Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Health insurer seeks to disqualify plaintiffs’ counsel in dispute over “most favored nation” agreements with hospitals, (Oct 27, 2014)

By Linda O’Brien, J.D., LL.M.

In an action against a commercial health insurance provider for entering into exclusionary contracts with hospitals, under which hospitals were required to increase the rates they charged to the insurance provider’s competitors, the law firm Honigman Miller Schwartz and Cohn and attorney David Ettinger should be disqualified from representing three health insurers in the suit due to their conflicts of interest and conduct, the insurance provider argued in a motion filed in the federal district court of Detroit (Health Alliance Plan of Michigan v. Blue Cross Blue Shield of Michigan, Case No. 14-13788).

Blue Cross Blue Shield of Michigan is the largest provider of commercial health insurance and the largest non-governmental purchaser of health care services, including hospital services, in Michigan. Health Alliance Plan of Michigan (HAP) provides health insurance services, primarily through its health maintenance organization. HAP Preferred, Incorporated is a preferred provider network that leases its network of contracted hospitals and physicians to third-party administrators. Alliance Health and Life Insurance Company is a health insurer which contracts with hospitals and other health care providers to provide health care to its insureds.

Since 2010, a series of suits were filed, challenging Blue Cross’ use of most favored pricing (most favored nation or MFN) plus clauses in many of its contracts with hospitals. The MFN plus clauses required a hospital to provide Blue Cross with the best price for the hospital’s services. The plaintiffs in these cases, including HAP in a complaint filed on October 1, alleged that the MFNs raised the prices of hospital services to insurers and reduced competition in the sale of commercial health insurance. Blue Cross moved to disqualify the Honigman firm and Ettinger based upon an irreconcilable conflict of interest and other ethical violations.

According to the defendant’s motion, HAP’s counsel represented multiple hospitals and the Michigan Health and Hospital Association as defendants and witnesses. In that capacity, Honigman contended that MFNs do not violate the antitrust laws. While still representing the same hospitals, Honigman, in HAP’s complaint signed and filed by Ettinger, alleges that MFNs raised the prices hospitals charged to Blue Cross’s rivals and resulted in the hospitals being overpaid. The allegations of the complaint directly contradicted Honigman’s own arguments and its clients’ sworn testimony and documents, the defendant charged.

Honigman’s conduct was alleged to violate multiple ethical rules and put the firm adverse to its own clients. It allegedly undermined the integrity of the judicial process, Blue Cross’ right to fair proceedings, and Honigman’s duty of loyalty to its clients. Since the law firm’s simultaneous and conflicting representations did not comply with the applicable standards for attorneys, the only remedy is to disqualify Honigman and Ettinger from their “overlapping and conflicting roles,” the motion claimed.

On October 23, U.S. District Judge Lawrence P. Zatkoff disqualified himself from the case and reassigned the action by blind draw to Judge Denise Page Hood.

Attorneys: David A. Ettinger (Honigman Miller Schwartz & Cohn LLP) for Health Alliance Plan of Michigan, HAP Preferred, Incorporated, and Alliance Health and Life Insurance Company. Todd M. Stenerson, D. Bruce Hoffman, Neil K. Gilman, and Jonathan H. Lasken (Hunton & Williams LLP) for Blue Cross Blue Shield of Michigan.

Companies: Health Alliance Plan of Michigan; HAP Preferred, Incorporated; Alliance Health and Life Insurance Company; Blue Cross Blue Shield of Michigan

News: Antitrust MichiganNews