Alabama Psychiatric Services Lawsuit Against Blue Cross Blue Shield of Alabama

7/23/2019 Alabama Psychiatric Services Lawsuit Against Blue Cross Blue Shield of Alabama

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IN THE CIRCUIT COURT OF JEFFERSON COUNTY, ALABAMA

MANAGED HEALTH CARE ADMINISTRATION, INC., )

and ALABAMA PSYCHIATRIC SERVICES, P.C. )

))

Plaintiffs, )

) Civil Action No.:

vs. )

) CV-2015-901979.00

BLUE CROSS BLUE SHIELD OF ALABAMA; and )

FICTITIOUS DEFENDANTS A, B, C, D, E, )

F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, )

V, W, X, Y, and Z; )

)

Defendants. )

FIRST AMENDED AND RESTATED COMPLAINT

Plaintiffs, Managed Health Care Administration, Inc. (“MHCA”) and Alabama

Psychiatric Services, P.C. (“APS”), now amend their complaint stating the claims below against

Blue Cross Blue Shield of Alabama (“BCBSAL” or “Defendant”) and Fictitious Defendants A,

B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W, X, Y, and Z. Plaintiffs

specifically limit all claims in this state court action to state law and equitable claims and bring

no claim under federal law.

PARTIES

1. Managed Health Care Administration, Inc. (“MHCA”) is an Alabama corporation with its

principal place of business in Jefferson County, Alabama.

2. Alabama Psychiatric Services, P.C. (“APS”) is an Alabama professional corporation with

its principal place of business in Jefferson County, Alabama.

11/4/2015 11:19 AM01-CV-2015-901979.00CIRCUIT COURT OF

JEFFERSON COUNTY, ALABAMANNE-MARIE ADAMS, CLERK



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3. Blue Cross Blue Shield of Alabama (“BCBSAL”) identifies itself as a domestic non-

profit corporation and in its filings with the Alabama Department of Insurance as a domestic

Health Care Service Plan. At all times relevant hereto, BCBSAL was doing business in Jefferson

County, Alabama.

4. Defendants fictitiously described as A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R,

S, T, U, V, W, X, Y, and Z, are otherwise unknown to Plaintiffs at this time. If their identities

are known to Plaintiffs at this time, their identity as proper party defendants is not known to

Plaintiffs at this time, but their true and correct names will be substituted by amendment when

the aforesaid information is ascertained. Defendant BCBSAL is responsible for the actions or

inactions of the fictitious parties under the doctrines of respondeat superior, joint and several

liability, authority, agency, conspiracy, and/or other doctrines. The fictitious defendants are

responsible for the actions or inactions of Defendants BCBSAL and its agents and employees

under the doctrines of respondeat superior, joint and several liability, authority, agency and/or

other doctrines. The fictitious defendants are also responsible for their own actions or inactions.

JURISDICTION AND VENUE

5. The Court has jurisdiction over BCBSAL because the Defendant does (or has done)

business in the State of Alabama and Jefferson County and has received substantial revenue,

income and profits from its activities conducted within Jefferson County, as well as across the

State of Alabama.

6. Venue in this case is proper in Jefferson County, Alabama, because the Plaintiffs have

their principal places of business here and BCBSAL does substantial business in the County.



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ALLEGATIONS OF FACT

7. BCBSAL, the largest health insurer in Alabama, does not have a preferred provider

network of individual mental health providers. Instead, BCBSAL has utilized MHCA and APS

for over 20 years to manage and provide behavioral health services within Alabama.

8. On Friday, February 13, 2015, APS was forced to close its doors after over thirty years of

providing services to hundreds of thousands of citizens of Alabama. As the Alabama Psychiatric

Physicians Association reported, the closure of APS created shockwaves in the behavioral health

community. Before its closure, APS was a private statewide behavioral health organization with

multiple locations throughout the state. It was the largest statewide psychiatric practice in

Alabama and was owned and operated by practicing physicians. APS operated as the primary

provider for MHCA, a managed behavioral health care company.

