Three Missoula businesses have filed suit in District Court alleging that Blue Cross Blue Shield of Montana added fees to its health insurance plan to provide kickbacks to the Montana Chamber of Commerce as a marketing incentive.

The Union Club Bar, The Depot and the Trail Head filed suit in Missoula District Court and are seeking repayment of all surplus fees charged by Blue Cross Blue Shield, along with punitive damages and attorney fees, among other things.

The suit alleges the insurer, known today as Health Care Services Corp., charged employers an amount in excess of the actual premium. Back then, the plans were known as Chamber Choices, and the excess fees were funneled back to the Montana Chamber as an “unlawful kickback.”

“They tacked $5 a month onto everybody's health insurance premium and gave it to the Chamber as a kickback to incent them to help market the product to a large group of employers across Montana,” said John Morrison, the lead attorney in the case. “You're not supposed to tack additional amounts onto premiums, and you're not supposed to pay kickbacks.”

Blue Cross Blue Shield referred to the charges as 'external rates' and concealed them in premiums as early as 2008, according to the suit. Health Care Service Corp. acquired BCBSMT in 2013 and placed all public assets in Caring for Montanans.

Following a market exam in 2014, the Montana Commissioner of Securities and Insurance imposed a $250,000 fine against BCBSMT for its illegal insurance practices. Those practices included improper medical billing and kickbacks, or rebates.

Neither Caring for Montanans nor Health Care Services Corp. challenged the findings. Instead, they paid the fine from pubic assets stemming from the sale of BCBSMT.

“The Montana insurance commissioner found the practice violated two different sections of the insurance code and imposed a $250,000 fine,” Morrison said. “The purpose of this civil action is to recover the overcharges in the premium and give it back to the Chamber Choices members.”

Morrison said the amount represents millions of dollars, though that hasn't been firmly established. He estimated that roughly 4,000 small businesses bought the Chamber Choices health insurance plan for their employees, insuring around 20,000 individual Montanans.

“The first thing that will be reached is whether the class of former Chamber Choices members have a legal right to recover the over payments,” Morrison said. “The second stage will determine how much those payments are, and the third stage will determine who pays it. There are corporate succession issues, but that's down the road.”

While publication of the fine in 2014 was the first time the public learned of the insurer's conduct, the suit contends, the three Missoula businesses named in the lawsuit didn't know for an additional two years.

Under the state's corporate succession laws, Health Care Services Corp. and Caring for Montanans, which continue to do business as BCBSMT, are allegedly liable for the damages.

“They've fought vigorously to avoid having to give people their money back,” Morrison said. “We've been litigating this in several different courts for about five years.”

The defendants in the lawsuit, including Caring for Montanans, Health Care Services Corp. and BCBSMT, have filed a motion to dismiss the case. They contend that prior rulings by the Montana Supreme Court and the Ninth Circuit Court don't allow a pathway for the class to recover the overcharges.

Morrison disagrees.

“We believe the prior rulings did not in any way block the right of Chamber Choices policy holders to recover these overcharges,” he said. “They simply defined the legal theory under which they can recover those overcharges.”

Contact reporter Martin Kidston at