A federal judge on Tuesday approved a $2.67 billion settlement in a years-long antitrust suit brought against Blue Cross Blue Shield Association (BCBSA) on the behalf of employers and individual policyholders, Anna Wilde Matthews reports for the Wall Street Journal.
Federal judge approves $2.7B BCBSA settlement
Currently, 34 companies own Blue health plans, and together, they cover more than 100 million Americans. In 2012, a group of employers and individual policyholders brought antitrust claims against the insurers as part of a class action lawsuit. The lawsuit argued that the BCBS companies violated antitrust laws by entering into an agreement not to compete with each other and to limit competition in selling health insurance and administrative services.
U.S. District Judge R. David Proctor on Tuesday approved a settlement in an antitrust case against BCBS companies. Under the settlement, the insurers are required to pay $2.67 billion and change certain practices that plaintiffs argued limit competition. The ruling is expected to go into effect after 30 days unless the approval is appealed.
According to Judge Proctor, the settlement will provide substantial relief for the plaintiffs through "significant structural changes to Defendants' practices that are to be closely monitored for compliance with both the antitrust laws" and the settlement's terms.
David Boies, a lead attorney representing the plaintiffs, said the settlement "provides very substantial monetary compensation as well as, even more important, injunctive relief that will create real competition."
How BCBS's operations are expected to change
Under the settlement's terms, Blue insurers will drop a rule that limited how much of each company's total national revenue could come from non-BCBSA businesses. According to insurance experts, this rule change could potentially increase competition if companies decide to expand their non-BCBSA businesses into each other's geographic regions.
In addition, the settlement will allow BCBSA insurers to compete for the business of large national employers more freely. Once the change is in place, certain national employers will be able to request a second bid from another Blue insurer of their choice, which will allow two Blue insurers to compete against one another.
However, the settlement does not change BCBSA's licensing setup, which grants exclusive geographic branding rights to companies—the original focus of the lawsuit. Because of this, several companies involved in the lawsuit, including Home Depot, have objected to the settlement, arguing that it does not go far enough to increase competition.
According to Home Depot, the settlement does not do enough for the plaintiffs because "it allows defendants to continue restraining competition in significant ways through their market allocation arrangements."
However, Boies said that reaching a settlement was the best option since determining whether BCBSA's practice of allowing exclusive geographic rights violated antitrust laws would have taken several more years of litigation.
Overall, a spokesperson for the BCBSA said the organization is pleased with the settlement's approval and is committed to finalizing and implementing its terms. Currently, BCBSA insurers are still facing a second, similar antitrust lawsuit filed on the behalf of hospitals, doctors, and other health care providers. (Matthews, Wall Street Journal, 8/9)