Antitrust Law Daily Wrap Up, ANTITRUST—ED Mich.: Aetna required to provide additional information in suit over Blue Cross MFNs, (Aug 21, 2014)

By Jeffrey May, J.D.

In an antitrust action filed by Aetna, Inc., the federal district court in Detroit has ordered the complaining insurer to provide additional information about its contract negotiations with hospitals to Blue Cross Blue Shield of Michigan (Blue Cross) so that Blue Cross might defend its use of so-called most favored nation clauses (MFNs) in hospital contracts (Aetna, Inc. v. Blue Cross Blue Shield of Michigan, August 20, 2014, Hood, D.).

In December 2011, Aetna brought an action claiming that Blue Cross used MFNs in contracts with hospitals to protect its dominant position and thwart competition from Aetna and other competitors. Aetna claimed that it was harmed by the Blue Cross practice of entering into exclusionary contracts, under which it agreed to pay hospitals more money if the hospitals increased the rates they demanded to treat patients covered by its competitors’ health plans.

The U.S. Department of Justice and the Michigan Attorney General also brought an action against Blue Cross challenging its contracting practices; however, the government dropped the suit in 2013 after the State of Michigan passed a law banning the use of MFNs by health insurers, such as Blue Cross. The enforcers decided that the law made their action unnecessary.

Meanwhile, Aetna's action proceeded. In June 2012, the court denied Blue Cross' motion to dismiss the suit (2012-1 Trade Cases ¶77,937). During the discovery phase of the litigation, Aetna, earlier this year, produced 21 new hospital contracts informing Blue Cross that Aetna and its experts intended to rely on these new contracts at trial to support Aetna’s position that it was harmed by Blue Cross’ exclusionary contracts and that now, without such provisions in Blue Cross’ contracts, Aetna is in a better position. The court instructed Aetna to provide additional information relating to the negotiations on these contracts.

After Aetna claimed to have completed production, Blue Cross expressed concern that Aetna’s production contained “substantial gaps.” Blue Cross filed a motion to compel Aetna to: (1) provide answers to Blue Cross’ Fourth Set of Interrogatories; (2) produce additional documents related to Blue Cross’ Sixth Set of Requests for Production of Documents; and (3) allow a Rule 30(b)(6) deposition seeking information regarding Aetna’s document production processes.

Blue Cross showed that the requested discovery was relevant, the court held. The negotiation documents from 2012 to 2014 would provide information on Aetna’s ability to seek new contracts. The reason why Aetna failed to obtain such new contracts or chose not to seek new contracts to nearly one-third of Michigan’s hospitals was relevant to Blue Cross’ defense to show whether the MFNs had any impact on Aetna’s ability to enter into such contracts, the court explained. Moreover, sales data for the time period could show whether hospital prices were relevant to Aetna’s ability to compete with Blue Cross.

Thus, the motion to compel discovery was granted. Aetna was required to provide documents and information regarding the contract negotiations and certain sales. In addition, it was ordered to make 13 individuals, including two experts, available for depositions. Aetna also was ordered to search files of five additional document custodians, even though Aetna had contended these individuals were not responsible for the relevant negotiations. Blue Cross had shown, through Aetna’s own documents, that these custodians may be relevant to the contracts at issue, in the court's view.

This is Case No. 11-15346.

Attorneys: Daniel Matheson (Gibson Dunn & Crutcher LLP) for Aetna Inc. Alan N. Harris (Bodman PLC) for Blue Cross Blue Shield of Michigan.

Companies: Aetna Inc.; Blue Cross Blue Shield of Michigan

Cases: Antitrust MichiganNews