New York’s MTA Brings Antitrust Claims Against BCBS

On Wednesday a case was filed in the Southern District of New York by the Metropolitan Transportation Authority and many other transit entities operating in and out of New York City against all Blue Cross Blue Shield (BCBS) organizations that participate in the Blue Card nationwide claim processing system. They allege anti-competitive organizational standards and policies regarding the competitive market in and around the area of New York City. This case has been filed as an opt-out from the main anti-trust lawsuit proceeding as In re Blue Cross Blue Shield Antitrust Litigation.

The plaintiffs are all transit authorities operating in and around New York City. These entities provide employer sponsored healthcare for their employees and their families. At the time of the lawsuit this coverage was provided by BCBS plans as a self-funded employer. This style of funding does not require that the full premium amounts be paid by the employer at the beginning of the coverage year, but permits premiums to be paid through the year as a result of the claims that have been covered for eligible insured. The processing of these claims are administered by BCBS, according to the complaint.

BCBS emerged into its current format in 1982, the plaintiffs recounted, when Blue Cross merged with Blue Shield to become the parent organization BCBS. As a part of the BCBS format, there are 36 separate companies which directly insure patients and employees in a particular state or states. A patient who receives treatment in another state other than their home state where that person is insured can still receive treatment under the terms of the contract that the BCBS for that particular state has enacted with the health care provider under a system known as the Blue Card system. This means that there is always a potential in-network provider no matter where that patient is.

However, the plaintiffs accuse all of the BCBS entities of anti-competitive behavior in having contracts and practices that result in the individual companies not competing directly with one another. Each company is assigned an “approved” areas within which they only compete against non BCBS companies and not with other BCBS entities. The defendants claim that this results in higher prices for coverage because the specific BCBS company for that area can essentially dictate the pricing and contracts that it is involved in, especially considering the high benefits of having the Blue Card system available for the patients convenience.

The plaintiffs are suing for violations of Sections 1, 2, and 3 of the Sherman Act, and they seek both injunctive prospective relief as well as damages in the form of refunds for the higher cost premiums as a result of the anticompetitive actions. Plaintiffs are represented by Calcaterra Pollack, LLP.