9. Prior to its closure, the providers of APS engaged in approximately 17,000 face-to-face

sessions with its patients per month across its 11 statewide offices and intensive out-patient

programs. Over 1,000 new patients per month were entering the APS system. APS employed

approximately 270 employees including approximately 35 psychiatrists, 55 therapists, 7 nurse

practitioners, and 25 psychiatric nurses. Over the years, APS recruited 55 psychiatrists to

Alabama from out-of-state of which 20 were child and adolescent psychiatrists. Many of these

providers were recruited to areas of the state that did not have sufficient availability of

behavioral health providers, including adult psychiatrists and child psychiatrists. In addition,

APS operated specialty programs for chemical dependency, eating disorders, and other

psychiatric disorders occurring in adult and adolescent populations. APS was able to

demonstrate consistently high patient satisfaction relating to the quality of its services and its



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providers. The entire APS behavioral health service delivery structure had been developed over

the course of more than a quarter of a century

10. APS and MHCA had a close long-term relationship with BCBSAL. Over 25 years ago,

the leaders of these companies embarked on a path involving a behavioral health product that

had two missions: to provide efficient, high quality care and to control the spiraling cost of care.

The business model placed the responsibility on the provider to develop, provide, and pay for the

care funded through a payment model called capitation. This form of funding enabled

investments in additional staff, facilities, and programs that met the needs of the patients. In

addition, the providers were accountable to the needs of BCBSAL and its customers. Most

importantly from a clinical perspective, this plan enabled unprecedented access for those seeking

care because there were no co-pays or deductibles for care received in the network.

Consequently, through the delivery of high quality care with unprecedented access to care and

high levels of patient satisfaction, reasonable control of rising costs through added programs and

efficiencies, and added provider accountability, the enrollment grew over the years to over

900,000 members. It was called, by BCBSAL executives, a “pillar of success.”

11. BCBSAL’s behavioral health product was known formally as Expanded Psychiatric

Services (“EPS”). APS first entered into a contract with BCBSAL in 1986 to manage EPS. In

1991, that contract was transferred from APS to MHCA. As a capitated product, BCBSAL

contracted with its members for health insurance, and out of the premiums BCBSAL received,

BCBSAL made a per-month per-member payment to MHCA for EPS. In turn, MHCA arranged

mental health services for these members for that monthly payment, and any leftover amount

was profit to MHCA. MHCA maintained its affiliation with APS and other contracted providers

to provide the full range of clinical services to its capitated customers under the EPS product.



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EPS is a limited provider network that has been managed by MHCA for approximately 26 years.

Both facility and provider contracting, as well as claims payments were provided through

MHCA.

12. At BCBSAL’s insistence, numerous additional APS facilities and providers were added

over the years to enhance services for BCBSAL members. Specifically Joseph Bolen, Jeff

Ingrum, Eddie Harris, and the BCBSAL Marketing Department, insisted that APS add facilities

beyond those operating in the larger metropolitan areas. In doing so, APS expended substantial

resources, including entering into long term leases. In creating these offices, APS was also

required to hire mental health professionals willing to work in these underserved areas and pay

them a salary (rather than on a fee-for-service basis) in order to find qualified professionals.

Because APS was centrally managed and financed, it operated at all levels as one integrated

system, not as 11 stand-alone facilities. While this structure created tremendous efficiencies and

capacity for innovation toward improving behavioral health care, it also created the risk that if

dramatic changes in funding occurred, the system could collapse. In short, the creation and

maintenance of the APS offices was only feasible for MHCA and APS as long as the capitation

agreement between MHCA and BCBSAL existed, and BCBSAL was fully aware of this fact.

13. MHCA also owned and operated a network with 1,400 providers in Alabama and

contiguous counties known as Blue Choice Behavioral Health Networks (“BCBHN”). Through

this network, MHCA provided clinical services to other BCBSAL members whose plans did not

include the EPS capitated product, but rather a fee-for-service benefit plan (i.e. members who

received behavioral health services from a BCBHN provider would be covered by BCBSAL for

a percentage of the cost of the services and would owe the provider a deductible and any costs of

services not covered by their BCBSAL plan).



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14. BCBSAL products accounted for approximately 95% to 100% of APS’s and MHCA’s

revenues.

15. During the time leading up to 2013, BCBSAL decided to change its health insurance

plans insuring thousands of members in Alabama. In doing so, it planned to restructure the

behavioral health care products offered under those plans. In conjunction with BCBSAL’s

projected changes, BCBSAL’s Jeff Ingrum stated that he thought that MHCA needed to begin to

share MHCA financial data with BCBSAL so that MHCA could more fully “tell its story” to

presumably further cement the partnership between MHCA and BCBSAL, including the

possibility of joint venture whereby BCBSAL would have some ownership in the venture. Also,

as explained by Mr. Ingrum and Eddie Harris (also of BCBSAL), this financial data was going to

be used by BCBSAL to help price the products that BCBSAL was going to be placing on the

Health Care Exchange as part of the Affordable Care Act. During these talks, Mr. Ingrum and

Mr. Harris also told MHCA that Griff Docking from New Directions Behavioral Health (“New

Directions”) had been trying to contact Mr. Ingrum to ask for a meeting. New Directions is a

managed behavioral health care company that provides administrative services and operates

similarly to MHCA, but on a regional level. Mr. Ingrum stated that he had not returned Mr.

