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BlueCross BlueShield drops lawsuit accusing Catholic Health of false ads

BlueCross BlueShield of Western New York has agreed to drop its lawsuit accusing Catholic Health System of false and deceptive advertising, the parties announced Wednesday morning.

The region’s largest insurer and its second-largest hospital system engaged in a bitter public feud in fall 2014 over a Medicare Advantage plan, offered by BlueCross BlueShield, that excluded non-emergency treatment at Catholic Health hospitals.

Catholic Health responded by posting billboards, newspaper ads and church bulletin notices urging consumers to pick a plan that included its hospitals. BlueCross BlueShield objected to the language in the ads because it stated the plan “excludes all Catholic Health facilities,” when emergency care was fully covered there. BlueCross Blue Shield also said that care at a Catholic Health facility provided by a primary care physician who accepts its insurance also would be covered.

The Buffalo-based insurer in November 2014 filed a complaint in U.S. District Court accusing Catholic Health of deliberately misleading consumers about its plan. The insurer said at the time it had filed the complaint only as a last resort and it sought an award of damages to be determined at trial.

Catholic Health had defended its marketing campaign as necessary to inform its patients because it said BlueCross BlueShield wasn’t upfront with its members about the narrow-network plan.

BlueCross BlueShield continued to offer the option, known as Senior Blue Select, as one of its Medicare Advantage plans during the open enrollment period this fall.

BlueCross BlueShield agreed to withdraw the pending lawsuit as part of a three-year contract that provides access for the insurer’s commercial membership to Catholic Health hospitals and to Catholic Health Partners physicians and specialists. Terms of the contract, that runs from 2016 to 2018, were not disclosed Wednesday. However, the contract does not affect the Medicare Advantage plan offered by Blue Cross.