Written By: Michael Beech, Regulatory and Legislative Specialist
As you may recall, since 2013 Blue Cross has been involved in a class-action lawsuit regarding its alleged anti-competitive policies. Brought by a class of over one million plaintiffs, the suit alleged the company violated antitrust law through dividing insurance markets in order to avoid competition among its member companies, thereby boosting prices for individual and corporate policyholders. After years of ongoing litigation and settlement discussions, it was announced in September 2020 that a tentative settlement was reached. The proposed settlement provides that Blue Cross will pay $2.6 billion to the affected class and institute reforms to increase competition amongst its member companies (thereby presumably helping companies wanting to work with Blue Cross obtain more competitive rates).
Although many questions remain, an update in the Blue Cross Blue Shield antitrust litigation provides some insights into several key aspects of the proposed settlement.
While the settlement has yet to be approved, a one-page “Settlement Facts” document released by Blue Cross provides insight into its view of the proposed settlement. Key points are as follows:
Eligible Class Members Will be Notified by Class-Action Representatives Regarding The Benefits of the Settlement
The document released makes clear that settlement eligible class members will be notified by the class-action representatives regarding the benefits available to them (“all benefits available to class members will be communicated through the Class Notice process being managed by the Plaintiffs.”). Details on the mechanisms for submissions and payments have not yet been released. Note: Class members should be on the lookout for enterprises that purport to be official administrators of the class-action as many of these entities seek to provide unnecessary services at a high cost.
Self-Funded National Employers Will be Eligible for a Second Bid from Blue Cross
This provision of the settlement, addressing one of the core issues in the litigation regarding the lack of competition between Blue Cross’ member companies, allows certain eligible employers to receive a second bid from a national Blue Cross company in addition to its local Blue Cross company. While the settlement will contain specific methodology and criteria for identifying companies eligible for the second bid, eligible employers are generally “self-funded accounts with over 5,000 employees and a large number of employees dispersed across the country.” The earliest eligible employers will be able to obtain the second Blue Cross bid will be April 1, 2022.
Blue Cross Will Retire its National Best Efforts Requirement
As part of the settlement, Blue Cross will retire its National Best Efforts policy. The policy, which required Blue Cross companies to place primary focus on Blue Cross and Blue Shield-branded business, will be eliminated and its member companies will be able to market coverage under the Blue Cross name or their separate brand without the mandated focus. No timeline for the retiring of this policy was articulated in the “Settlement Facts.”
Many Questions Left – Hays is Monitoring the Settlement
Details are still sparse and many questions regarding the settlement, particularly its disbursement and second bid process remain. Hays will continue to monitor the situation and provide updates as they become available.
This document is provided for general information purposes only and should not be considered legal or tax advice or legal or tax opinion on any specific facts or circumstances. Readers are urged to consult their legal counsel and tax advisor concerning any legal or tax questions that may arise.
Interested in learning more? Connect with us today: