Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Alabama Firm Alleges Market Allocation Conspiracy Among Blue Cross, Blue Shield Plans, (Mar 11, 2013)

By Jeffrey May, J.D.

A Huntsville, Alabama, janitorial service, Joiner Superior Services, Inc., filed a putative class action antitrust complaint against Blue Cross and Blue Shield of Alabama (BCBS-AL) and the Blue Cross and Blue Shield Association (BCBSA) last week. The complaint was brought on behalf of similarly-situated subscribers of BCBS-AL, the largest health insurance company operating in Alabama, against the firms for participating in market allocation conspiracies. According to the complaint, a recent American Medical Association study identified Alabama as having the least competitive health insurance market in the country (Joiner Superior Services, Inc. v. Blue Cross and Blue Shield of Alabama, March 7, 2013).

The plaintiff is a purchaser of small group full service commercial health insurance to cover its employees from BCBS-AL. It alleges that the challenged market allocation agreements were implemented through Blue Cross and Blue Shield license agreements. These agreements were executed between BCBSA, a licensing vehicle that is owned and controlled by all of the 38 Blue Cross and Blue Shield plans, and each individual Blue Cross and Blue Shield licensee, including BCBS-AL.

Through these agreements, the independent Blue Cross and Blue Shield entities—“potential competitors”—have agreed not to compete with one another in violation of Section 1 of the Sherman Act, according to the complaint. In addition, BCBS-AL allegedly maintains its monopoly power through selective discounting practices aimed at thwarting competition and participation in the association’s market allocation and suppression of competition rules in violation of Section 2 of the Sherman Act.

The plaintiff seeks treble damages based on the alleged overcharges for BCBS-AL premiums. It also seeks an award of attorney fees and costs.

This case is one of a number of antitrust actions that have been filed recently against BCBSA and its plans. Last December, the Judicial Panel on Multidistrict Litigation (JPML) centralized a number of private antitrust actions against BCBSA for pre-trial proceedings in the federal district court in Birmingham, Alabama. Those suits also alleged that the Blue Plans divided and allocated among themselves health insurance markets throughout the nation in violation of Sections 1 and 2 of the Sherman Antitrust Act.

The case is No. 2:13-cv-00460-RDP.

Attorneys: Herman Watson, Jr. (Watson McKinney, LLP) for plaintiff.

Companies: Blue Cross and Blue Shield of Alabama; Blue Cross and Blue Shield Association; Joiner Superior Services, Inc.

News: Antitrust