Blue Cross Blue Shield Association Hit With Antitrust Class Action

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An Alabama-based plumbing corporation has filed a class action lawsuit against Blue Cross Blue Shield Association (BCBSA) and more than 100 BCBS companies, alleging that BCBS’ networked structure of insurance groups violates federal antitrust laws.

Pettus Plumbing and Piping Inc. (Pettus) is an Alabama corporation that has purchased BCBS-AL health insurance, with approximately 185 employees enrolled in the policy.

Pettus claims that BCBSA enters into agreements with health insurance companies throughout the country that specify the geographic areas in which those companies can compete.

The antitrust lawsuit alleges that Blue Cross Blue Shield affiliates (known as Individual Blue Plans) across the country have agreed to divide territory to limit competition with each other, in violation of federal antitrust laws. Local affiliates such as Blue Cross Blue Shield of Alabama are independently run, but they are linked to other Blues by a national organization, the Blue Cross and Blue Shield Association.

Alabama has the least competitive health insurance market in the country, according to recent studies by the American Medical Association. Blue Cross covers 93 percent of privately insured patients in Alabama, according to the BCBSA antitrust class action lawsuit.

“BCBSA and the Individual Blue Plans have agreed to divide and allocate the geographic markets for the sale of commercial health insurance into a series of exclusive areas for each of the thirty-six BCBSA members,” Pettus Plumbing claims in its 97-page complaint.

The plaintiffs argue that, because BCBSA is controlled by its members, the association limits the amount of insurance business insurers can do under non-Blue brands.

“There was and is a dangerous possibility that BCBS-AL will succeed in its attempt to monopolize the relevant markets because BCBS-AL controls a large percentage of those markets already, and further success by BCBS-AL in excluding competitors from those markets will confer a monopoly on BCBS-AL,” attorneys for Pettus Plumbing stated.

Pettus further alleges that BCBSA initiated a widespread conspiracy to divide territory and limit competition between Blue Cross Blue Shield affiliates nationwide which in turn artificially inflated customer premiums as a result of the anticompetitive practices.

“As the dominant player in Alabama, BCBS-AL has led the way in causing premiums to be increased each year,” according to the complaint. “In 2010, BCBS-AL raised some premiums by as much as 17 percent and others by as much as 21 percent.”

Pettus Plumbing alleges the BCBS units have violated the restrictions set forth in sections 1 and 2 of the Sherman Act, and is seeking an injunction to prohibit alleged market division agreements between BCBS units. Pettus is also seeking to represent a class of Alabama BCBS plan participants and has requested treble damages, award costs and attorneys’ fees. A jury trial has been demanded for this case.

The plaintiffs are represented by Robert G. Methvin Jr., Phillip W. McCallum, and James M. Terrell of McCallum, Methvin & Terrell PC, and by Jeffrey L. Bowling of Bedford, Rogers & Bowling PC.

The Blue Cross Blue Shield Association Antitrust Class Action Lawsuit is Pettus Plumbing & Piping Inc. v. Blue Cross Blue Shield of Alabama, et al., Case No. 3:16-cv-00297, in U.S. District Court for the Northern District of Alabama.