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BCBS Antitrust Suit Appeal Rejected

Analysis  |  By John Commins  
   December 13, 2018

Plaintiffs in the class-action suit allege that the nation's 36 Blue Cross Blue Shield companies have entered non-compete clauses that result in higher premiums and less choice for consumers.

A federal appeals court has upheld a ruling that agreements among Blue Cross Blue Shield companies across the nation to carve out markets and limit competition can be reviewed as inherent violations of the Sherman Anti-Trust Act.

In a one-page memorandum issued Wednesday, the 11th U.S. Circuit Court of Appeals sided with U.S. District Judge David R. Proctor, who last April ruled that the healthcare consumers who filed the suit against the Blue Cross Blue Shield companies "have presented evidence of an aggregation of competitive restraints…which, considered together, constitute a per se violation of the Sherman Act."

The plaintiffs, who include a class of BCBS customers, allege that the 36 Blue Cross Blue Shield companies have entered non-compete pacts that allocates the markets in which they sell health insurance and caps the amount of unbranded health insurance they offer.

The suit, filed nearly six years ago, claims that the pact artificially inflates premiums and decreased consumer choice for health insurance.

Blue Cross Blue Shield Association General Counsel Scott Nehs said this week's ruling denying the insurers' appeal "was not unexpected, as pre-trial appeals are rare."

"This is another step in a very long process and we look forward to continuing to defend our case in the U.S. District court. We remain confident that we will ultimately prevail," Nehs said in prepared remarks.

"Blue Cross and Blue Shield companies have been at the heart of the U.S. health care system for almost a century," he said. "We provide substantial benefits to medical professionals and currently serve nearly 106 million people with competitive pricing, secure and stable healthcare coverage and reliable service."

By upholding the district court's per se standard for the suit, the plaintiffs' attorneys say the appellate court has made it easier to prove their case without involving extensive documentation of economic damages.

Edith Kallas and Joe Whatley, lead attorneys for the plaintiffs, issued a joint statement calling the appeals court ruling "an important positive step for all healthcare providers and subscribers in America. It is our sincere hope that the parties can now engage in a dialogue to increase competition in health insurance and to improve healthcare for all Americans."

Whatley noted that attorneys for the Blues had asked Proctor to certify the appeal, arguing that, because its the largest antitrust suit in U.S. history, the appeal would be granted.

"Now, they are saying they never expected the appeal to be granted, which means that they were only filing the petition to delay the proceedings," Whatley said in an email to HealthLeaders.

"As the court has found, 15 of the largest 25 health insurance companies in the country are Blues, including two of the largest four or five," Whatley said. "Those 15 have agreed that they will not compete with each other, which is a major reason why we have so little competition in health insurance."

“We remain confident that we will ultimately prevail.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Appeals Court affirms lower court's ruling that the Blues' aggregation of competitive restraints constitute per se violations of the Sherman Act.

The per se standard provides a lower threshold for plaintiffs to demonstrate anticompetitive practices among the 36 BCBS companies.


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