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BC/BS being sued for $60M

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Craighead and her company began a contract with BlueCross in 1988 to provide services for those insured by BlueCross, and the two worked together under that contract for 10 years.

Kids and Nurses provided packaged services to those insured with BlueCross and billed for those services with specific flat rates either per diem or per hour. After the establishment of TennCare, the services provided to the insured by Kids and Nurses was paid for by the State Children’s Plan.

According to the complaint, “although being paid by the state to provide those services, (BlueCross) was avoiding having to actually secure those medical services.”

In 1996, the complaint states that the two companies entered into a “form contract” of a home health care agency, as was reportedly insisted by BlueCross. Although Kids and Nurses was not a home health care agency, they entered into the contract anyway.

When BlueCross began to see the cost of providing care for children under Kids and Nurses, due to their special medical conditions, the complaint alleges that BlueCross realized “it would be financially beneficial to eliminate that cost either by driving Kids and Nurses Inc., out of business and thus unavailable for the services or forcing those insureds to transfer to another MCO (managed care organization) or a combination of the two.”

BlueCross reported Kids and Nurses for Medicaid fraud due to their billing practices of sending bills for nursing services as a packaged deal as it had done since the company was founded. Craighead and her attorneys allege that BlueCross’ fraud accusations began a criminal investigation and that the insurance company “provided slanted information and incomplete information about the course of dealing between the parties or the contract of the parties.”

They also claim that BlueCross “blatantly ignored the contract” between the two parties and used the investigation into Kids and Nurses as a “shield and an excuse to not comply with the contract.”

Gary C. Shockley of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC in Nashville, who is representing BlueCross, said they intend to prove that the insurance company did not breach contract with Kids and Nurses.

Shockley also said that BlueCross had the “undisputed right” to terminate its contract with Kids and Nurses Inc. and said that although Craighead was paid $1 million when she sold her business, “she wants millions more today.”

“I think you’ll find that BlueCross/BlueShield kept its promises,” Shockley told the jury Monday afternoon in his opening statements.

During the investigation, Craighead looked within her own company to determine if there was anything that needed to be corrected about its practices. Also, in 1996 and 1997, BlueCross was said to have stifled the cash flow of Kids and Nurses, leaving them in dire financial straits.

Another company offered to buy Craighead’s business for a reported $8 million, but due to the criminal investigation, poor financial conditions and the actions of BlueCross, Craighead claims it was directly responsible for her company being sold for only $1 million.

Craighead herself was tried on 36 counts of alleged TennCare fraud in Chattanooga and acquitted of all counts. However, the complaint states that during the five years of the criminal investigation and sale of her company, Craighead suffered emotional and financial ruin.

The lawsuit claims that BlueCross’ actions prompted the criminal investigation in an effort to avoid paying for services that were already purchased under the contract with Kids and Nurses.

Craighead is seeking compensatory damages in the amount of $10,040,083.56 and punitive damages in the amount of $50 million for damages suffered by her and Kids and Nurses Inc., during the criminal investigation and “emotional stress and agony” of her criminal investigation and trial costs.

Staff Writer Patrick Hall may be contacted at

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