Docking’s calls.

16. However, later in 2012, MHCA was informed by Jeff Ingrum and Eddie Harris that

MHCA should meet with New Directions to see if there was any sort of business relationship

that could be formed between the two companies. MHCA complied with this request. MHCA

was then informed by Jeff Ingrum and Eddie Harris that BCBSAL would be issuing a Request

for Information (RFI) and that MHCA would be contacted by a consultant that BCBSAL had

hired to conduct the RFI process. MHCA, along with New Directions and a third respondent to



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the RFI, American Behavioral Benefits Managers (ABBM), participated in the RFI. The final

part of the process was a presentation to BCBSAL by each of the participants. Notably, the

presentations by MHCA and ABBM were scheduled more than one month after the presentation

by New Directions. Subsequently, MHCA was informed by Jeff Ingrum and Eddie Harris that

BCBSAL had made the decision to contract with New Directions for all its behavioral health

business. It was later learned that BCBSAL has ownership interest in New Directions and that

BCBSAL had no interest in acquiring ownership of MHCA.

17. Thus, in 2013, BCBSAL formally contracted with New Directions to manage BCBSAL’s

behavioral health products and services pursuant to an Administrative Services Agreement. The

Administrative Services Agreement called for New Directions to build, maintain and actively

manage an Alabama statewide provider network for the purpose of providing covered services to

BCBSAL members. However, BCBSAL and New Directions also specifically agreed that due to

MHCA and APS’s longstanding history of providing health and substance abuse treatment to

BCBSAL members, and because MHCA already had the statewide provider network in place

that it had built for BCBSAL, New Directions would contract with MHCA and use MHCA’s

network and APS for a minimum term of four years to continue to provide services to BCBSAL

members. The arrangement would be memorialized ultimately in a Services and Network

Subdelegation Agreement (“Subdelegation Agreement”).

18. Before the Subdelegation Agreement was finalized and as the terms of the new

arrangement were being negotiated, it was revealed that BCBSAL’s restructuring would mean

that the capitated EPS plan would be cut dramatically. Of course, the EPS plan was largely

responsible for APS’s ability to operate in under-served areas throughout the state and all

BCBSAL members benefitted greatly from it. MHCA and APS analyzed the proposed



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restructuring and projected the negative effect it would have on their businesses and specifically

their revenue. Those projections, which included the anticipated closure of some APS offices if

the revenue shortfalls were realized, were shared during negotiations of the Subdelegation

Agreement. BCBSAL actively participated in all negotiations for that agreement and received

the projections.

19. Throughout those negotiations and in light of the projections, BCBSAL convinced

MHCA and APS to continue their relationship with BCBSAL by representing that the changes

were necessary and were being made to improve and expand the access to care for BCBSAL

members. This representation was of utmost importance because both APS and MHCA are

physician-owned businesses and improving access to affordable quality care has always been

their primary concern. Indeed, they have done everything asked of them by BCBSAL for over

twenty years to ensure BCBSAL members across the state had access to quality behavioral

health care services.

20. Along with the stated goal of improving access to care, the Subdelegation Agreement was

premised on MHCA being provided the means by which it could avoid any APS office closures

or loss of providers as had been projected. Toward that end, BCBSAL, through Mr. Ingrum, Mr.

Harris, and other BCBSAL executives, convinced MHCA and APS that BCBSAL was

committed to working with them financially as BCBSAL transitioned its behavioral health plans.

BCBSAL also acknowledged that the transition would take years, not months, and BCBSAL

proposed the arrangement whereby BCBSAL would cover annually, for at least the initial term

of the Subdelegation Agreement, the projected shortfall in revenue necessary to keep APS

offices open and its providers in place for the benefit of BCBSAL members.



