Blue Cross Blue Shield argues state investigation should be halted

Jordan Hansen | Daily Montanan

Blue Cross Blue Shield fought this week in Lewis and Clark County District Court to stop the Montana Commissioner of Securities and Insurance from moving ahead with an investigation into a massive data breach, affecting more than 460,000 Montanans. 

Montana’s largest insurance carrier told Judge Christopher Abbott the process has been stacked against it and it hasn’t been able to properly defend itself.

Meanwhile, attorneys for Commissioner James Brown told the judge the administrative process hasn’t played out and it’s unclear if a 2025 Legislative session regarding data breaches will be retroactive to an incident involving Conduent, a third-party contractor of Blue Cross Blue Shield, which was reported in January of last year. The state is still in the process of gathering facts about the breach, lawyers for the state said.

That’s why the state wants the investigative process to play out, attorney Jack Connors said, adding the process would answer those questions. There’s also an option for judicial review under the Montana Administrative Procedure Act, which the state says applies in this case and the state is seeking dismissal of the lawsuit.

“As a matter of basic administrative law, a party must exhaust all available administrative remedies before turning to a court for relief,” the state’s request for dismissal says. “The Montana Supreme Court has held that compliance with the provisions of MAPA is mandatory.”

The hearing came as a step by the state to investigate when the breach occurred, why it took until October for the company to fully report the issue and when those impacted were told their data was compromised.

“Commissioner Brown opened the investigation of BCBSMT and the Conduent data breach for multiple reasons: (a) to help educate the public about data breaches, (2) to improve the regulation of insurance companies to prevent future breaches, and (3) to potentially impose a fine against BCBSMT if the facts establish a violation and if the Commissioner finds that imposing a fine is in the public interest,” court documents submitted by the state say.

Lawyers for the state did say Brown, “wasn’t going to stick it to the largest health insurance provider in Montana.”

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