Alerts and Updates

Blue Cross Blue Shield Plans Agree to Structural Changes and Payment of $2.67 Billion in "Historic" Antitrust Settlement

December 17, 2020

The comprehensive settlement, reached after eight years of litigation, is notable in several respects.

On November 30, 2020, the U.S. District Court for the District of Alabama granted preliminary approval of a wide-ranging settlement resolving antitrust claims against the Blue Cross Blue Shield Association and its member plans (collectively, the “Blue Cross plans”). The case involves class allegations that the Blue Cross plans’ 36 domestic organizations conspired for many years to divide the country into service areas and then limited competition among the Blue Cross plans and with their competitors. The alleged scheme affected more than 1 million individual and corporate policyholders, whose policies covered tens of millions of Americans. While the preliminary approval is an important step toward resolution of the roughly 40 impacted actions, class members must still be notified and given the opportunity to object before the final approval hearing, scheduled to begin on October 20, 2021.

Settlement Terms

The comprehensive settlement, reached after eight years of litigation, is notable in several respects.

First, it provides, in the court’s words, “historic injunctive relief to enhance competition in the market of health insurance.” The terms of this structural relief are intended to be forward-looking by, among other things, eliminating the so-called National Best Efforts provisions in the member plans’ license agreements with the Blue Cross Blue Shield Association. These provisions allegedly limited the member plans from competing against each other by mandating a minimum percentage of business that each member plan must do under the Blue name, both inside and outside each member plan’s territory. The structural relief also limits the Blue Cross plans’ ability to restrain acquisitions and limits the use of most favored nations clauses.

Second, the settlement provides for a monitoring committee, comprised of individuals appointed by the parties as well as the court, to monitor new rules or regulations proposed by the Blue Cross plans and to mediate all disputes that arise from the proposed structural relief.

Finally, the monetary relief is among the highest reported dollar settlements in an antitrust class action. The Blue Cross plans will pay $2.67 billion into a settlement fund to resolve the claims.

Potential Impact of Settlement

If it gains final approval, the settlement could have a significant impact on the U.S. healthcare industry. In the short term, Blue Cross plan policyholders will benefit from the cash provided by the monetary relief. In the long term, Blue Cross plan policyholders will likely benefit from lower rates due to increased competition. After the settlement is finalized, the Blue Cross plans will be free to compete outside of geographic service areas to which they are currently limited, which will likely increase competition both among the Blue Cross plans themselves as well as among all health plans. Increased competition could also lead to an increase in payments to providers and could improve quality of care.

Another potential impact of the settlement could be increased consolidation. Limits on the Blue Cross plans’ ability to restrain acquisitions could lead to consolidation among Blue Cross plans and other insurers. There could also be increased vertical integration between payers and providers.


The full impact from the settlement will likely take several years to play out, but the effect on the market dynamics of the insurance industry will likely be significant. It is estimated that Blue Cross plans cover one in three Americans, and they are the largest health insurers in many regions of the country. Healthcare payers, plans, providers and systems as well as healthcare-related data analytics and big tech companies will need to consider how to position themselves within these new market dynamics. Before engaging in conduct that might invite antitrust scrutiny, companies, particularly healthcare industry players, should seek experienced antitrust counsel for the potential competitive issues and risks associated with that conduct.

For More Information

If you have any questions about this Alert, please contact Sean P. McConnell, Christopher H. Casey, one of the attorneys in our Antitrust and Competition Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.