Health providers opt out of $2.8B BCBS antitrust settlement, file lawsuits

A group of primarily Pennsylvania medical providers, led by the Temple Health and Penn State Health systems, opted out of a Blue Cross Blue Shield antitrust settlement and filed their own lawsuit Tuesday.

An Alabama court set a March 4 deadline for members of the class to opt out of the $2.8 billion settlement.

The plaintiffs, a collection of dozens of hospitals, clinics and physician groups, instead will take their chances on a lawsuit filed in U.S. District Court for the Eastern District of Pennsylvania. Similar lawsuits were filed in California and Illinois, Reuters reported.

The allegations in the new lawsuit are substantially the same as in the settled cases: plaintiffs claim that BCBS violated antitrust laws by illegally dividing the United States into “Service Areas” and agreeing not to compete in those areas. They also allege that the BCBS companies fixed prices for services provided.

“Defendants colluded for decades to restrict competition for the purchase of healthcare services,” the Pennsylvania lawsuit begins. “Defendants colluded for one reason: to pay healthcare providers, including Plaintiffs, far less than they would have been paid in a competitive market.”

Plaintiffs ask for “damages and other relief caused by Defendants’ continuing conspiracy to allocate territories, to restrict output, to fix prices, and to allocate customers in violation of” the Sherman Act.

Years-long cases

Many of the lawsuits in the original consolidated class action date to 2015. The settlement applies to all healthcare providers who treated BCBS patients between July 24, 2008, and Oct. 4, 2024.

A Blue Cross spokeswoman said the insurer does not comment on active litigation. In an October statement on the settlement, it denied the antitrust allegations but “agreed to make some operational changes and a monetary payment to the provider class” involved in the case.

“This settlement ends a long-running legal challenge to the Blue Cross Blue Shield Association license agreements and related rules,” the statement says. “Our members and health care provider partners can rest assured that Blue Cross and Blue Shield companies continue to be strong and ready to deliver exceptional services.”

In the new Pennsylvania lawsuit, plaintiffs explain how Blue Cross allegedly conspired to keep competition low or nonexistent.

BCBS allegedly adhered to a “National Best Efforts Rule,” which precludes each defendant from earning more than 33% of its revenue from the sale of services that do not carry a Blue Cross or Blue Shield brand or trademark, and a “Local Best Efforts Rule,” which requires that 80% of the revenue received by a defendant insurer from within an exclusive service area comes from the sale of services using a Blue Cross and/or Blue Shield mark.

“The effect of these restraints is to ban or otherwise frustrate all competition for the purchase of healthcare services among Defendant Insurance Companies,” the lawsuit claims.

Not the first settlement

In a separate case, Blue Cross in 2020 settled antitrust claims by commercial and individual subscribers who claimed they were overcharged.

Last year, the U.S. Supreme Court upheld a $2.7 billion settlement in that case. A few major companies are pursuing separate lawsuits from that settlement as well. Settlement payments are expected to be around $333 per claim to roughly six million claimants, Healthcare Finance reported.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.