On September 7, 2021, a massive group of Plaintiffs (all sponsors/administrators of, or self-insured group plans purchasing administrative services only (“ASO”) from the Defendants),[i] including Alaska Air, Albertsons Companies, American Electric Power, Boeing, Bridgestone, Burlington Northern, Conagra, Dollar General, FedEx, Kellogg, Kroger, Meijer, Publix, Walgreen, churches, benefit plans, and labor organizations filed an antitrust action in the United States District Court for the Northern District of Alabama.[ii] The Plaintiffs are national accounts that provide coverage to more than 5,000 members spread over two states or more. The case was assigned to the Hon. Anna Manasco[iii] and names another massive list of Defendants (plan administrators which do not bear the risks associated with insurance coverage but providing ASO) including Anthem and Blue Cross entities, Wellmark, and others.[iv]

The Complaint alleges, “a continuing conspiracy between and among Defendant Insurance Companies and BCBSA to restrict output and allocate markets and customers across the United States in violation of Section One of the Sherman Act. Such damages include the difference between what Plaintiffs have paid individual Defendant Insurance Companies and the lower competitive prices they would have paid but for their illegal conspiracy described herein.”[v] The plaintiffs assert that “[e]ach Defendant Insurance Company has entered into an agreement with each other and with the BCBSA, in which each agreed to restrict the geographic areas throughout the country in which the company can compete. In addition to allocating geographic areas, Defendant Co-Conspirators have developed additional restraints on the Defendant Insurance Companies’ ability to compete, and not only with each other, but also with non-defendant competitors.”[vi]

The Plaintiffs allege they have paid inflated prices for the services of the Defendants which “would not have been possible but for the illegal allocation scheme and/or output restrictions agreed to by and between the Defendant Insurance Companies and the BCBSA. The illegal conduct has the actual and intended effect of restricting the ability of a significant portion of the nation’s largest health insurance companies from competing with each other for the provision of services to customers such as the Plaintiffs.”[vii]

The Complaint defines the relevant product market as “the sale of commercial health insurance to National Accounts with 5,000 members or more spread across two or more states. The relevant geographic market is the entire United States.”[viii]

Allegedly,

the individual Defendant Insurance Companies are each granted a putative license to use the Blue brand to sell commercial health insurance in an “exclusive service area” (each, an “Allocated Area”). Under the rules governing the Blue conspiracy, with certain limited exceptions, the Defendant Insurance Company allotted the Allocated Area where an employer or plan is headquartered is the only Defendant Insurance Company allowed to bid to provide services to that employer or plans. Even in the limited areas where the Allocated Areas of two Defendant Insurance Companies overlap, all other Defendant Insurance Companies are still prohibited from quoting employers or plans for insurance or ASO services in those areas. These are territorial limitations among actual or potential horizontal competitors. Thus, Allocated Areas are intended to prevent – and do in fact prevent – Defendant Insurance Companies from bidding for an account headquartered outside of their Allocated Area, including with respect to the ASO contracts. This restriction on competition has injured Plaintiffs by causing them to overpay for ASO services.[ix]

The Sherman Antitrust Act was adopted in 1890, was named after its principal author, Senator John Sherman, and along with the Clayton Antitrust Act of 1914 and the Robinson-Patman Act of 1936 comprise the three major U.S. antitrust enactments.  Generally, the Sherman Act prohibits anticompetitive agreements and conduct that monopolizes or attempts to monopolize a market. Section 1 of the Sherman Act provides in pertinent part, “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” There are three elements to a violation of Section1, (i) an agreement, (ii) which unreasonably restrains competition, and (iii) which affects interstate commerce.

The Plaintiffs allege that the conduct of the Defendants is a per se illegal market division, defined by the Antitrust Division of the Department of Justice as:

Market division or allocation schemes are agreements in which competitors divide markets among themselves. In such schemes, competing firms allocate specific customers or types of customers, products, or territories among themselves. For example, one competitor will be allowed to sell to, or bid on contracts let by, certain customers or types of customers. In return, he or she will not sell to, or bid on contracts let by, customers allocated to the other competitors. In other schemes, competitors agree to sell only to customers in certain geographic areas and refuse to sell to, or quote intentionally high prices to, customers in geographic areas allocated to conspirator companies.[x]

“The restraints and regulations of BCBSA, including, but not limited to, the License Agreements, the Membership Standards, and the Guidelines, constitute horizontal agreements between competitors, Defendant Insurance Company, to limit output and divide the geographic market for commercial healthcare insurance in the United States. As such, they are a per se violation of Section 1 of the Sherman Act.”[xi] Plaintiffs cite to statements contained in public SEC filings as well as internal documents in support of the claims asserted in the Complaint. “For example, in a summary conversations with four Blue CEOs from 1986, they stated ‘the major advantage of an exclusive franchise area was seen in the lessening of competition as well as the opportunity to discuss plans and proposals with companies in the same industry knowing that those ideas would not be used against you.’ Further, another Defendant Insurance Company CEO stated, ‘[Blues] benefit from the exclusive service areas because it eliminates competition from other Blue Plans,’ and that without the exclusive service areas, ‘there would be open warfare.’”[xii]

