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Northern Montana, Four Other Hospitals Agree To $7 Million Settlement With Employees Group

Editor’s note: This story has been updated to include comment from Northern Montana Hospital.

Northern Montana Hospital will pay $348,055 to offset the cost of health benefits for its employees under the terms of a preliminary settlement reached in U.S. District Court in Great Falls on Friday.

The arrangement was part of a $7 million deal that will resolve a lawsuit filed by eight employees from five hospitals in Montana, including Audrey Turner of Havre, who was president of the Northern Montana Hospital nurses union when the suit was filed.

The hospitals denied any wrongdoing, but U.S. District Judge Brian Morris said all sides agreed that the settlement was favorable to “substantial and burdensome additional proceedings (that) would need to be completed if the litigation proceeds to trial.”

Northern Montana Hospital denied the allegations.

Attorney Gary Zadick of Great Falls said in a statement to the Herald that NMH “denies that Northern Montana Hospital and/or plan participants paid excessive administration fees.  The insurance premiums paid by Northern Montana Hospital plan participants from 2012-2017 were well below the industry standard, have not increased for several years, and the coverage provided to plan participants was above industry standard. 

“Northern Montana Hospital retained nationally recognized experts and consultants both when it entered the transaction with BCBSMT (Blue Cross Blue Shield of Montana) and when Plaintiffs filed this litigation.  The transaction with BCBS was reviewed by the Department of Justice and was approved.  All of the experts and consultants concluded that Northern Montana Hospital acted appropriately and that no part of the BCBSMT transaction violated the law.”

Furthermore, Zadick added: “The insurance plan provided by Northern Montana Hospital to its employees is the same plan provided to management, medical staff and administration.  Northern Montana Hospital believes it was a good plan for all and that BCBS provided many advantages, including the biggest provider network, which is very important for all persons covered under the plan.  NMH continuously evaluates health insurance plans and rates and strives to provide the best coverage for the price to all of its employees and staff.”

According to the deal, the hospitals will pay the following:

Billings Clinic, $2,470,100; Bozeman Deaconess Hospital, $1,275,000; Community Medical Center Healthcare of Missoula, $2,083,910; St. Peter’s Hospital in Helena, $775,000.

In a complicated argument, the plaintiffs went through the history of the dispute:

The hospitals had jointly owned New West Health Services, which provided health insurance to Montanans, including employees at the hospitals.

In 2011, the hospitals tried to sell New West to Blue Cross Blue Shield of Montana for $26 million, with the agreement that the hospitals would use Blue Cross Blue Shield exclusively for six years. The hospitals would also get two seats on the insurance company’s board of directors.

But federal and state regulators blocked the deal, claiming it violated anti-trust regulations.

So the hospitals divested part of their ownership in New West and set up an arrangement with Blue Cross Blue Shield that the plaintiffs contend was very similar to the deal struck down by state and federal regulators.

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The plaintiffs contend that the money should have been used to defray health care expenses for employees.

In legal filings, the employees said the hospitals told them that health care benefits were not subject to union negotiations because of the deal with Blue Cross Blue Shield.

“It is highly unusual for an employer to receive kickbacks from the health insurer/administrator of its health plan,” the employees said in legal papers.

But, they said, the money should have been distributed to the plan and its participants, not the hospitals’ general funds.

The employees said it was a secretive deal and they were unaware of the details until 2018.  

Employees at St. Peter’s Hospital in Helena and Havre’s Northern Montana Hospital were told in 2018 that they would receive some of the benefits from the deal, according to filings.

All the 11,000 affected employees were reportedly notified last week that they will benefit from the arrangement with Blue Cross Blue Shield, though the details have not been offered.

St. Peter’s and Billings Clinic both told Lee Newspapers Friday night that they insist they are doing nothing wrong.

Billings Clinic stressed that the money will be placed in a trust fund that will be used to offset employee health care costs.

The other hospitals have offered no comment as of yet.


Email John Kelleher at (406) 262-7778
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