Healthcare providers will now need to decide whether to participate in the proposed settlement based on their particular circumstances.
On October 14, 2024, a class of hospitals, physician groups and other healthcare providers reached a proposed $2.8 billion settlement of antitrust claims against Blue Cross Blue Shield (BCBS) affiliated insurers. In addition to the monetary amount of the settlement fund, the proposed settlement includes incremental transparency and accountability measures, including the creation of a systemwide information platform to facilitate benefits, eligibility verification and claims tracking. It will also give providers incrementally more contracting opportunities with BCBS insurers. Healthcare providers will now need to decide whether to participate in the proposed settlement based on their particular circumstances.
Settlement Background
For over a decade, two classes of plaintiffs consisting of healthcare providers and subscribers, respectively, have been prosecuting claims that the Blue Cross Blue Shield Association and the independent Blue Cross operating companies (known as the “Blues”) conspired among themselves to reduce competition in violation of antitrust laws. Subscribers, plaintiffs alleged, were overcharged as a result of this misconduct; providers, plaintiffs alleged, were underpaid as a result of this misconduct. In Re Blue Cross Blue Shield Antitrust Litigation, N.D. Ala., No. 2:13-cv-20000.
The Blues’ plans include 36 independent companies that each sell health insurance and are governing members of the Blue Cross Blue Shield Association. All member plans agreed to be bound by the BCBS Association’s rules and bylaws. Two main rules allowed the Blues to carry out their allegedly anticompetitive plan. First, the 2005 National Best Efforts (NBE) Rule required each Blues plan to derive at least 66.67 percent of their health revenue from Blues brand plans. Second, exclusive service areas (ESAs) divided the country into sections and permitted only one Blue plan at a time to compete in an ESA. Plaintiffs alleged that these rules had the effect of allocating markets for the provision of healthcare services, allowing the Blues to increase the cost of insurance to subscribers and to drive down contracted rates and actual reimbursement rates for providers.
In April 2018, the U.S. District Court for the Northern District of Alabama found that the NBE Rule, combined with the ESAs, constituted a per se unlawful agreement to eliminate competition. Under the Sherman Act, a finding of a per se violation allows the court to move forward without further analyzing the practice’s actual competitive effects in the market. This substantially increased BCBS’s liability exposure and resulted in BCBS settling with the subscriber class and agreeing to terminate the NBE Rule.
In August 2022, the court ruled that the providers could also maintain their per se violation claim against the insurers for the period of January 2008 to April 2021 when the NBE Rule and ESAs were both in effect.
Class Settlements
In 2020, BCBS agreed to pay roughly $2.7 billion to resolve the antitrust claims brought by the subscribers. The Eleventh Circuit rejected challenges to that settlement, and earlier this year, the United States Supreme Court decided not to hear further challenges to the settlement.
On October 14, 2024, the provider plaintiffs filed a motion for an order approving a provider class settlement of $2.8 billion. The proposed settlement is now pending court approval. If approved, healthcare providers should expect to soon receive notice and more information about potential recovery and participation in the settlement fund. Providers will need to evaluate their potential recovery from the fund against the potential recovery for providers if they opt out of the class settlement.
Key Takeaway for Providers
Health systems, hospitals, physician groups and other healthcare providers will need to assess whether to participate in the fund or to opt out of the fund and assert their own separate actions, either independently or with other, similarly situated providers. Potential settlement fund participants should consult legal counsel regarding their potential recovery in different scenarios in order to make an informed decision regarding next steps.
For More Information
If you have any questions about this Alert, please contact Sean S. Zabaneh, Sean P. McConnell, Erin M. Duffy, any of the attorneys in our Healthcare Industry Litigation Group, any of the attorneys in our Health Law Practice Group, any 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.