Health Care In The States

Highmark Files Suit Against West Penn Allegheny In Pittsburgh

By Erika Beras, WESA

October 4th, 2012, 4:04 PM

The Pennsylvania insurer Highmark has filed suit in the Allegheny County Court of Common Pleas to prevent West Penn Allegheny Health System from forming alliances with other entities.

Last year, Highmark said it was purchasing the financially struggling hospital system. Last week, West Penn Allegheny announced it was breaking ties with Highmark and searching for other fiscal partners, because the insurer wanted the health care provider to file for bankruptcy, which they said amounted to a breach of contract.

Michael Weinstein, spokesperson for Highmark, said that’s not true.

“Highmark categorically denies the West Penn Allegheny Health System claim that that Highmark has breached the affiliation agreement. Highmark urges WPAHS to change its position and work cooperatively to move forward with the proposed affiliation,” he said.

West Penn Allegheny officials said they are keeping the $200 million in loans Highmark had given the system. They did not return calls on Tuesday.

The suit filed Monday reads in part, “In a flight from reality WPAHS has chosen to take over $200 million of Highmark’s money and the expectations of an entire community and negotiate in good faith and exclusively with Highmark,” and “The only reason WPAHS has been able to avoid default of its debt and other obligations is by virtue of the financial infusions it has received from Highmark.”

Stephen Foreman, an associate professor of health administration at Robert Morris University, said he was shocked at West Penn Allegheny’s announcement to pull out of the deal. It was a partnership that many saw as the health system’s last chance at survival – and even a step towards becoming a rival to local juggernaut UPMC.

“Without another affiliation I don’t see how West Penn Allegheny manages to avoid a restructuring, a bankruptcy restructuring,” he said.

Pennsylvania Insurance Commissioner Michael Consedine said he urges the companies to work together and that Highmark’s initial filing is still pending before the department.

In the meantime, Pennsylvania Gov. Tom Corbett reacted to the conflict by calling on the two sides to work out their differences. “My primary focus is ensuring broad health care access for all the citizens of Western Pennsylvania. Both Highmark and West Penn are important to the Pittsburgh community. The citizens they both serve and the jobs involved must be the highest priority. I am asking both Highmark and West Penn to end the rhetoric, work together and see if there is an amicable way to move forward. We need health care choice and competition in Western Pennsylvania,” said Corbett.

This story is part of a reporting partnership that includes WESA, NPR and Kaiser Health News.

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