he lays out the procession of America's morbid health care monopolization:

pluralistic.net/2021/01/29/fra…

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First, we allowed pharma companies to merge to monopoly, which gave them the power to screw hospitals with sky-high drug prices. So the hospitals defensively merged into regional monopolies with the power to negotiate those prices down, but this also gave them the power to overbill insurers. So the insurers *also* merged until they could resist the hospital chains' pricing power and force rates down.

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