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21. On October 1, 2013, MHCA entered into the Subdelegation Agreement with New

Directions. BCBSAL agreed to pay approved claims to MHCA. BCBSAL agreed to be

responsible for making coverage determinations regarding benefits and MHCA would process

the claims and make payments to providers. BCBSAL also agreed to develop annual value based

payment opportunities, including Goals and a Bonus Structure for MHCA and/or additional

payment mechanisms for MHCA in 2015 and subsequent years, in order to allow MHCA to

recoup anticipated losses of revenues resulting from changes to BCBSAL’s behavioral health

products. MHCA and APS clearly identified the anticipated losses and other effects that would

result from the changes BCBSAL was proposing. In turn, BCBSAL, through Jeff Ingrum, Eddie

Harris, and/or Michael Velezis, promised to provide additional funding to minimize the losses

and other negative effects to MHCA and APS’s business. MHCA and APS agreed to the

business arrangement with BCBSAL and New Directions based on the belief that the

representations made by BCBSAL (identified above) were true. The representations were untrue

and were made with the intent to deceive MHCA and APS. Additionally, MHCA and APS

agreed to the arrangement after asking BCBSAL, through Eddie Harris and/or Michael Velezis,

to provide all material facts, including the underlying reasons and intentions of BCBSAL’s

decision to change the business plan involving MHCA and APS. Had BCBSAL, and specifically

its executives including Eddie Harris and/or Michael Velezis, provided the whole truth, and not

suppressed material information in its communications with MHCA and APS, MHCA and APS

would not have agreed to the business arrangement with BCBSAL and New Directions.

22. In 2014, MHCA actively pursued the development of the annual Value-Based Payment

opportunities, Bonus Structure and additional payment mechanisms for MHCA, as promised by

BCBSAL, and as contemplated by the Subdelegation Agreement. In the Spring of 2014, MHCA



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worked with New Directions to provide budget information for behavioral health services for

2015 and beyond. MHCA met with New Directions to discuss a high performance delivery

system and prepared a PowerPoint to present to BCBSAL in May 2014. MHCA informed New

Directions and BCBSAL that it needed specific information about bonuses and goals by

November 1, 2014 to avoid closing APS offices.

23. MHCA’s subsequent attempts to negotiate the goals, bonus structure and payments to

MHCA for 2015 were met with no meaningful offers or good faith on the part of BCBSAL. At

one point, BCBSAL, and specifically through its executives including Jeff Ingrum, Eddie Harris,

Dow Briggs, and/or Tim Vines, informed MHCA that there was no money for bonuses or goals

in 2015. Dr. Richard Akins of MHCA and APS tried to meet CEO-to-CEO with Terry Kellogg

of BCBSAL in an effort to reach a rational solution that would preserve BCBSAL’s subscribers’

access to behavioral care through APS. Despite the looming public health crisis, BCBSAL

continued to reject MHCA’s proposals. BCBSAL refused to operate in good faith and made no

meaningful counter-offers. The offers that were made were all conditioned on MHCA and APS

executing agreements to release BCBSAL from liability arising from its dealings with MHCA

and APS. Although Terry Kellogg failed to work meaningfully with Dr. Akins during this time,

Mr. Kellogg admitted, nonetheless, that he was aware of all material information and events that

had occurred in the lead up to this point.

24. When informed that liquidation of APS was imminent, rather than continue negotiations,

BCBSAL informed MHCA that it was deferring to its partner, New Directions, and that

BCBSAL’s decision was to provide no additional funding to MHCA. As a result, APS has closed

its doors and was forced to lay off approximately 260 employees amongst its several offices.

BCBSAL’s actions have resulted in substantial financial losses and reputational damage to both



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APS and MHCA. More importantly, the course chosen by BCBSAL has imperiled patients and

has significantly impacted the access to quality behavioral care in the State of Alabama.

25. Notably, the significant changes to benefit plans implemented by BCBSAL meant

patients now have higher co-pays and fewer covered services. Couple that with BCBSAL’s

refusal to live up to its promise to work financially with MHCA and APS to provide funding to

cover revenue shortfalls and the result is a direct contradiction to BCBSAL’s representations

made to induce MHCA and APS to continue its relationship with BCBSAL. As projected at the

outset, BCBSAL’s failure to live up to those representations resulted in the financial turmoil that

led to the closure of APS offices across the state, which in turn resulted in a dramatic reduction

in access to care.

26. While BCBSAL attempts to paint a different picture, the truth is that BCBSAL’s actions

have resulted in not only the closure of eleven APS out-patient offices, but there are now nine

fewer treatment programs for adult chemical dependency, four fewer programs for adult

psychiatric behavioral health disorders, four fewer programs for adolescent disorders, and two

fewer programs for eating disorders in the state of Alabama. Also, there are at least eight

psychiatrists who are no longer available to BCBSAL members because they have moved either

out of the state, to cash-only practices, or to other institutions such as the VA. In addition to

these reductions, there is a growing body of evidence indicating that BCBSAL members are

receiving less care as they decide to forego treatment and medication due to BCBSAL’s decision

to change its plans. Whether BCBSAL believes it or not, there is a real mental health crisis in

Alabama and it can be attributed entirely to BCBSAL’s decision making.



