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Oscar Health Lawsuit Against BCBS Florida Dismissed

Analysis  |  By Jack O'Brien  
   September 23, 2019

The suit, first filed last November, challenged Blue Cross Blue Shield of Florida's exclusive broker arrangements.

A federal judge in Florida dismissed New York-based Oscar Health's lawsuit against Blue Cross Blue Shield (BCBS) of Florida over broker arrangements, according to a Friday ruling. 

Judge Paul Byron of the Middle District Court of Florida granted a motion to dismiss Oscar's lawsuit, ruling that BCBS Florida's exclusive broker arrangements fall within the purview of state law.

"Florida Blue's efforts at enforcing a lawful contract are not coercive, regardless of the tone or tenor of the language employed by Florida Blue," Byron wrote in his judgment. 

This marks the second legal defeat for Oscar against BCBS Florida after Judge Byron ruled in February that the company could use its brokers following Oscar's request for an injunction.

Oscar first filed the suit in November 2018, challenging BCBS Florida's broker arrangements were "improper, unlawful, and anticompetitive," and designed to reduce competition in the Sunshine State's insurance markets created under the Affordable Care Act (ACA).

Related: Health Insurance Startups Like Bright and Oscar Have Raked in $3 Billion in Venture Funding.

The company further asserted that BCBS Florida required brokers to sign exclusivity agreements to only sell BCBS' individual ACA plans and keep Oscar out of the market. 

"The fact that Florida Blue plans are not the most affordable option this year makes its restrictions on Orlando brokers even more egregious," Joel Klein, chief policy and strategy officer at Oscar, wrote in a blog post last November. "Orlando brokers should be allowed to operate as brokers do in every other market -- representing all available plans and advising their clients accordingly."

BCBS Florida moved to have Oscar's case dismissed, arguing that three counts were barred under the McCarran-Ferguson Act, a federal law exempting the business of insurance from most federal regulations, and that Oscar failed to state a claim "for monopolization or attempted monopolization" under state law.

Related: Alphabet Investment in Oscar Seeks to 'Break the Cost Curve'

In late April, the Department of Justice (DOJ) sided with Oscar, submitting a statement of interest that argued BCBS Florida's exclusivity policy is "far removed from the collective ratemaking" that comprises the McCarran-Ferguson Act.

"The Court should not dismiss Oscar’s Sherman Act claims on the basis of Florida Blue’s flawed interpretation of the McCarran-Ferguson Act’s antitrust exemption," the DOJ wrote.

Judge Byron concluded that BCBS Florida's brokers act within the business of insurance, adding that the exclusivity arrangement is covered by state law.

Byron also wrote that the decision by the Florida state legislature to create antitrust exemptions for insurance companies is legal and can be modified at the discretion of the legislature.

Related: $3.2 Billion Startup Insurer Oscar Health Announces Plans to Sell ACA Plans in a Dozen New Markets

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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