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BCBS Restricts Competition, Suit Charges

 |  By Margaret@example.com  
   August 03, 2012

A federal class action suit charges that Blue Cross and Blue Shield of Alabama and the Blue Cross Blue Shield Association have conspired to restrict competition to drive up health insurance premium costs.

The antitrust suit filed on behalf of chiropractor Jerry L. Conway, DC, and the customers of the Birmingham-based insurer, alleges that the trade group's licensing agreements with its 45 members give each Blues plan as "exclusive, competition-free slice of the healthcare market." As a result "healthcare providers are subject to much lower rates and less favourable terms."

The suit notes that BCBS Alabama controls access to 93% of healthcare insurance subscribers in the state, which makes it difficult for a provider not to agree to its reimbursement terms. "Most healthcare providers simply cannot survive economically as out-of-network providers."

Among the efforts to eliminate competition, according to the suit, is the trade group's restriction that a Blues' provider network can't be sold or transferred to non-Blue insurers. Because provider networks are intrinsic to the health insurance business, the restriction creates "an immense barrier" to market entry where a Blues plan dominates.

Not too surprisingly, both the trade group and the Alabama Blues are dismissing the merits of the suit. "Our company operates in compliance with a license from the Blue Cross Blue Shield Association," said Koko Mackin, vice president of corporate communications for the Alabama Blues. "We comply with all state and federal laws. The allegations have no merit."

Kelly Miller, a spokesperson for the trade group says the suit has "no merit and we will vigorously defend the Blue Cross Blue Shield model."

The suit seeks damages equal to three times the unspecified amount of damages suffered by the plaintiffs. It also asks the court to stop the defendants from entering into or enforcing any agreements that restrict the territories or geographic regions where a Blue Cross Blue Shield Association member "may plan to compete."

The suit was filed in U.S District Court, Northern District of Alabama by Whatley Kallas, LLC, which has offices in several cities across the country, including New York and Birmingham. Its website describes the firm as a "healthcare boutique" whose lawyers have focused their practices on "litigating against, and negotiating with, health insurers across the country on a wide range of issues."

Most recently Whatley Kallas attorneys were the principal litigators and negotiators for a settlement in Feller v. Blue Cross of California, which successfully sought to prevent class action members from being trapped in closed plans and subjected to what is known as a "death spiral," where the premiums for the plans increase dramatically because no new enrollees are being added, and younger and healthier members move to other plans.

Joe L. Whatley, a senior partner in the firm, said in an interview with HealthLeaders Media that the firm is awaiting a ruling on a motion filed last week to consolidate the Conway suit with four other similar Alabama cases that involve business subscribers. The move would help eliminate duplication of effort among the different legal teams.

The firm has filed notice of the Conway suit with 45 Blue Cross Blue Shield plans across the country. Whatley said if additional providers in other states want to join Conway's suit it would simply be a matter of amending the suit.

The BCBS plans have until late August to respond but are expected to request extensions.

Similar lawsuits have been filed by other plaintiffs and lawyers in North Carolina and Tennessee.

Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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