Blue Cross Blue Shield Antitrust Suit Settlement Reached

On Friday in the Northern District of Alabama, the 37 plaintiffs in litigation that began more than eight years ago against Blue Cross and Blue Shield Association (BCBSA) filed a motion for preliminary approval of a proposed class settlement of $2.67 billion and historic injunctive relief.

The plaintiffs are employers with BCBSA plans — and their employees covered under the plans — and individuals with insurance policies from BCBS within the Settlement Class Period, which generally is Feb. 7, 2008, through Oct. 16, 2020.

In the motion, the plaintiffs alleged that in 2012 the defendants had plans to “carve the United States into geographic Exclusive Service Areas in which the other Member Plans could not compete using the Blue Cross and Blue Shield names and marks.” 

They claimed that this was a violation of Sections 1, 2 and 3 of the Sherman Antitrust Act because it decreased competition between and among the plaintiffs and the defendants in health insurance markets by: “(1) allocating geographic territories; (2) limiting the Member Plans from competing against each other, even when they are not using a Blue name, by mandating a minimum percentage of business that each Member Plan must do under that name, both inside and outside each Member Plan’s territory; (3) restricting the right of any Member Plan to be  sold to a company that is not a member of BCBSA; and (4) agreeing to other ancillary restraints on competition.” 

The plaintiffs argued that the conduct of BCBSA and the decrease in competition resulting from its purported conduct increased premiums and other costs in subscribers’ health insurance plans.

The proposed settlement seeks a settlement fund of $2.67 billion to be deposited into an escrow account for eventual distribution to all the settlement class members who are entitled. Additionally, the settlement will include injunctive relief that includes “significant, unprecedented, and far-reaching changes to BCBSA’s rules and regulations, and the establishment of a Monitoring Committee” that will allow for more competition in the health insurance market and prevent conduct like BCBSA’s, according to the motion.

Over the last eight years, the defendants filed over a dozen motions to dismiss, all of which the plaintiffs overcame.

“The proposed settlement secures substantial injunctive relief that will reshape competition in the health insurance industry and offer increased choice to millions of Americans, coupled with one of the largest monetary recoveries ever achieved in an antitrust class action settlement,” the motion said.

The plaintiffs’ counsel is led by Boies, Schiller & Flexner LLP and Hausfeld LLP. Blue Cross and Blue Shield Association is represented by Kirkland & Ellis, among others.