Montgomery, Ala.-based Jackson Hospital is suing BCBS Alabama amid the hospital’s bankruptcy proceeding, according to a Feb. 16 filing with the Middle District of Alabama’s U.S. Bankruptcy Court.
According to the filing, BCBS Alabama loaned over $1.5 million to Jackson Hospital through a one-time cash advance in 2023. The hospital agreed to repay the loan through remittance deductions from Oct. 1, 2024, to Jan. 31, 2025, but Jackson Hospital began its bankruptcy case shortly thereafter.
“Despite having actual knowledge of Jackson Hospital’s bankruptcy filing and the resulting automatic stay, Blue Cross, on its own volition and without this court’s approval, nonetheless began to offset Jackson Hospital’s loan obligations,” the complaint said.
The offsets reached $1.4 million, the hospital claimed, beginning in May 2025.
“Throughout the time period in which Blue Cross was impermissibly retaining each of the offsets, Jackson Hospital struggled to remain in operation,” the complaint continued.
In a statement from BCBS Alabama shared with Becker’s, the insurer disputed the hospital’s allegation.
“It is regrettable that the hospital has twisted our gesture of voluntarily providing it with an over $1.5 million cash advance — one of the actions Blue Cross undertook to help Jackson Hospital navigate its financial difficulties,” BCBS Alabama said. “Although Blue Cross had the right under our written agreement to begin recouping our advance to Jackson Hospital in October 2024, we waited another seven months before beginning recoupment at the hospital’s request. Jackson Hospital’s bankruptcy proceedings did not prevent such recoupment. In this case, recoupment occurred with Jackson Hospital’s express agreement and knowledge. To now claim otherwise is inaccurate.”
On Dec. 18, Jackson Hospital filed a separate complaint against BCBS Alabama over its reimbursement rates, seeking damages in excess of $250 million. The payment tensions have been playing out in the local press, as well.
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