BlueCross to appeal breach of contract ruling

BlueCross BlueShield of Tennessee is appealing a recent court decision that it breached a contract with a general insurance agent.

The Chancery Court for Tennessee’s 20th Judicial District recently awarded James Walker, the president and owner of Individual Healthcare Specialists, $ 2.1 million after BCSBT was found to have breached a commissions contract. The ruling, issued in September and under seal until late December, dismissed the claim that BCBST owed Walker $33 million.

Walker contracted as a general agent with BCBST in 1999 just after the insurer branched out into selling individual insurance plans. It contracted with four general agents, including Walker, who already had a broker network. As a general agent, Walker received commissions from insurance plans sold by IHS agents as well as each time customers renewed their plans in perpetuity.

Walker brought the suit against BCBST in 2011 after changes to the contract and commission structure on renewals, which BCBST attributed to changes under the Affordable Care Act, according to the ruling. He claimed there was a breach of contract, unjust enrichment and that BCBST knowingly underpaid him commissions for more than 10 years.

The court found the

“WE RESPECTFULLY DISAGREE WITH A PORTION OF THE COURT’S DECISION AND WILL APPEAL THIS RULING TO THE TENNESSEE COURT OF APPEALS.” — ROY VAUGHN, VICE PRESIDENT OF CORPORATE COMMUNICATIONS AT BLUECROSS BLUESHIELD

changes to the renewal rate commission were a breach of contract, although it dismissed several claims, including unjust enrichment. BCBST was ordered to pay Walker’s court costs.

Jay Bowen, a partner at Shackelford who represented Walker, expects to represent another broker in a similar suit.

Roy Vaughn, vice president of corporate communications, said in a statement that the company values its broker partners and that only one claimed a breach in the contractual relationship following the new requirements under the ACA.

“We respectfully disagree with a portion of the court’s decision and will appeal this ruling to the Tennessee Court of Appeals,” Vaughn said.

The audit of data and litigation went on for about four years before the suit went to trial in 2015. The next court date is scheduled for early March.

Contact Holly Fletcher at 615-259-8287 or on Twitter @hollyfletcher.