Plaintiffs Win Procedural Ruling in BCBS Antitrust Suit

A federal judge says that Blue Cross Blue Shield's 'aggregation of competitive restraints' represent a per se violation of anti-trust laws. BCBS will appeal the ruling.

A federal judge in Alabama has ruled that agreements among Blue Cross Blue Shield companies across the nation to carve out markets and limit competition will be reviewed as inherent violations of the Sherman Anti-Trust Act.

U.S. District Judge David R. Proctor on Thursday ruled that the "plaintiffs have presented evidence of an aggregation of competitive restraints…which, considered together, constitute a per se violation of the Sherman Act."

The granting of the plaintiffs' motion for partial summary judgment is the latest step in a five-year-long legal battle in federal court in Birmingham.

A Blue Cross Blue Shield Association attorney said the health insurer would appeal the ruling, which he called "one step in a lengthy process."

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 claims that the pact artificially inflates premiums and decreased consumer choice for health insurance.

"Our case alleges that, for decades, the Blue Cross Blue Shield system has operated as an illegal association of competitors trying to suppress competition in order to inflate their own profits at the expense of their customers," said Michael D. Hausfeld, lead counsel for the plaintiffs.

"We look forward to taking our case to trial and achieving a nationwide injunction to stop these practices once and for all," he said.  

Scott Nehs, general counsel for the Blue Cross Blue Shield Association said he is confident that the insurers will win their appeal.

"The District Court stated that it is constrained by authority from the late 1960s and early 1970s, which we believe is inapplicable for a number of reasons," Nehs said. "The Blue Cross and Blue Shield System has served Americans well for almost a century, and we are disappointed by the court’s ruling with respect to certain aspects of the BCBS System."

Nehs said that the ongoing litigation will not affect operations for Blue Cross Blue Shield companies or their more than 106 million customers and healthcare providers.

"The BCBS System enables members to receive in-network medical care everywhere in the country and has substantial competitive benefits for consumers and medical professionals," he said