Important Update for Health Care Providers Regarding In re Blue Cross Blue Shield Antitrust Litigation, MDL 2406
18 Agustus 2022Over 10 years ago, a purported class of insurance subscribers and health care providers alleged that the various Blue Cross-affiliated health insurers (Blues) conspired to eliminate competition between themselves, resulting in higher premiums for subscribers and lower reimbursement rates for providers. Now, in a ruling with substantial impact on every health care provider that participates or has participated in a Blues network, the district court has ruled that the Blues’ conduct against providers from January 2008 to April 2021 will be subject to the stringent per se antitrust standard of review. This standard eliminates the Blues’ ability to argue that there were legitimate or procompetitive justifications for their alleged anticompetitive conduct, which greatly increases the Blues’ litigation risk. The ruling has substantial impact not only on a potential settlement between the Blues and the purported provider class, but also on health care providers that may consider opting out of any potential class settlement and bringing their own litigation against the Blues. Given that the Blues previously settled per se antitrust claims with the subscriber class for US$2.7 billion, the purported provider class and opt-out settlements have the potential to be substantial, likely exceeding US$3 billion.
Overview of the Litigation
The long-running litigation alleges, at base, that the various Blues conspired among themselves to eliminate competition for subscribers and providers. According to the plaintiffs, the Blues accomplished this through two rules. The National Best Efforts (NBE) rule required that any Blue plan derive at least 66.67% of its national insurance revenue from Blue brands. Additionally, the Exclusive Services Area (ESA) rule used licensing rights to Blues-related trademarks in order to restrict the geographic areas in which the Blues competed.
Previously, the district court held that the NBE and ESA rules, taken together, constituted per se unlawful agreements among the Blues that eliminated competition between them for business with both the provider and subscriber classes. This ruling substantially increased the Blues’ potential liability exposure. Under the more lenient “rule of reason” standard of review, defendants can present procompetitive justifications for conduct alleged to have violated the antitrust laws. As such, rule-of-reason claims are difficult for plaintiffs to win. Under the per se standard of review, however, a plaintiff only needs to show that a certain type of agreement existed, and defendants cannot offer any justifications for those agreements. Because antitrust damages are trebled, per se claims that survive summary judgment almost always result in settlement.
In October 2020, before the district court had certified a class or ruled on damages, the subscriber class reached a settlement with the Blues for almost US$2.7 billion and a commitment from the Blues to terminate the NBE rule.
The Provider Class May Now Also Proceed with a Per Se Antitrust Claim
Once the Blues terminated the NBE rule in April 2021, they moved the district court to reconsider whether the provider class’ claims alone should be subject to per se review. The Blues argued that the NBE rule only affected subscribers, not providers, and that the ESA rule, standing on its own, did not warrant per se scrutiny.
In critical rulings last week, the district court disagreed with the Blues for the most part.1 The court agreed with the Blues that the ESA rule, standing alone, was not per se illegal. However, the court confirmed its previous ruling, holding that providers had alleged harm from the NBE rule and that, for the class period from January 2008 to April 2021, providers could bring per se claims against the Blues based on both the NBE and ESA rules.
The Blues Now Face Immense Pressure to Settle the Provider Claims
The district court’s ruling will place immense pressure on the Blues to settle with the purported provider class. The Blues do not dispute that the NBE and ESA rules existed, and the Eleventh Circuit has already once upheld the district court’s application of the per se standard to the NBE and ESA rules taken together. With no ability to argue that the rules benefited consumers by lowering health care costs and with limited hope of success on appeal barring U.S. Supreme Court intervention, any remaining litigation would primarily concern class certification and damages.
The Blues already settled the subscriber class’s claims before the court ruled on either class certification or damages. The Blues may now attempt a similarly early settlement with the provider class. Because the providers’ damages are much greater than the subscribers’ damages, any settlement would likely exceed US$3 billion.
Health Care Providers Should Monitor for a Potential Settlement and Consider Opt-Out Litigation
Health care providers should actively monitor this litigation for a settlement. Once a settlement is in place, any health care provider with Blues revenue may have a claim for settlement money. Antitrust counsel can assist providers with making a claim.
Health care providers with significant Blues revenue have a substantial damages claim in this litigation and should consider discussing with antitrust counsel the pros and cons of “opting out” of any proposed class settlement and bringing an individual claim against the Blues. Opt-out litigation presents potential costs not associated with simply claiming a portion of a class action settlement. However, in cases like this, opting out often presents the best opportunity for plaintiffs to recover their actual damages, and monetary recoveries would likely far exceed any class settlement claim. Antitrust counsel can assess potential damages claims and guide health care providers on whether opt-out litigation is appropriate.