Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Blue Cross Blue Shield allegedly conspires to allocate markets, fix prices, (Aug 11, 2015)

By Greg Hammond, J.D.

Blue Cross and Blue Shield Association and its member or affiliated companies (collectively, BCBS) are purportedly engaging in a conspiracy to allocate geographic service areas, as well as a price fixing and boycott conspiracy, according to a complaint filed by Hospital Service District 1 of the Parish of East Baton Rouge, Louisiana, doing business as Lane Regional Medical Center. Lane joins a growing list of health care providers that have brought similar claims against BCBS (Hospital Service District 1 of the Parish of East Baton Rouge v. Blue Cross and Blue Shield of Alabama, August 7, 2015).

The complaint alleges that the BCBS defendants have agreed that each defendant would be allocated a defined service area and that each defendant’s ability to operate and generate revenue outside its geographic service area would be severely restricted. This, according to Lane, amounts to a horizontal agreement to allocate markets and not to compete in those markets.

BCBS has further exploited its market dominance by entering into a price fixing and boycott conspiracy, the complaint asserts. Specifically, each defendant has allegedly agreed to participate in the Blue Card and National Accounts Programs, which purportedly lock in fixed, discounted reimbursement rates that each defendant achieves through market dominance in its service area and makes those below-market rates available to all other BCBS defendants without the need for negotiation or contracting. Lane additionally claims that BCBS has conspired to monopsonize the markets for health care services and that, in many geographic areas, BCBS has successfully created or maintained a monopsony, or has created a dangerous probability of achieving a monopsony.

The horizontal market allocation, price fixing, and boycott conspiracies, according to the complaint, have significantly injured Lane and other health care providers. Specifically, Lane claims that the unlawful agreements have harmed competition by decreasing options available to health care consumers; fewer health insurance companies are competing in each service area; fewer health care professionals are practicing in each service area as a result of the lower than competitive prices that BCBS pays; and many hospitals and other health care facilities are closing or reducing services or are not expanding as a result of BCBS’s low prices.

Lane seeks to represent two classes: (1) a nationwide injunction class consisting of all health care providers, not owned or employed by any of the defendants, who currently provide health care services, equipment or supplies in the United States; and (2) a damages class, including all health care providers, not owned or employed by any of the defendants, in the United States, who provided covered services, equipment, or supplies to any patient who was insured by, or who was a member or beneficiary of any plan administered by, a defendant within four years prior to the date of the filing of the complaint—August 7, 2015.

The ten-count complaint sets forth a claim for injunctive relief; claims for trebled damages and interest for the per se, quick look, and rule of reason market allocation, price fixing, and boycott conspiracy violations; as well as monopsonization and conspiracy to monopsonize claims. Lane seeks a judgment and decree that BCBS violated Sections 1 and 2 of the Sherman Act; permanent injunctive relief prohibiting BCBS from entering into, honoring, or enforcing any agreements that restrict territories or geographic areas in which any BCBS member may compete, as well as prohibiting BCBS from continuing with the market allocation, price fixing and boycott conspiracies; trebled damages; costs and attorney fees; prejudgment interest; and trial by jury.

A group of health care providers filed a similar complaint in July 2015, alleging market allocation, price fixing, and boycott conspiracies in violation of Sections 1 and 2 of the Sherman Act.

The case number is 3:15-cv-00523-BAJ-SCR.

Attorneys: Lance C. Unglesby (Unglesby Law Firm), Edith M. Kallas (Whatley Kallas, LLP), Dennis C. Reich (Reich & Binstock, LLP) for Hospital Service District 1 of the Parish of East Baton Rouge, Louisiana.

Companies: Hospital Service District 1 of the Parish of East Baton Rouge, Louisiana; Blue Cross and Blue Shield of Alabama; Blue Cross and Blue Shield Association

News: Antitrust LouisianaNews