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PLAINTIFFS’ CLAIMS

Fraudulent Misrepresentations and Suppression of Material Facts

27. Plaintiffs re-allege all prior paragraphs of the Complaint as if set out here in full. To the

extent this claim is inconsistent with others, it is pleaded in the alternative.

28. During the course of business and throughout negotiations leading to the consummation

of the Subdelegation Agreement (and specifically from December, 2012 through October, 2013),

BCBSAL induced MHCA and APS to enter into the arrangement with BCBSAL and New

Directions by making misrepresentations and suppressing material facts as described above and

including, but not limited to, the following:

a. BCBSAL, through Jeff Ingrum, Eddie Harris, and/or Michael Velezis, misrepresented

that it was restructuring its behavioral health services products in an effort to provide

better services and access to care for its members, who were MHCA and APS’s patients.

Instead, BCBSAL’s primary reason for restructuring its behavioral health services

products was to increase its own profit at the expense of and to the detriment of its

members, and to ultimately dismantle the statewide provider network MHCA and APS

had created. BCBSAL, and specifically its executives including Jeff Ingrum, Eddie

Harris, and/or Michael Velezis, suppressed this information from MHCA and APS;

b. BCBSAL, through Jeff Ingrum, Eddie Harris, and/or Mary Smith, misrepresented that

confidential and proprietary information was needed from MHCA and APS for the

purpose of developing a business model that included BCBSAL, New Directions, and

MHCA working as partners. This representation was untrue, in part, because BCBSAL

used the confidential and proprietary information to unilaterally change the benefit plans

offered to BCBSAL members to eliminate a capitation plan for behavioral health



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services. As a result, BCBSAL eliminated a substantial portion of the revenue stream

MCHA used to maintain the statewide network of providers it had created at BCBSAL’s

insistence. BCBSAL, and specifically its executives including Jeff Ingrum, Eddie Harris,

and/or Mary Smith, suppressed this material information from MHCA and APS;

c. BCBSAL, through Jeff Ingrum, Eddie Harris, and/or Mary Smith, misrepresented that it

needed MHCA to provide confidential and proprietary information to New Directions so

that a business plan could be constructed in which MHCA and APS’s relationship with

BCBSAL would remain intact. The representation was untrue, in part, because

BCBSAL’s true intention was to put a business model in place that would significantly

undermine MHCA and APS’s ability to conduct their business and provide care for

patients, and to dismantle the statewide network of behavioral health services providers

MHCA and APS had created. BCBSAL, and specifically its executives including Jeff

Ingrum, Eddie Harris, and/or Mary Smith, suppressed this material information from

MHCA and APS;

d.

BCBSAL, through Jeff Ingrum, Eddie Harris, Becky Patterson, Jason Rocks, and/or Ross

Bartee, misrepresented that the costs associated with the EPS capitation plan were higher

than a fee-for-services model due to “out-of-network leakage” and this fact necessitated a

change to the business model as it existed prior to New Directions entering the picture.

The representation was untrue, in part, because “out-of-network leakage” had not

occurred to the degree BCBSAL indicated and was not a material reason for BCBSAL’s

decision to drastically reduce or eliminate the capitation plan offered to its members.

BCBSAL, and specifically its executives including Jeff Ingrum, Eddie Harris, Becky



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Patterson, and/or Ross Bartee, suppressed the true reasons for making changes to its

behavioral healthcare products;

e. When New Directions informed MHCA and APS that BCBSAL had decided to reduce

by half the number of members enrolled in the EPS capitation plan, MHCA explained

that the financial losses associated with this type of cut to the EPS program must be

addressed because a number of programs would not survive. MHCA asked how

BCBSAL planned to address this concern and BCBSAL, through Jeff Ingrum, Eddie

Harris, and/or Michael Velezis, responded with misrepresentations explaining that under

the arrangement with New Directions and MHCA, BCBSAL planned to develop annual

Value-Based Payment opportunities and a Bonus Structure for MHCA and/or additional

payment mechanisms to allow MHCA to recoup losses of revenues resulting from

changes to BCBSAL’s behavioral health products. The representation was untrue, in part,

because BCBSAL had no intention of developing such payment opportunities, bonus

structure or payment mechanisms for any year other than 2014. BCBSAL, and

specifically its executives including Jeff Ingrum, Eddie Harris, and/or Michael Velezis,

suppressed these material facts from MHCA and APS;

f. BCBSAL, through Jeff Ingrum and/or Eddie Harris, misrepresented that it had no interest

in the control or management of New Directions. This representation was untrue because

