Blue Cross Blue Shield Hit With Antitrust Price-Fixing Class Actions

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Blue Cross Blue Shield Association and other member plans allegedly engaged in price-fixing in New Jersey, Pennsylvania and other states, four antitrust class action lawsuits claim.

The four price fixing class action lawsuits, which includes 18 plaintiffs made up of individuals and businesses, allege that Blue Cross Blue Shield as well as the 37 health insurance plan providers artificially inflates insurance premiums through a practice in which they illegal carve out geographic markets.

“[The member plans’] dominant market shares are the direct result of the illegal conspiracy to unlawfully divide and allocate the geographic markets for health insurance in the United States,” the antitrust class action lawsuits state.

“This series of agreements has enabled many … plans to acquire and maintain grossly disproportionate market shares for health insurance products in their respective regions, where these plans enjoy market and monopoly power,” the lawsuits add.

The nearly identical antitrust class action lawsuits were filed in New York, Pennsylvania, North Dakota and Kansas federal courts and have been added to the multidistrict litigation that is underway in an Alabama federal court.

Because of the alleged “illegal conspiracy” to set prices, the insurers don’t compete against each other, as would be expected in a typical non-manipulated market situation, the class action lawsuits allege. But their price fixing conspiracy violates the Sherman Antitrust Act.

All of the 37 health insurance regional member plans are sold under the Blue Cross Blue Shield trademarks, and they insure 105 million subscribers.

BCBSA member plans are voted into the association and are required to keep the the association’s rules and regulations and there is a a “disciplinary process for members of BCBSA that do not abide by BCBSA’s rules and regulations.” Such a process “could result in the termination of a member plan’s license,” the class action lawsuits claims.

The Blue Cross Blue Shield class action lawsuits allege that the arrangement by which the member plans must keep the rules they collectively make, it is more like a cartel than the non-profit organization that BCBSA was originally intended to be.

The price-fixing practices by the BCBSA, which have led to higher health insurance premiums “for over a decade” have made the organization into a de facto monopoly, the class action lawsuit says.

“This anticompetitive behavior, and the lack of competition the Individual Blue Plans face because of their market allocation scheme and monopoly power and anticompetitive behavior, have prevented plaintiffs and other subscribers from being offered competitive prices and have caused supra-competitive premiums to be charged to Plan customers,” the antitrust class action lawsuits allege.

“These inflated premiums would not be possible if the market for health insurance in these Individual Blue Plans’ Service Areas was truly competitive” because the agreements made by the member plans “have the actual and intended effect of restricting the ability of 37 of the nation’s largest health insurance companies from competing with each other.”

The class action lawsuits are looking to represent nationwide classes of anyone in the country who is “currently insured by any health insurance plan that is currently a party to a license agreement with BCBSA that restricts the ability of the that health insurance plan to do business in any geographically defined area.”

BCBSA’s largest licensee, WellPoint, admitted “in its Form 10-K filed Feb. 22, 2013 [with the Securities and Exchange Commission] . . . that it had ‘no right to market products and services using the Blue Cross and Blue Shield names and marks outside of the states in which we are licensed to sell Blue Cross and Blue Shield products.'”

“WellPoint has further stated that the ‘license agreements with the BCBSA contain certain requirements and restrictions regarding our operations and our use of the Blue Cross and Blue Shield names and marks,'” the antitrust class action lawsuit explains.

Plaintiffs are represented by Adam R. Shaw of Boies Schiller & Flexner LLP in New York, Daniel E. Gustafson and Jason S. Kilene of Gustafson Gluek PLLC in North Dakota, and W. Greg Wright of Wright Schimmel LLC in Kansas.

Counsel information for the Pennsylvania suit was not immediately available.

Counsel information for defendants was not immediately available.

The Blue Cross Blue Shield Antitrust Class Action Lawsuits are Galactic Funk Touring Inc. et al. v. Blueshield of Northeastern New York et al., Case No. 6:15-cv-06151, in the U.S. District Court for the Western District of New York, Galactic Funk Touring Inc. et al. v. Noridian Mutual Insurance Co., Case No. 3:15-cv-00025, in the U.S. District Court for the District of North Dakota, Galactic Funk Touring Inc. et al. v Blue Cross Blue Shield of Kansas, Case No. 2:15-cv-02662, in the U.S. District Court for the District of Kansas, and Galactic Funk Touring Inc. et al. v. Capital Blue Crosset al., Case No. 3:02-at-06000, in the U.S. District Court for the Middle District of Pennsylvania.

The Blue Cross Blue Shield Antitrust Class Action MDL is in re: Blue Cross Blue Shield Antitrust Litigation, Case No. MDL-2406, in the U.S. District Court for the Northern District of Alabama.