Montgomery, ALTwo massive antitrust lawsuits have been consolidated against Blue Cross and Blue Shield, alleging the health insurers drove up prices by avoiding competition with each other. The lawsuits are different from many lawsuits alleging insurance claims were wrongly denied because they accuse the insurers of joining forces to avoid competition. Two different sets of lawsuits have reportedly been consolidated, one by doctors who say payments from the insurers have gone down as a result of the alleged collusion, and the other by individuals and small businesses, who say their costs have gone up.
According to reports by The Wall Street Journal (5/27/15), a federal judicial panel recently consolidated the claims against Blue Cross and Blue Shield. The insurers had filed a motion to dismiss the lawsuits but in 2014, a district judge refused to do so.
Blue Cross and Blue Shield licenses brands to insurers such as Anthem Inc. Those insurers then reportedly have exclusive rights to the license in their geographic area. The business model isn’t new - federal regulators know about the licensing and have not taken action against it according to the insurers.
“The Blue System and its structure are not, and have never been, a secret,” the defendants argue. They further say the licensing deals are not an agreement on the part of any insurer to do anything illegal.
But plaintiffs argue that the market division is illegal, limiting the insurance that can be done under other brands. They also say it decreases competition, allowing prices to go up. Plaintiffs in the individual and small business lawsuits allege Blue Cross and Blue Shield’s actions violate the Sherman Act and laws in various states including California, Florida and Michigan.
In the 319-page complaint, the plaintiffs note that the Supreme Court condemns horizontal price fixing and calls out market allocation as collusion.
“Many of the Individual Blue Plans have developed substantial non-Blue brands that could compete with other of the Individual Blue Plans,” the lawsuit notes. “But for the illegal agreements not to compete with one another, these entities could and would use their Blue brands and non-Blue brands to compete with each other throughout their Service Areas, which would result in greater competition and competitively priced premiums for subscribers.” The plaintiffs claim the dominant market shares enjoyed by the Blue Plans are the “direct result of the illegal conspiracy to unlawfully divide and allocate the geographic markets for health insurance in the United States.”
The individual and small business lawsuit is Galactic Funk Touring, Inc. et al v. Blue Cross Blue Shield of Alabama, et al. Case number 2:13-cv-20000-RDP in the US District Court for the Northern District of Alabama.
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