BCBSAL did have an ownership interest in New Directions. BCBSAL, and specifically

its executives including Jeff Ingrum and/or Eddie Harris, suppressed the true nature of its

relationship with New Directions from MHCA and APS;

g. BCBSAL, through Jeff Ingrum, Eddie Harris, and/or Mary Smith, misrepresented that it

was considering acquiring an ownership interest in MHCA and/or APS and in doing so



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gained access to MHCA and APS’s confidential and proprietary information. The

representation was untrue, in part, because BCBSAL had no interest in acquiring an

ownership interest in MHCA and, instead intended to dismantle the provider network and

business model MHCA and APS had created to benefit itself as an owner of New

Directions. BCBSAL, and specifically its executives including Jeff Ingrum, Eddie Harris,

and/or Mary Smith, suppressed BCBSAL’s true intentions from MHCA and APS;

h. BCBSAL, through Jeff Ingrum, Eddie Harris, Ross Bartee, and/or Deborah Miller,

misrepresented that its customers were demanding fee-for-service plans rather than the

EPS capitation plan. This representation was untrue, in part, because overall customer

satisfaction with EPS was extremely high and no such demand existed; and/or

i. BCBSAL, through Jeff Ingrum and/or Eddie Harris, misrepresented that the arrangement

with New Directions was necessitated by the enactment of the Affordable Care Act. This

representation was untrue, in part, because there was no such necessity created by the

Affordable Care Act and BCBSAL’s true intention was to put a business model in place

that would cost its BCBSAL’s members substantially more money while providing less

benefits through plans with higher co-payments and deductibles, and generate more

profits for BCBSAL. BCBSAL, and specifically its executives including Jeff Ingrum

and/or Eddie Harris, suppressed these material facts from MHCA and APS.

29. Unless otherwise stated, BCBSAL, through its executives, made the misrepresentations

and suppressed material facts identified above in the period between December, 2012 and

October, 2013. The fraudulent conduct was committed, in part, at BCBSAL’s headquarters,

during telephone conversations, and in meetings with the Plaintiffs, including those held at the

offices of BCBSAL and Plaintiffs.



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Fraudulent Misrepresentations

30. BCBSAL committed actionable fraud by making misrepresentations to the Plaintiffs. The

above representations were material and false, and were deliberately, negligently or recklessly

presented to Plaintiffs by BCBSAL with full knowledge of their falsity and/or with reckless

disregard as to their truth or falsity.

31. The above representations were made by BCBSAL’s employees, representatives, and/or

agents while acting within the line and scope of their agency with BCBSAL.

32. Plaintiffs entered into the business arrangement with BCBSAL as described above based

on the negligent, reckless and/or intentional material representations made by BCBSAL and its

employees, representatives, and/or agents as stated above. These representations were false, and

at the time they were made BCBSAL did not intend to do what was promised and, in fact,

intended to deceive Plaintiffs.

33. Plaintiffs reasonably relied on the representations made by BCBSAL and its employees,

representatives, and/or agents in deciding to enter into and/or continue the business arrangement

with BCBSAL as described above.

34. As a proximate consequence of BCBSAL’s fraudulent conduct described above,

Plaintiffs were injured and damaged as described above.

35. Plaintiffs demand judgment against BCBSAL for compensatory and punitive damages

caused by BCBSAL’s fraudulent misrepresentations, plus prejudgment interest and costs.

Fraudulent Suppression

36. BCBSAL also committed actionable fraud by suppressing material facts from the

Plaintiffs.



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37. At the aforesaid times and places as described above, BCBSAL and its employees,

representatives, and/or agents had a duty to disclose, but fraudulently failed to disclose to

Plaintiffs the material information identified above. The duty to disclose arose from the fact of

the parties’ relationship that spanned over 25 years. The duty also arose from the fact BCBSAL

voluntarily undertook to provide material information to Plaintiffs, but failed to provide

complete and truthful renditions of the facts, instead providing only half-truths or

misrepresentations in an effort to deceive Plaintiffs. The duty to disclose also arose from the fact

Plaintiffs asked specific questions about the matters at issue and BCBSAL offered in response

only incomplete or untruthful answers as described above.

