Updated March 25 at 6:26pm

Judge lifts stay, allows Landmark suit against Blue Cross to proceed


PROVIDENCE – Superior Court Judge Michael A. Silverstein lifted his stay today, allowing the lawsuit against Blue Cross & Blue Shield of Rhode Island by Landmark Medical Center to move forward – at least as far as an Aug. 30 hearing on the merits.

The lawsuit, which is being brought by the Landmark Medical Center’s special master, Jonathan R. Savage, charges that Blue Cross “starved” the community hospital through unfair reimbursement rates, contributing to the financial failure of the hospital.

Blue Cross, in turned, argued that the lawsuit was without merit, futile and potentially frivolous under Rule 11. If the judge rules in favor of Blue Cross and the suit is deemed frivolous, the special master would be liable to pay for opposing legal fees.

Left unanswered by the judge’s decision was the question of whether or not the lack of contract between Blue Cross and Landmark is a roadblock to the closing of the hospital’s sale of Boston-based for-profit hospital system Steward Health Care.

Toward the end of Tuesday’s three-hour hearing, lawyer Mark Russo, representing 21st Century Oncology, asked Silverstein directly whether or not a contract between the insurer and the hospital was now a contingency being attached the sale of Landmark to Steward. The judge referred the question to Savage, who declined to answer.

Under the current asset purchase agreement, a contract between Blue Cross and Landmark or Steward is not a contingency.

The contract expired on July 16 after negotiations between Steward and Blue Cross broke down and Blue Cross has asked the R.I. Department of Health for permission to drop Landmark from its provider network. The request is currently under review by Dr. Michael Fine, director of the R.I. Department of Health.

The latest deadline for completion of the asset purchase agreement, according to Rhode Island Assistant Attorney General Jodi Bourque, is Friday, July 27, when a hearing is scheduled before Silverstein and at which time Savage is expected to present the latest interim report.

After Tuesday’s hearing, neither Savage, Bourque, nor lawyers representing Steward had any comment on exactly when a deal might be concluded, but Savage said he believed the asset purchase agreement was still in place.


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