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Blue Shield and Monarch in breach of contract dispute

Mergers and business acquisitions often involve a host of complicated issues that are not necessarily easily resolved. That may in turn lead to business litigation, such as a breach of contract dispute. Indeed, that appears to be what happened after the recent acquisition of Monarch HealthCare by UnitedHealth Group in November 2011.

Before the acquisition, Monarch had a contract with Blue Shield of California through which it offered services to a little more than 19,000 of Blue Shield’s customers in Orange County. According to Blue Shield, the sale of Monarch to UnitedHealth Group violated a provision of their contract. Blue Shield subsequently notified Monarch that the contract would be terminated effective May 1.

In the meantime, Monarch is supposed to be continuing to provide services to Blue Shield’s customers, but Blue Shield claims this did not happen in many instances. Instead, it says that its customers have been turned away from their doctor, and that Monarch has additionally been advertising to its Medicare patients. It is seeking $10.5 million in damages for Monarch allegedly violating its contractual obligations.

Sifting through breach of contract cases is often a difficult and time-consuming task, and this case may be no different. Monarch is denying any wrongdoing, and has stated that it is not aware of any instances where a physician affiliated with Monarch denied care to a Blue Shield member. On Feb. 27, Blue Shield of California requested binding arbitration of the dispute to settle the back and forth allegations. By requesting arbitration, it may be possible to settle the matter as quickly and cheaply as possible.

Source: The Orange County Register, “Blue Shield sues Monarch Health over contract,” Courtney Perkes, Feb. 29, 2012

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