38. Plaintiffs reasonably relied on BCBSAL and its employees, representatives, and/or agents

to tell the truth and the whole truth in its dealings with Plaintiffs.

39. As a proximate consequence of BCBSAL’s fraudulent conduct described above,

including its failure to disclose material facts, Plaintiffs were injured and damaged as described

above.

40.

Plaintiffs demand judgment against BCBSAL for compensatory and punitive damages

caused by BCBSAL’s fraudulent suppression of material fact, plus prejudgment interest and

costs.

Breach of Implied Contract



42. In obtaining MHCA’s and APS’s consent to maintain and operate their provider networks

and to provide quality behavioral heath care services for the benefit of BCBSAL members in a

manner dictated by BCBSAL, BCBSAL impliedly agreed to fairly compensate Plaintiffs and to



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provide funding to minimize the losses and other negative effects to MHCA and APS’s business

resulting from BCBSAL’s decision to change its behavioral health care products and benefit

plans. BCBSAL also impliedly agreed to compensate Plaintiffs for their disclosure of

confidential and proprietary information relative to the creation, management, administration and

control of their provider networks. The agreement was supported by consideration in the form of

MHCA and APS’s expenditures of money, time and resources. Specifically, MHCA and APS

continued to provide and manage their provider networks in the manner chosen and dictated by

BCBSAL and provided all information requested by BCBSAL. During its performance of the

implied agreements, BCBSAL failed to act in good faith and to deal fairly by evading the spirit

of the transaction and by refusing to develop annual Value-Based Payment opportunities and a

Bonus Structure for MHCA and/or additional payment mechanisms for MHCA, in order to allow

MHCA to recoup losses of revenues resulting from changes to BCBSAL’s behavioral health

products. Moreover, by engaging in the misleading and deceptive practices described herein

BCBSAL has successfully taken advantage of Plaintiffs

43.

The Plaintiffs fully performed their obligations owed to BCBSAL.

44. Defendant BCBSAL breached the agreements.

45. As a proximate consequence of said breaches, Plaintiffs have been damaged and have

incurred losses.

46. Plaintiffs demand judgment against BCBSAL for compensatory damages, plus

prejudgment interest and costs.

Promissory Estoppel





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48. BCBSAL made promises to the Plaintiffs and in so doing reasonably expected to induce

action or forebearance of definite and substantial character on the part of the Plaintiffs.

49. BCBSAL’s promises did, in fact, induce action or forebearance on the part of the

Plaintiffs.

50. The Plaintiffs detrimentally relied on the promises made by BCBSAL.

51. Specifically, the Plaintiffs incurred substantial costs in developing and maintaining

behavioral health service facilities in underserved areas for the benefit of BCBSAL and its

subscribers. Those facilities were not sustainable on a stand-alone basis and could be operated

only within system that included a number of facilities state-wide. The Plaintiffs built the

statewide system and network at the request and demand of BCBSAL, and based on BCBSAL’s

promise that its relationship with the Plaintiffs would be maintained in a manner that would

justify the costs incurred by the Plaintiffs, and that would allow recoupment of those costs.

52. Additionally, after BCBSAL decided to change its behavioral health care products and

services as described above, BCBSAL knew the effect the changes would have on the Plaintiffs

and promised to annually develop Value-Based Payment opportunities and a Bonus Structure for

MHCA and/or additional payment mechanisms for MHCA and APS, in order to allow MHCA

and APS to recoup losses of revenues resulting from changes to BCBSAL’s behavioral health

products. MHCA and APS continued to provide and manage their provider networks based on

the promise of BCBSAL. BCBSAL breached its promise and as a result Plaintiffs incurred

substantial losses.

53. Injustice can only be avoided by enforcement of the promises made by BCBSAL.

54. Plaintiffs demand judgment and/or relief for all losses derived from the breach of

BCBSAL’s promises, plus prejudgment interest and costs.



