public policy

Landmark, Blue Cross head to mediation

Posted 4/2/12

PROVIDENCE – The long-simmering dispute between Landmark Medical Center and Blue Cross & Blue Shield of Rhode Island erupted again on March 23 in Superior Court, leading to Judge Michael A. Silverstein to order the two sides to attempt to work out their differences in mediation. A mediator was chosen on March 26, according to Craig Burke, court spokesman.

Landmark had sought to sue Blue Cross, claiming that health insurer was trying to stop the sale of the financially troubled hospital.

At the root of the conflict is money: Blue Cross is seeking reimbursement owed for Landmark employees’ health care; Landmark in turn is seeking higher reimbursements for its health services, blaming Blue Cross in large part for its financial difficulties that led to receivership.

Steward Health Care, the for-profit hospital system based in Boston that is owned by a private equity firm, Cerberus Capital Management, plans to participate in the mediation efforts that pertain to them, according to the court-appointed special master Jonathan N. Savage.

Silverstein, voicing concern that Landmark’s purchase by Steward was at a critical stage, and worried about the amount of time required to deal with litigation, ordered the mediation because he believed that it would be better for people to focus their energies on achieving a successful acquisition.

The most recent legal battle had escalated as a result of a war of words between Blue Cross and Landmark on the editorial pages of The Providence Journal, trading barbs. It began when Peter Andruszkiewicz, Blue Cross’s president and CEO, wrote an op-ed published on March 10 in which he voiced opposition to Steward’s legislative efforts to change the law to end the three-year ban on for-profit hospitals purchasing other non-profit hospitals in the Rhode Island market. Officials from Steward and Landmark responded with their own pieces.

Each of the parties had filed lawsuits against the other in Superior Court, but those have been held in abeyance until the conclusion of the Steward’s purchase of Landmark, which in the future will be known as the Blackstone Medical Center.

The proposed sale is currently under review by state officials in the R.I. Department of Health and the R.I. attorney general’s office, under the Hospital Conversions Act.

At a March 9 hearing, Silverstein agreed to changes proposed by Steward in the asset purchase agreement, including the for-profit hospital system’s ability to cut psychiatric and obstetrics services, cut the workforce as necessary by laying off employees not covered by a collective bargaining agreement, and agreements with both Thundermist Health Center and 21st Oncology regarding future health delivery services. Silverstein also set the new date to conclude the purchase as May 2, despite the fact that the state’s review could, under law, go until sometime in July.

“With the ultimate goal to reach a fair and equitable agreement on the open matters, Blue Cross is committed to entering the mediation process in good faith and hopes to find common ground with Landmark and Steward,” said Kim Reingold, Blue Cross spokeswoman.

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