Dive Brief:
- Antitrust lawsuits allege the Blue Cross Blue Shield companies are acting like an illegal cartel by dividing markets to avoid having to compete with each other, and are therefore impacting their prices and payments.
- A federal judicial panel in Alabama has consolidated the claims against the the 37 independent BCBS companies and the Blue Cross Blue Shield Association into two separate lawsuits; one represents healthcare providers while the other represents consumers.
- The lawsuits have weathered their first major legal challenge, in which a judge declined to dismiss them. They are now in the discovery phase, and the plaintiffs are requesting class-action status.
Dive Insight:
The lawsuits could shake the foundation of the BCBS companies if they manage to undermine their age-old business model by framing it as "illegal market division."
Meanwhile, the association has defended its licensing deals, saying they simply codify trademark rights and noting that they date back decades.
"This is a model that has withstood scrutiny over our entire history," Scott Nehs, general counsel of the Blue association, told the Wall Street Journal. "There's no smoky room involved, there's no dividing up."
Experts suggest it will take years to resolve the litigation unless those involved can reach a settlement. They also note that the plaintiffs in the two separate lawsuits have conflicting interests and appear to be arguing for different outcomes, given that providers are concerned with higher payments, which would impact premiums for consumers.