Q: I read something recently about a billion-dollar settlement in a case against the Blue Cross Blue Shield Association and many of the state Blues plans. Can you give us some detail and an idea what this may mean for physicians?
The case you are referring to was brought against the Blue Cross Blue Shield Association and several Blues plans including Blue Cross Blue Shield of Michigan. It has been pending for years in an Alabama federal court. The Plaintiffs alleged that the Blue Cross Blue Shield Association and several Blues plans entered into anticompetitive agreements in violation of the federal antitrust laws that prohibit contracts, combinations, or conspiracies that unreasonably restrain trade. They claim these agreements restrict competition among the Blue plans, resulting in geographic market allocations. A subgroup of Plaintiffs consisting of hospitals, physicians, and other health care providers further alleged that the Blues plans agreed to fix prices for their services.
Following several years of discovery the Plaintiffs moved for summary judgment asking the judge to rule that the Blue Cross Blue Shield Association’s agreements with the Blue plans violated the antitrust laws. Significantly, the Plaintiffs argued that these agreements amounted to territorial allocations and price fixing and therefore should be viewed as per se or automatic violations of the federal antitrust laws. The court granted the Plaintiffs’ motion in part finding that many of the alleged restraints were subject to per se review under the antitrust laws. The practical effect of this ruling was that the Blue Cross Blue Shield Association and other defendants were not allowed to present any defenses (e.g., that procompetitive effects of the conduct outweigh the anticompetitive effects, a lack of market power and other detailed factual and economic defenses that are typically employed when there has not been a finding of per se violations) to these per se violations. Instead, the Plaintiffs were left only having to prove the amount of damages. The ruling was appealed to the Eleventh Circuit Court of Appeals and Blue Cross Blue Shield’s request for reversal was denied.
In early December, the Alabama federal district court judge granted preliminary approval of a $2.67 billion settlement. In addition to the payment of this sum, the Blue Cross Blue Shield Association and the other defendant Blues plans reportedly have agreed to make several changes to their operations. These changes include the elimination of several terms contained in the trademark licensing agreement between the Blue Cross Blue Shield Association and the state Blues plans. These terms currently: (1) limit the amount of “non-Blue” business that a Blue Cross licensee can have outside of the service area for which it possesses the Blue mark; (2) limit the ability of an out-of-state Blues plan to bid for insurance business against a “home” Blues plan for larger employers (those with over 5,000 employees that also meet certain dispersion criteria); (3) restrict the ability of a Blues plan to acquire another Blues plan member, making such restrictions permissible only to the extent that the restrictions are “reasonably necessary to prevent the impairment of the value of the Blues marks or the competitive or efficiency of Blues branded business”; and (4) would greatly restrict the ability of the Blues plans to utilize “most favored nations” clauses in their provider contracts. The proposed settlement would also create a 5-person “monitoring committee” that would oversee compliance with the terms of the settlement for a period of 5 years.
Many of the specific details of the settlement are not yet known publicly. How these changes required by the settlement will directly or indirectly affect Michigan physicians and other health care providers across the country is not yet known. Legal counsel will continue to monitor the case and provide updates as additional information becomes known.