Recent Lawsuits Allege Anticompetitive Market Allocation Conspiracy by Blue Cross and Blue Shield

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Two recent lawsuits allege that Blue Cross and Blue Shield entities in North Carolina and Alabama have violated federal and state antitrust laws by engaging in concerted action with other Blue Cross Blue Shield (BCBS) plans nationwide to divide geographic markets among them, which has allegedly resulted in reduced competition and higher rates charged to end customers for healthcare services. The cases may have significant implications for providers: if the plaintiffs’ allegations are true, then it follows that BCBS’ practice of allocating markets may also have restricted healthcare providers’ ability to obtain reimbursement rates that would likely be available in a more competitive market.

The North Carolina case, Cerven v. Blue Cross and Blue Shield of North Carolina, was filed this past February and is pending before the U.S. District Court for the Western District of North Carolina. It is a class action on behalf of two classes: subscribers of any health insurance plan that is a party to a license agreement with the Blue Cross and Blue Shield Association (BCBSA) that restricts the ability of that health insurance plan to do business outside of its assigned geographic area, and all persons or entities that have paid health insurance premiums to BCBS-NC for full-service commercial health insurance. According to the Complaint, BCBS-NC currently exercises “market power” in the commercial health insurance market throughout North Carolina, enrolling 73.8% of subscribers of full-service commercial health insurance plans whether via an HMO or PPO. It has allegedly been able to do so as a result of an agreement with 37 other BCBS entities, pursuant to which BCBS-NC has the exclusive right to do business in North Carolina so long as it does not compete with any of the other BCBS entities in their assigned and exclusive geographic areas.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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