BOSTON—A judge ruled Monday against Massachusetts health insurers in a dispute over premiums with state regulators.
In his ruling, Suffolk Superior Court Judge Stephen Neel denied a request from the insurers that the court allow them to continue with planned 2010 rate increases for plans covering small businesses.
Neel said the insurers hadn't exhausted the state's administrative hearing process.
The state Division of Insurance had rejected the bulk of the proposed increases, saying the companies have not justified them and that they exceed the medical inflation rate.
The insurers have argued that the state's decision earlier this month to reject nearly all of their proposed 2010 premium increases will cause "destabilizing" losses.
Blue Cross Blue Shield of Massachusetts, the state's largest private insurer, said in a statement that it remains confident in the merits of its case and is appealing directly to the Division of Insurance.
In the meantime, the insurer said it will use the premium rates in effect a year ago.
"Our goal is for a swift resolution to minimize the confusion for members and customers," the statement said.
Insurers have until the end of the day Thursday to file an appeal to the Division of Insurance. The division then has 15 days to begin a hearing on that appeal.
Gov. Deval Patrick called the decision good news for small businesses and families.
"We appreciate the court acknowledging and supporting the power of the commissioner to take this action, and we very much hope that the insurers and the hospitals and others will work with us on a solution," Patrick said.
During a two-hour hearing last week in Suffolk Superior Court, an attorney for Blue Cross Blue Shield and five members of the Massachusetts Association of Health Plans asked Neel to at least temporarily block the state's decision from taking effect, allowing insurers to proceed with rate increases.
Attorney Dean Richlin had also asked that the companies be allowed to collect the new premiums they had proposed effective April 1 while a trial is held on the matter.
He said that requiring them to collect premiums at April 2009 rates was "grossly unsound" and would create losses of more than $100 million in the next eight months.
But an attorney for the state had asked Neel to dismiss the claim because the insurers did not seek a required administrative hearing before heading to court.
Assistant Attorney General David Guberman said the rejection would not force the insurers to collect at their April 2009 rates, as Richlin said, but instead at their most recent rates. They generally are recalibrated on a monthly or quarterly basis.
The state Division of Insurance rejected 235 of the companies' 274 proposed rate increases for a category including small businesses with up to 50 employees. The insurers were seeking base rate increases from 8 percent to 32 percent.
The rejection came after the governor publicly proclaimed that double-digit premium increases were preventing small businesses from adding jobs and that the state would consider rejecting any rates it deemed "unreasonable."
The debate has political undertones, as Patrick seeks re-election. One of the Democrat's main challengers is Republican Charles Baker, the former president of Harvard Pilgrim Health Care.
"Nothing changes the fact that Deval Patrick has spent three and a half years taxing and spending small businesses into the ground, while failing to implement any solutions that address the underlying causes of skyrocketing health care costs under his watch," he said.
Baker listed a series of proposals to lower health costs, from reforming medical malpractice to increasing the number. of primary care doctors.
Patrick brushed off the criticism.
"Rather than try to play politics it would be great to have him to lend a hand and try to get a solution," Patrick said. "That's what I'm focused on, and I welcome the constructive contributions of any and all, including would-be governors."