Jackson Hospital filed a lawsuit on Thursday against Blue Cross and Blue Shield over alleged “unfair reimbursement rates.”
An attorney representing the financially-ailing hospital said they were in “immediate and serious danger of closing” if a judge doesn’t force the insurance company to act in “good faith and fair dealing” on rates.
Chase Potter, an attorney representing Jackson Hospital, said in the lawsuit that “despite admitting that it is paying much higher reimbursement rates to a similarly situated hospital in Montgomery, Alabama (i.e., Baptist), Blue Cross Alabama has nonetheless refused to provide any reasonable justification for this persistent and substantial rate disparity. Blue Cross Alabama informed Jackson Hospital that the low and discriminatory proposed reimbursement rates for 2026 are Blue Cross Alabama’s “best and final” rates for Jackson Hospital.”
“In addition to Blue Cross Alabama’s complete control over the “negotiated” changes to the yearly reimbursement rates, the Contracts reflect Blue Cross Alabama’s desired power to trap Jackson Hospital in a never-ending cycle of being subject to Blue Cross Alabama’s unilateral imposition of unfair reimbursement rates. Indeed, both of the Contracts purport to prohibit Jackson Hospital from entering into an agreement with any other payor if the “basis” for such agreement is the payment rates (i.e., unfair, discriminatory reimbursement rates) “developed by” Blue Cross Alabama. Blue Cross Alabama’s breaches of the implied duty of good faith and fair dealing in performing under the Contracts (including, but not limited to, Blue Cross Alabama’s failure to negotiate yearly reimbursement rates paid to Jackson Hospital) have caused significant harm to Jackson Hospital. As a result of Blue Cross Alabama’s refusal to perform under the Contracts in good faith, Jackson Hospital has suffered—and continues to suffer—millions of dollars in damages. Jackson Hospital seeks such damages from Blue Cross Alabama,” Potter said. “Moreover, if Blue Cross Alabama is not immediately required to abide by the implied duty of good faith and fair dealing in the performance of the Contracts, Jackson Hospital is in immediate and serious danger of being forced to close its doors and no longer provide essential care to the residents of Montgomery, Alabama. Jackson Hospital therefore seeks mandatory injunctive relief requiring Blue Cross Alabama to comply with basic contractual obligations under Alabama law. The specific injunctive relief being sought by Jackson Hospital is outlined in the separate Emergency Motion for Temporary Restraining Order and Preliminary Injunction being filed by Jackson Hospital, which is incorporated herein by reference.”
Sophie Martin, a spokesperson for Blue Cross and Blue Shield of Alabama said in a statement, “At the close of business day on Thursday, December 18, 2025, Blue Cross and Blue Shield of Alabama received a complaint filed on behalf of Jackson Hospital in Montgomery.”
“From the start, Blue Cross has negotiated with Jackson Hospital in good faith and has repeatedly increased Jackson Hospital’s reimbursement rates in recognition of its financial difficulties. Jackson Hospital is more than fairly compensated by Blue Cross for the services it offers. Although Blue Cross customers make up only 25% of the patients that Jackson Hospital treats, Jackson Hospital's Texas lawyers seek Blue Cross customers to pay for the hospital's mismanagement,” Martin said. “Contrary to the misinformation contained in the complaint, Blue Cross and Blue Shield of Alabama is a tax-paying not for profit health plan. It is - and has been for many decades - one of the most efficient health insurance companies in the country paying out more than 90% of every premium dollar to hospitals and other healthcare providers. Our personnel costs - salaries and all benefits for our more than 3,000 Alabama-based employees - are less than 4% of our revenue. In the past five years Blue Cross has paid more than $400 million in taxes into the Alabama General Fund. We know this is a challenging environment for both patients and healthcare providers. The cost of healthcare - what providers charge, including Jackson Hospital, continues to rise rapidly each year. We are obligated to our premium paying employers and families to provide high-quality, cost-effective healthcare. We know our members come to us by choice and we don’t take that for granted.”
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