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Fictitious Defendants

55. To the extent the following allegations and claims of liability conflict with other portions

of the Complaint, the following is pleaded in the alternative. All of the relevant foregoing

paragraphs and factual allegations made throughout the Complaint are incorporated by reference

to the following section. In addition to the facts alleged throughout the Complaint, the following

factual allegations serve as additional basis for Plaintiffs’ claims against Fictitious Defendants A,

B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W, X, Y, and Z:

56. There may be other entities whose true names and identities are unknown to Plaintiffs at

this time who may be legally responsible for the claim(s) set forth herein. These Defendants

described as “Fictitious” may be added by amendment by Plaintiffs when their true names and

identities are discovered. Until that time, Plaintiffs designate these parties in accordance with

Rule 9 (h) of the Alabama Rules of Civil Procedure. The word “entity” as used herein is intended

to refer to and include all legal entities, including individual persons, any and all forms of

partnerships, and any and all types of corporations and unincorporated associations. The symbol

by which these party defendants are designated is intended to include more than one entity in the

event that discovery reveals that the descriptive characterization of the symbol applies to more

than one “entity”. In the present action, the party Defendants which Plaintiffs must include by

descriptive characterization are as follows:

a. Defendants “A”, “B”, “C”, and “D” are those individuals or corporations,

whether singular or plural, being that person, firm, entity, alter ego or the

predecessor or successor in interest to any other Defendant, including thatnamed above as Blue Cross Blue Shield of Alabama;

b. Defendants “E”, “F”, “G”, and “H” are those individuals or corporations

whether singular or plural, being that person, firm or entity who was the principal of any of the named or above described Defendant and/or who is

vicariously liable for the acts and omissions of the named Defendant;



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c. Defendants “I”, “J”, and “K” are those individuals or corporations,

whether singular or plural, being that person, firm or entity who conspiredwith the named defendants (and/or others) to commit the unlawful and

wrongful conduct alleged in this Complaint, and/or who contributed in any

way to cause the damages and injuries of which Plaintiffs complain;

d. Defendants “L”, “M” and “N” are those individuals or corporations,

whether singular or plural, being that person, firm, or entity who violated

state law and from whom Plaintiffs are rightfully entitled to remedy andrecovery under such laws or regulations;

e. Defendants “O”, “P” and “Q” are those individuals or corporations,whether singular or plural, being that person, firm, or entity whose

fraudulent acts caused Plaintiffs’ injuries and damages complained of

herein and/or contributed to Plaintiffs’ injuries and damages complainedof herein;

f. Defendants “R”, “S” and “T” are those individuals or corporations,

whether singular or plural, being that person, firm, or entity whose breachof duty caused Plaintiffs’ injuries and damages complained of herein

and/or contributed to Plaintiffs’ injuries and damages complained of

herein;

g. Defendants “U”, “V” and “W” are those individuals or corporations,

whether singular or plural, being that person, firm, or entity who conspiredwith the Defendant to cause Plaintiffs’ injuries and damages complained

of herein and/or contributed to Plaintiffs’ injuries and damagescomplained of herein; and

h. Defendants “X”, “Y” and “Z” are those individuals or corporations,whether singular or plural, being that person, firm, or entity who were

unjustly enriched at the expense of Plaintiff and/or whose breach of

contract caused Plaintiffs’ injuries and damages complained of herein

and/or contributed to Plaintiffs’ injuries and damages complained ofherein;

DEMAND FOR RELIEF

57. WHEREFORE, premises considered, Plaintiffs respectfully demand judgment against

BCBSAL and fictitious defendants for compensatory and punitive damages in amounts to

determined by a jury, as well as any all other relief or recovery to which Plaintiffs may be

entitled.



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58. The loss and damages suffered by Plaintiffs were caused by each of the Defendants’

wrongdoing. The Defendants are jointly and severally liable for the damages caused.

59. Plaintiffs have tried in good faith, but unsuccessfully, to resolve their disputes with the

Defendants prior to resorting to litigation.

Plaintiffs demand a trial by struck jury.

Respectfully submitted,

s/ Michael Yancey .P. Michael Yancey (YAN006)

J. Matthew Stephens ( STE153)Rodney E. Miller (MIL126)

MCCALLUM, METHVIN & TERRELL, P.C. 2201 Arlington Avenue South

Birmingham, Alabama 35205

Telephone: (205) 939-0199Facsimile: (205) 939-0399

CERTIFICATE OF SERVICE

I hereby certify that on this day, November 4, 2015, I electronically filed the foregoing pleading with the Clerk of the Court using the AlaFile system, which will send notification of

such filing to the following:

Cavender C. Kimble, Esq.Thomas R. DeBray, Jr., Esq.

BALCH & BINGHAM, LLP

1901 6th Avenue North, Suite 1500Birmingham, Alabama 35203

Telephone: (205) 251-8100

(Attorneys for Blue Cross Blue Shield of Alabama)

/s / Michael Yancey .

OF COUNSEL

Alabama Psychiatric Services Lawsuit Against Blue Cross Blue Shield of Alabama

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