Judge approves North Carolina’s transition to Aetna for state employee health insurance agreement

In a recent legal battle involving two health insurance companies vying to manage North Carolina’s public employee benefits plan, a judge confirmed on Monday that the plan’s board acted appropriately in choosing to switch to Aetna and part ways with long-time administrator Blue Cross and Blue Shield of North Carolina. The contract expenses, which include health care claims, surpass $3 billion per year. Blue Cross has been administering the State Health Plan for more than 40 years, managing healthcare expenses for hundreds of thousands of state employees, teachers, their families, and retirees by handling claim payments and developing a provider network. After a competitive bidding process, the plan’s trustee board decided in December 2022 to grant the initial three-year contract to Aetna over Blue Cross and a division of United Healthcare.
Blue Cross contested the decision, alleging that the State Health Plan had made errors in the contract award process, deeming it oversimplified and capricious. However, Administrative Law Judge Melissa Owens Lassiter, who presided over the case in February, ruled on Monday that Blue Cross had not proven that the plan’s leaders had acted wrongly or deviated from proper procedures. Lassiter stated in her decision that the evidence showed the plan had conducted the procurement diligently, fairly, and in good faith, within its discretion, supporting the trustee board’s choice to award the contract to Aetna. It remains unknown whether the ruling will be challenged in Superior Court.
Blue Cross expressed disappointment in the ruling but acknowledged that the court had considered the significant concerns they had raised about the State Health Plan’s request for proposal process. The company affirmed its commitment to delivering top-notch service to teachers, public safety officers, and state employees as per the current contract. State Treasurer Dale Folwell, the trustee board chairman, commended the ruling, highlighting that the State Health Plan had executed a well-thought-out, high-integrity procurement process for third-party administrative services. Aetna North Carolina market president Jim Bostian mentioned that hundreds of its employees had been diligently working to implement the contract on schedule, arguing in court that transitioning to Aetna was in the best interests of the State Health Plan and its members.