A federal judge in Alabama recently granted preliminary approval to a massive $2.67 billion settlement claiming that the Blue Cross Blue Shield Association (Blue Cross) conspired to prevent nationwide competition and artificially inflate health care premiums for thousands of Blue Cross/Blue Shield members.

The Blue Cross is a network of 36 independent Blue Cross Blue Shield insurance providers that are spread across the US. While each of the 36 members of the association work under agreements between each other, they are independently owned and operated. The distinction between each member of the association, as well as their cooperative practices, has been at the center of an ongoing class-action antitrust litigation brought against them in 2012. After 8 years of litigation, 15 million pages of documents, over 120 depositions, and more than a dozen motions to dismiss the plaintiff’s claims, all 36 members of the Blue Cross have announced a proposed $2.67 billion settlement in hopes of bringing the drawn-out legal battle to a close.

The settlement started back in 2012 as a single case filed against the Blue Cross that claimed that the rules put in place between the 36 members of the Blue Cross unlawfully impeded competition among the members of the association. The single case quickly converted into a multi-district litigation (MDL) proceeding in the Northern District of Alabama as more plaintiffs came forward and the scope of the case continued to grow. While each member of the association defended the rules as necessary safeguards to protect the value of the “Blue Cross” trademark, the class members claimed that the rules allowed Blue Cross members to charge significantly higher rates by not competing with each other. With Blue Cross representing nearly a third of Americans with private health insurance, the impact of such allegations is massive.

Settlement offers plaintiffs more than just financial compensation

While plaintiffs of this MDL stand to receive significant compensation from the proposed settlement of $2.67 billion, the agreed-to changes to the way Blue Cross members must operate, going forward, might be the bigger victory of the settlement. The agreed-to changes are important as they force Blue Cross to reform the way their members will have to compete for business against each other and could reshape the current health insurance market moving forward.

One of the major rules stipulated in the settlement is the abolition of the “National Best Efforts” pact that forced Blue Cross members to derive two-thirds of their revenue from “Blue Cross” services. That meant that when a business or individual was shopping for a health insurance plan, members of the Blue Cross would be restricted in offering and providing alternative options, outside of Blue Cross services, to maintain the correct revenue ratio agreed to in the pact. Additionally, the settlement removes certain geographical restrictions that the Blue Cross placed on members to limit competition in certain areas. Finally, the settlement requires that the Blue Cross fund a monitoring committee that would make sure that all of the new guidelines of the settlement are adhered to.

U.S. District Judge R. David Proctor, who presided over the case, praised the settlement for not only looking to rectify the past activity of Blue Cross by compensating the plaintiffs properly but for also making steps towards a more competitive market in the future. He wrote,

The prospective injunctive relief, in this case, is wide-reaching and bears greater importance for the class than the monetary relief. Unlike many antitrust cases, this suit does not involve a defunct conspiracy. The settlement terms take this into account by offering forward-thinking, pro-competitive reforms that will change the nature of defendants' business moving forward.

David Boies, one of the many lawyers representing the plaintiffs, agreed with Judge Proctor stating, “the reported terms are a very good settlement for everybody. It will significantly increase competition in the health insurance market, which is obviously a critical market for Americans today. It will result in more competitive offerings and lower prices.”

It seems to be a rare occasion that a large lawsuit against a major company concludes in appropriate reform and compensation for its plaintiffs. Unfortunately, these lawsuits are greatly affected by the power and deep pockets of these large corporations, so much so that settlements can feel like a slap on the wrist and a financial payment that fails to appropriately compensate the victims. While Blue Cross members have only agreed to a proposed settlement and there is still a lot of work ahead of the defendants and plaintiffs, in this case, it is encouraging to see a possible settlement that looks to bring a more holistic resolution that will properly resolve the allegations brought against Blue Cross and create a more fair and competitive market moving forward.

If you were covered by certain Blue Cross Blue Shield health insurance or administrative services plans between February 2008 and October 2020, you may be eligible to receive compensation through this class action. More information on this class action can be found at the court appointed claims administrator site found at: www.bcbssettlement.com. Alternatively, you can fill out our General Contact Form and we can put you in contact with an affiliated company that can assist you in filing your claim.

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