An array of relief is available to plaintiffs in private antitrust actions under U.S. law. Under Section 4 of the Clayton Act, plaintiffs may recover three times their total compensatory, or actual, damages (“treble damages”) together with costs incurred and reasonable attorneys’ fees. To do so, “a private plaintiff must demonstrate that he has suffered an ‘antitrust injury’ as a result of the alleged conduct of the defendants, and that he has standing to pursue a claim under the federal antitrust laws.” In re Canadian Import Antitrust Litig., 470 F.3d 785, 791 (8th Cir.2006). An antitrust injury is “injury of the type that the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.” Brunswick Corp. v. Pueblo Bowl–O–Mat, Inc., 429 U.S. 477, 489 (1977). To secure an injunction under Section 16 of the Clayton Act, a private plaintiff must demonstrate a threatened loss or damage “of the type the antitrust laws were designed to prevent and that flows from that which makes defendants’ acts unlawful.” Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 113 (1986). “Section 16’s requirement of ‘threatened injury,’ dovetails with Article III’s requirement that in order to obtain forward-looking relief, a plaintiff must face a threat of injury that is both ‘real and immediate,’ not ‘conjectural’ or ‘hypothetical.’“ In re New Motor Vehicles Canadian Exp. Antitrust Litig., 522 F.3d 6, 14 (1st Cir.2008). “There must be some immediacy or imminence to the threatened injury.” Id.

The relief sought by the Plaintiffs includes treble damages as well as an order enjoining the Defendants from “entering into, or from honoring or enforcing, any agreements that limit output or restrict the territories or geographic areas in which any Blue Company may compete for National Accounts.” A jury trial is demanded.

The ASO lawsuit follows upon the heels of the settlement of a class action antitrust lawsuit captioned In re: Blue Cross Blue Shield Antitrust Litigation MDL 2406, N.D. Ala. Master File No. 2:13-cv-20000-RDP reached in October 2020. That case was filed on behalf of individuals and companies that purchased or received health insurance provided or administered by a Blue Cross Blue Shield company. Those plaintiffs had alleged that the defendant Blue Cross entities had violated the antitrust laws by entering into an agreement not to compete with each other and to limit competition among themselves in selling health insurance and administrative services for health insurance. If approved by the Court, the Settlement will establish a $2.67 billion Settlement Fund.

__

[i] Alaska Air Group, Inc.; Alaska Air Group, Inc. Welfare Benefit Plan; Alaska Airlines, Inc.; Alaska Airlines, Inc. Welfare Benefit Plan; Albertsons Companies, Inc., New Albertsons L.P., Albertson’s LLC, New Albertson’s Inc., and Safeway Inc.; Albertsons Companies, Inc. Health and Welfare Plan, f/k/a Albertson’s LLC Health & Welfare Plan; New Albertson’s Inc. Health and Welfare Plan; American Electric Power Service Corporation; American Electric Power System Comprehensive Medical Plan; Big Lots, Inc.; Big Lots Associate Benefit Plan; The Board of Pensions of the Presbyterian Church (U.S.A.); The Benefits Plan of the Presbyterian Church (U.S.A.); The Boeing Company; The Boeing Company Master Welfare Benefit Plan; Bridgestone Americas, Inc.; Bridgestone Americas, Inc. Employee Group Insurance Plan; Bridgestone Americas, Inc. Retiree Medical Plan; Burlington Northern Santa Fe, LLC; Burlington Northern Santa Fe Corporation Welfare Benefits Trust; Burlington Northern Santa Fe Group Benefits Plan; The Carpenters and Joiners Welfare Fund; Chicago Painters and Decorators Welfare Fund and, its affiliates and predecessors, including the Chicago Painters and Decorators Retiree Welfare Fund; Christian Brothers Services (a church plan benefits board created by the Christian Brothers religious order); Christian Brothers Employee Benefit Trust; Church Pension Group Services Corporation; Episcopal Health Plan; Episcopal Health Plan for Qualified Small Employer Exception; Conagra Brands, Inc.; ConAgra Foods, Inc. Welfare Benefit Wrap Plan; Concordia Plan Services; Concordia Health Plan; Dollar General Corporation; Dollar General Health Plan (a component of the Dollar General Corporation Employee Benefits Plan); FedEx Corporation; Federal Express Corporation; FedEx Freight, Inc.; The FedEx Corporation Group Health Plan; FedEx Group Health Plan; FedEx Corporation Retiree Group Health Plan; The Federal Express Corporation Group Health Plan; The Federal Express Corporation Group Health Plan for Pilots; Federal Express Corporation Retiree Group Health Plan for Pilots; Federal Express Corporation Retiree Group Health Plan; General Board of Pension and Health Benefits of The United Methodist Church, Incorporated in Illinois, d/b/a Wespath Benefits and Investments; UMC Benefit Board, Inc.; Employee Health Benefit Trust of The United Methodist Church; HealthFlex Plan; GuideStone Financial Resources; GuideStone Group Plan; GuideStone Personal Plan; Heartland Health & Wellness Fund; Horizon Air Industries, Inc.; Horizon Air Industries, Inc. Welfare Benefit Plan; Employee Benefit Plan for Employees of Horizon Air Industries, Inc.; Employee Benefit Plan for Full-Time and Part-Time Employees Horizon Air Industries, Inc.; Hy-Vee, Inc.; Hy-Vee and Affiliates Benefit Plan and Trust; Indiana/Kentucky/Ohio Regional Council of Carpenters’ Welfare Fund; Kellogg Company; Kellogg Company Welfare Benefit Plan; Kellogg Company Retiree Welfare Benefit Plan; The Kroger Co., 84.51 LLC, and Murray’s Cheese LLC; The Kroger Co. Health and Welfare Benefit Plan; 84.51 LLC Health & Welfare Plan; McLane Company Inc.; McLane Company, Inc. Welfare Plan; Meijer, Inc. including its affiliates Meijer Great Lakes LP, Meijer Stores LP, and Town Total Health LLC; Meijer Health Benefits Plan; Ohio Carpenters’ Health Fund; Plumbers’ Welfare Fund, Local 130, U.A.; Board of Pensions of the Evangelical Lutheran Church in America d/b/a Portico Benefits Services; ELCA Medical and Dental Benefits Plan; Publix Super Markets, Inc.; Publix Super Markets, Inc. Group Health Benefit Plan; SEIU Local 1 & Participating Employers Health Trust; SEIU Local 1 & Participating Employers Health Trust – Plan 1; SEIU Local 1 & Participating Employers Health Trust – Plan 3; Local No. 1 Health Fund; Plan of Benefits for the Local No. 1 Health Fund; The Sheet Metal Workers Local 73 Welfare Fund; Tractor Supply Company; The Tractor Supply Company Medical Plan; United Natural Foods, Inc., including its affiliates SUPERVALU, INC., and Unified Grocers, Inc. (“UNFI”); UNFI Health and Welfare Plan; United Natural Foods Employee Benefit Plan, SUPERVALU Group Health Plan, SUPERVALU Retiree Benefit Plan, Unified Grocers, Inc. Group Welfare Plan and Unified Grocers, Inc. Retiree Medical Plan; Walgreen Co.; Walgreen Health and Welfare Plan (Plan No. 501) f/k/a Walgreen Major Medical Expense Plan.

