The Department of Insurance has called a hearing where Blue Cross will have to explain why it denied thousands of claims.
Patients, doctors and hospitals were stuck with the bill for thousands of emergency room visits the insurer should have paid for.
Paperwork filed by the state Department of Insurance states Blue Cross was "not in compliance" with a law that requires insurers to pay for reasonable emergency room visits. It also claims that internal Blue Cross memos show the company knew it was breaking the law.
"They were aware that they were having problems with it. They were aware they were out of compliance and they willfully decided to stay out of compliance for five years," said Chrissy Pearson of the state Department of Insurance.
"It was always our intent to fully comply with the law. Obviously, the execution was flawed, but we disagree strongly with any implication this was anything other than an inadvertent error," said Mike Stinneford of Blue Cross.
A spokesman pointed out that it was Blue Cross that told the insurance department about the violations.
The company has since paid 140,000 claims at a cost of $17 million. Blue Cross blames many of the unpaid claims on a system problem that has been corrected.
Blue Cross and the Department of Insurance could agree on a settlement when the agencies meet at a conference next month.
If that does not happen, the issue will be settled at a hearing in front of insurance Commissioner Jim Long in December.
The Department of Insurance could fine the insurer up to $180 million at the December hearing.