The state's largest health insurer wrongfully allowed policyholders to be charged higher rates for medical services after they received their maximum benefits, according to a lawsuit that recently won class action status.

The Aug. 5 court ruling in the nearly 3-year-old suit paves the way for thousands of policyholders to seek claims against Blue Cross and Blue Shield of North Carolina, say attorneys who filed the action.

"We're very pleased on behalf of the policyholders involved," said Raleigh lawyer Donald Beskind of Twiggs, Beskind, Strickland & Rabenau. "It's an important first step to getting them the recovery they deserve."

The lawsuit accuses Blue Cross of breach of contract, breach of good faith, and unfair and deceptive trade practices, and it seeks triple damages. Blue Cross denies the allegations.

At issue is the amount policyholders are charged for services provided by in-network providers after the policyholders have received the maximum amount of benefits covered by their insurance policies. In-network providers are those that have a contract with Blue Cross to provide health care at a discounted rate. That discount can be as high as 50 percent, Beskind said.

The named plaintiff in the case is Macy M. Hamm, a Wake County resident whose now-5-year-old son, who suffers from cerebral palsy, is covered under her Blue Advantage health insurance plan.

After reaching the maximum physical therapy and speech therapy benefits from in-network providers, Hamm was charged higher amounts for services than Blue Cross paid when it was footing the bill, according to the lawsuit.

Hamm could not be reached for comment.

Blue Cross spokesman Lew Borman said the company doesn't comment on pending litigation.

The lawsuit contends Blue Cross promises in its contract that if policyholders obtain services from an in-network provider, they will never pay more than the discounted rate.

"I feel like Blue Cross Blue Shield broke their promise to me when I was charged ... [higher] amounts," Hamm testified at a deposition.

Beskind and co-counsel J. Martin Futrell, of Philadelphia's Martin & Auerbach, said they have no beef with the in-network providers themselves, because the amounts they charge are consistent.

But Blue Cross pays a discounted rate that may not be available to policyholders once they reach the maximum amount of services covered by their policy and begin paying 100 percent out of their own pocket. That can occur when, for example, the policyholder exceeds the maximum benefits for the period of time covered by the policy.

"It is Blue Cross ... that processes the bills between members and their preferred provider," even after the policyholders have reached their maximum benefits, Futrell said.

Potential class members are policyholders covered since November 2002 by "preferred provider organization," or PPO, plans purchased individually or obtained through a nonbusiness employer, such as a government or nonprofit agency. Class members also must have exceeded their maximum benefits and must have subsequently been charged higher rates by in-network providers.

As a result of the court's ruling, policyholders who meet these requirements will be notified by mail.

The state Department of Insurance isn't aware of any consumer complaints related to the issues raised in the lawsuit, said spokeswoman Kristin Milam.

The suit doesn't specify how much extra Hamm was charged, and her attorneys declined to provide details. But Futrell said the losses suffered by individual class members probably aren't huge. He estimates they range from a few hundred to a few thousand dollars, which is why a class action lawsuit was necessary.

Many of Blue Cross' filings have been sealed from the public by court order. But in documents that are available, Blue Cross argued the suit has no merit because, among other things, providers -- not Blue Cross -- charge policyholders for health care services. The insurer also argued Hamm isn't a party to the contracts between Blue Cross and providers.

Special Superior Court Judge John R. Jolly Jr. noted in his order that Blue Cross contends its policies only pertains to "covered services," and that services provided after the maximum number of visits allowed are no longer covered.

The judge also noted that Blue Cross acknowledged it allowed policyholders to pay higher rates after they reached the maximum number of visits, but not after they reached the maximum amount of dollars, covered by their policies. The plaintiff argues that nothing in Blue Cross' contract distinguishes between the two types of maximums.

The next step in the case is a hearing on the plaintiff's motion for a summary judgment ruling on whether Blue Cross is permitted, under its contracts, to allow in-network providers to charger higher rates after policyholders receive their maximum benefits. That hearing has not yet been scheduled.

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