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Lawsuit between New Jersey hospital, insurer moves forward

Contracts are at the heart of many business operations in New Jersey. Two parties often form a contract together that provides them both with some sort of benefit. This can help them grow a successful business venture. However, sometimes contract disputes arise, leading to litigation.

A Middlesex County judge has allowed a lawsuit brought by St. Peter's University Hospital against Horizon Blue Cross Blue Shield of New Jersey to continue, after dismissing several motions filed by the hospital alleging fraud and unfair competition, but not dismissing the lawsuit as a whole, as requested by the insurer. The judge determined that the insurer did not deceive its consumers, but that there was a viable contract claim.

The hospital filed the lawsuit against the insurer after the insurer instigated a new health plan that created two tiers for New Jersey hospitals. Tier 1 included certain health care facilities as well as New Jersey's biggest doctor's group. Individuals who seek treatment under a Tier 1 facility pay only a small copay or no copay at all. Tier 2 facilities have expressed concerns that such a designation would make it less likely that patients will seek care at their facilities.

St. Peter's University Hospital was designated as a Tier 2 facility, but seeks Tier 1 status. They argue that their contract supports their inclusion into Tier 1. They claim their contract states that if separate tiers are established, it must be done based on certain objective factors, and if they meet these factors they can participate. Moreover, they claim their contract grants them prior written notice to challenge the insurer's designation of their facility into any certain tier.

The court rejected the insurer's argument that the contract should be interpreted in a way that allows it to establish whatever criteria it chooses when deciding what Tier a hospital should be in. The court found the hospital could continue to seek specific performance to be included in Tier 1. The case will continue on to the discovery phase.

Disputes involving contractual interpretation can arise between any two business entities. Businesses who have differing opinions on how to interpret a contract may need to seek legal advice.

Source: NJBIZ, "Judge allows St. Peter's case against Horizon to proceed," Anjalee Khemlani, May 7, 2016

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