In a legal battle between two health insurers over control of North Carolina’s public employee benefit plan, a judge ruled Monday that the plan’s board acted appropriately when it switched to Aetna Inc. and fired its longtime administrator, Blue Cross Blue Shield of North Carolina.
The contract costs more than $3 billion annually, including medical claims.
Blue Cross has managed the state’s health insurance plan for more than 40 years. The plan’s administrators manage health care costs for hundreds of thousands of state employees, teachers, their families and retirees, ensure claims are paid and build the provider network. After a bidding process, the plan’s board of directors voted in December 2022 to award the initial three-year contract to Aetna over fellow competitors, subsidiaries of Blue Cross and UnitedHealthcare.
Blue Cross challenged the decision, arguing that there were errors in how the state Medicaid system decided which company to award the contract to and that the bidding process was oversimplified and arbitrary. But Administrative Law Judge Melissa Owens Lassiter, who heard the contentious case in February, ruled Monday that Blue Cross had not met the burden of proof needed to prove that the system’s leaders acted erroneously or failed to follow proper procedures.
“The preponderance of the evidence shows that the Plan conducted its procurement carefully, thoughtfully, fairly and in good faith, and that its decision was properly within its discretion,” Lassiter said in a statement supporting the board’s decision to award the money to Aetna. It is unclear whether the decision will be appealed to a higher court.
Blue Cross said it was disappointed with the ruling but “is pleased the court has considered the important questions we raised” about the state health insurance proposal application process. “Blue Cross NC is honored to serve teachers, public safety officers and state employees, and will continue to provide the highest level of service for the term of our current contract,” the company said in a written statement.
State Treasurer Dale Folwell, who chairs the board, praised the ruling, saying it was clear the state health plan “conducted a well-founded, good faith and correct procurement process for third-party managed services.”
Aetna North Carolina market president Jim Bostian said hundreds of employees have worked hard to complete the contract on time and “proved in court that the transition to Aetna is in the best interest of North Carolina Health Plans and its members.”
