Blue Cross healthcare antitrust case reaches tentative $2.8B settlement

After 12 years of legal wrangling, a huge class action against Blue Cross and Blue Shield has ended with a tentative agreement that is being called the largest healthcare antitrust case of its kind. Blue Cross agreed to pay roughly $2.8 billion to settle accusations brought by health care providers that the giant insurer and its affiliates divided insurance markets into exclusive areas where they did not compete with one another, increasing costs and suppressing reimbursements.

“In total, 38 separate Blue Plans operate under Blue Cross Blue Shield trademarks and trade names, providing health insurance to approximately 100 million subscribers,” reads the complaint. “Plaintiffs contend that the 38 Blue Plans are independent health insurance companies that, but for any agreement to the contrary, could and would compete with one another.”

Instead, according to the complaint originally filed in 2012, the plans worked together through Blue Cross Blue Shield to divide insurance markets, set prices, and discourage competition. The plaintiffs contended such actions violated federal antitrust acts as well as various related state laws. As a result, the class action suit alleged, hospital systems, physicians and other health providers were underpaid for reimbursements.

Blue Cross denies allegations, agrees to pay

Blue Cross Blue Shield denied the allegations but, in a statement, said it agreed to the settlement and promised to make operational changes to put years of litigation behind it.

“The Court has not decided who is right or wrong,” Blue Cross said in statement posted on a special website to explain the case. “Instead, plaintiffs and settling defendants have agreed to a settlement to avoid the risk and cost of further litigation.”

Under the settlement, Blue Cross will create a system-wide information platform easing member benefits, eligibility verification and claims tracking that the attorneys said would lead to more transparency, efficiency, and accountability. It will also give providers more contracting opportunities with Blue Cross. The company will spend hundreds of millions of dollars implementing the non-monetary part of the settlement, the filing said.

The settlement covers U.S. healthcare service providers, including hospitals and some doctors, with Blue plan patients between July 2008 and October 2024.

Case follows earlier Blue Cross settlement

The new settlement comes on top of another reached last year with subscribers who made similar allegations in a case that went all the way to the U.S. Supreme Court. In that case, Blue Cross agreed to set up a $2.67 billion Settlement Fund and make changes in the way it does business that plaintiffs said will increase the opportunities for competition in the market for health insurance.

Plaintiff lawyers in that case, led by famed attorney David Boies, of Boies Schiller & Flexner LLP, said they would ask for up to $700 million in legal fees from Blue Cross.

Boies called that settlement "historic" at the time and said, "consumers across the country will now benefit from the increased health care insurance competition, and substantial monetary award, that this settlement provides."

The appeals court rejected challenges to the insurance subscribers' deal from Home Depot and others who objected to the legal fees and expenses that are part of the settlement.

Writing for the panel, Chief Circuit Judge William Pryor said Home Depot had not persuaded the court that the settlement would harm the power of antitrust enforcers or others to bring claims against Blue Cross Blue Shield in the future.

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].