Blue Cross and Blue Shield Multi-District Antitrust Litigation
Latest Update from MCAG
As a proven leader in serving the health care community in class action settlement recovery services, MCAG is fortunate to have over one thousand hospitals and thousands of medical providers rely on us to meet their revenue recovery needs. With that said, we are closely monitoring the Blue Cross Blue Shield Multi-District Antitrust Litigation case, which impacts providers across the country, and want to make our clients aware of recent developments.
News of a proposed $2.7 billion settlement that we will pursue on behalf of clients for their eligible benefit plans was announced on September 24, 2020. A key point of clarification is that this proposed settlement covers the subscriber class (i.e. patients and employee benefit plans). This is not the settlement for the provider class (healthcare organizations) that we have closely monitored for years, and will continue to track for our healthcare clients.
If a settlement is reached for the provider class, which is our expectation, prior cases indicate that a fund amount is likely to be larger than the proposed $2.7 billion for the subscribers. Stay tuned for further updates as the case progresses. Stay tuned for more information on both of these settlements.
In order to set the context for this litigation, it is helpful to know some important historical background information. Blue Cross (hospital insurance) and Blue Shield (physician/medical insurance) plans were created as non-profit prepayment insurance plans with the intention of providing affordable health care coverage for the communities each plan served. Blue Shield came first in the logging camps of the Pacific Northwest at the turn of the 20th century. Blue Cross followed in 1929.
Over time, the American Hospital Association (AHA) issued standards for the hospital prepayment plans and gave permission to hospitals to identify themselves as being covered by Blue Cross plans with the seal of the AHA superimposed upon a blue cross. A Blue Cross Commission was created in 1937 to control and approve Blue Cross plans—they promoted one plan per service area. The American Medical Association soon followed the AHA in 1946 by sponsoring the founding of the Associated Medical Plans, Inc., with its role in relation to medical-care plans analogous to that played by the Blue Cross Commission with hospital service plans.
By 1947, competition from commercial insurance companies for employer-sponsored plans prompted Blue Cross and Blue Shield plans to unify, setting up agreements to ensure that members of both plans would have more comprehensive coverage nationwide.
By the early 1970s, the AHA had transferred ownership of the Blue Cross service mark to the Blue Cross Association and the Associated Medical Care Plans, Inc. had spun off into the Blue Shield Association. In 1978 these two associations consolidated their staff and then fully merged in 1982. Both the Blue Cross and Blue Shield names as well as service marks (Blue Marks) were united and given the name the “Blue Cross and Blue Shield Association” (the Association); governed by member plans.
Today, the Association is a federation of 36 separate health insurance companies (plans) that provide health insurance in the United States to more than 106 million people. The plans are the governing members of the Association, they can repeal/amend bylaws as well as implement new bylaws. Each member plan is bound by the Association rules and are autonomous in their operations. Each plan’s CEO has a fiduciary responsibility to both their individual plan and the Association.
Each plan has signed a License Agreement with the Association that identifies an exclusive “service area” where a member plan may use the Blue Marks. Plans are not able to develop a provider network or contract with a healthcare provider outside its service area for services to be provided under the Blue Marks. A “Map Book” is used to display defined service areas. The Map Book is a “highly sensitive” document that is not public record nor distributed to the plans.
The plans agree to not use the Blue Marks outside their service area and they can be fined by the Association for doing so. However, since its earliest days, there has been competition among the differing member plans. Today, it is rare, but there are several plans that do overlap one another.
Exclusive Service Areas
The use of Exclusive Service Areas (ESAs) by the Association has led to some antitrust violation claims in the past. In 1985, the Attorney General of Maryland sued the Association saying the use of ESAs violated federal and state antitrust laws. Even so, plan CEO’s acknowledged the benefits of the ESAs, claiming they allowed for more aggressive bargaining and guaranteed larger market share because other Blue plans stayed out of area.
Current Anti-Trust Class-Action
In December of 2018, a federal appeals court ruled that Blue Cross and Blue Shield plans must defend themselves against a major class action case accusing them of anti competitive practices.
The 11th U.S. Circuit Court of Appeals upheld a federal district judge's April 2018 ruling that the combination of the Blues plans' exclusive territories, in which they agreed not to compete, and the agreement to limit competition on non-Blues branded products is a per se violation of the Sherman Antitrust Act.
Provider Plaintiffs in this multi-district litigation case, including hospitals, physicians, surgery centers, chiropractors, and other healthcare providers, allege that the Blues reached explicit agreement to divide the United States into "Service Areas" and then to allocate those geographic markets among themselves, free of competition among themselves. Further, the Provider Plaintiffs challenged the agreements reached by the Blues to fix prices for services rendered by healthcare providers through the Blue Card Program.
This late 2018 ruling could represent a positive development for the Provider Plaintiffs. It is possible that this ruling reduces the likelihood and necessity of a lengthy and complicated trial in court since a per se violation means that Provider Plaintiffs no longer need to provide extensive economic evidence of the anti competitive nature of their claim.
Next Steps for MCAG Clients
As of today, the status of this case remains in litigation and it is not yet a settled matter from which we can pursue recoveries for our clients. However, MCAG clients can rest assured that if and when a settlement does become available, we will promptly notify you of any information we may need to complete your claim to ensure that your recovery is optimized with minimal effort on your part. MCAG is a leader in class action recovery in the healthcare market. In fact, 5 out of 10 of the largest for-profit health systems and 10 out of 25 of the top non-profit hospitals utilize MCAG as their settlement recovery expert. Since our founding in 2003, we’ve recovered over $200 million for our healthcare clients. If you are not currently an MCAG client, sign up today.
Please contact us if your organization has not yet taken advantage of our comprehensive class action Settlement Recovery Service (SRS) program. You may also visit www.mcaginc.com to learn more about this program, and enroll online through our secure web form.