A class-action lawsuit has been filed against Chicago-based Health Care Service Corporation, a Blue Cross Blue Shield insurer, alleging the company has not upheld its nonprofit mission by improperly spending more than $5 billion in profits, according to a Courthouse News report.
As a nonprofit organization, HCSC is obligated to use its profits that are not needed for a financial contingency for the mutual benefit of the company and its members, the policyholders.
The lawsuit alleges HCSC accrued more than $5 billion in profits over the past five years, and instead of using those profits for the mutual benefit of its members, the company used the money to pay exorbitant bonuses HCSC executives and to expand its business operations, according to the report.
The lawsuit further alleges HCSC has continued to raise administrative fee charges for its members even though the company has been very profitable, resulting in $96 million in bonuses being paid to 10 HCSC executives over the past three years, according to the report.
The class-action lawsuit asks the court to find HCSC breached its member contracts by not upholding its nonprofit mission, and it also seeks to recover the excess profits that have been allegedly wrongly distributed, according to the report.
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