BCBS Plans Defend against Antitrust Class Actions
Back at the end of July, a class action lawsuit was filed against Blue Cross Blue Shield of Alabama (BCBS Alabama), the Blue Cross Blue Shield Association (the “Association”), and multiple BCBS Plans for antitrust violations. The lawsuit was filed on behalf of a retired chiropractor, Jerry L. Conway, by Whatley Kallas, a Birmingham-based health law firm.
This isn’t by far the first time that a BCBS entity has been targeted for anticompetitive practices. There have been several other complaints on different grounds, the more recents triggered by Department of Justice and state investigations concerning BCBS Michigan’s use of “most-favored nation clauses”, a practice not uncommon among insurers. This triggered several additional suits against BCBS Plans on the same grounds. In addition, BCBS Tennessee settled potential HIPAA violations with HHS this past March.
However, this class action is much different: the Conway complaint alleges that the defendants, 45 Blue Cross Plans, as well as the Association, completely dominate their respective geographic market to the complete lack of meaningful competition. The argument presented by this class action, and a novel one, is essentially that the very nature of the license agreements and other rules and regulations of membership in BCBS is a deliberate conspiracy to reduce competition and allocate market shares in violation of federal antitrust laws. With antitrust law, the issue isn’t just whether a particular entity or group of entities dominates a given market, but rather, whether they are doing so through improper means. Without these horizontal agreements to not compete and implement other anticompetitive practices, the complaint alleges, the individual plans would not have dominant market shares in their states or areas of a state to begin with and would be potential competitors of each other. The class of allegedly affected health care providers would therefore then have better rates and better terms but for this restraint on competition.
Other similar class-actions were filed against BCBS North Carolina and the Association, as well as BCBS Alabama, earlier this year, alleging similar conduct, in addition to challenges to most-favored-nation clauses. However, the previous class actions were filed on behalf of companies and beneficiaries of BCBS Plans, not heath care providers, making this the first filed on behalf of providers.
The BCBS Plans and the BCBS Association will undoubtedly do everything in their power to have this new complaint dismissed for any number of reasons. The plaintiff must additionally prove that a class action is appropriate and be granted class certification before the action can proceed. Class action certification in and of itself is a time-consuming and lengthy process, and if denied, would be difficult for this lawsuit to go forward due to the number of defendants named and their considerable resources, as well as the more limited resources of the individual plaintiff health care providers seeking to establish themselves as a class.
Given the previous suits filed against BCBS Alabama on similar grounds, it is possible that the Conway class action will be consolidated with them. In addition, given the fact-specific nature of antitrust suits in general as well as the novel nature of the argument being presented, the class action(s) will undoubtedly present a variety of additional hurdles for the plaintiffs, as well as defendants, to navigate.
Even though the Conway complaint alleges harm to rival health plans as well as individual consumers as a result of the alleged anticompetitive practices, the more immediate benefits if the plaintiffs are successful would likely be to health care providers themselves, presumably in the form of their increased ability to negotiate better terms for rates and increased access to patients in a more competitive market. Given that these license agreements have been in operation for some time, it is remarkable that there has not been a challenge to these practices earlier.
The Birmingham Business Journal reports BCBS Alabama spokesperson Koko Mackin has stated the BCBS Alabama Conway and other class action suits have “no merit.” However, at the very least, the complaints are a far-cry from being frivolous or ill-conceived and represent, at least on the surface, potentially valid antitrust concerns, with reputable attorneys and the companies and individuals they represent buying into these arguments.