[ii] Case. No. 2:21-cv-01209.

[iii] Judge Manasco was appointed by President Donald Trump and was confirmed on May 20, 2020. She is a 2008 graduate of Yale Law School.

[iv] Anthem, Inc., f/k/a WellPoint, Inc. d/b/a Anthem Blue Cross Life and Health Insurance Company, Blue Cross of California, Blue Cross of Southern California, Blue Cross of Northern California (Blue Cross of California, Blue Cross of Southern California and Blue Cross of Northern California are referred to herein, together, as “Anthem-CA”), and Blue Cross Blue Shield of Georgia (“Anthem-GA”), and also does business through its subsidiaries or divisions, including, Anthem Health Plans, Inc. d/b/a Anthem Blue Cross Blue Shield of Connecticut (“Anthem-CT”), Rocky Mountain Hospital & Medical Service, Inc. d/b/a Anthem Blue Cross Blue Shield of Colorado (“Anthem-CO”) and Anthem Blue Cross Blue Shield of Nevada (“Anthem-NV”), Anthem Insurance Companies, Inc. d/b/a Anthem Blue Cross Blue Shield of Indiana (“Anthem-IN”), Anthem Health Plans of Kentucky, Inc. d/b/a Anthem Blue Cross Blue Shield of Kentucky (“Anthem-KY”), Anthem Health Plans of Maine, Inc. d/b/a Anthem Blue Cross Blue Shield of Maine (“Anthem-ME”), Anthem Blue Cross Blue Shield of Missouri, RightCHOICE Managed Care, Inc., Healthy Alliance Life Insurance Company and HMO Missouri Inc. (together, “Anthem-MO”), Anthem Health Plans of New Hampshire, Inc. d/b/a Anthem Blue Cross Blue Shield of New Hampshire (“Anthem-NH”), Empire HealthChoice Assurance, Inc. d/b/a Empire Blue Cross Blue Shield (“Anthem-Empire”), Community Insurance Company d/b/a Anthem Blue Cross Blue Shield of Ohio (“Anthem-OH”), Anthem Health Plans of Virginia, Inc. d/b/a Anthem Blue Cross and Blue Shield of Virginia, (“Anthem-VA”), Anthem Blue Cross Blue Shield of Wisconsin, and Compcare Health Services Insurance Corporation (together, “Anthem-WI”); (2) Aware Integrated, Inc. and BCBSM, Inc., d/b/a Blue Cross and Blue Shield of Minnesota (together “Aware”); (3) Blue Cross and Blue Shield of Alabama (“BCBS-AL”); (4) Blue Cross and Blue Shield of Arizona, Inc. (“BCBS-AZ”); (5) Blue Cross of Idaho Health Service, Inc. d/b/a Blue Cross of Idaho (“Idaho Health”); (6) Blue Cross and Blue Shield of Kansas, Inc., also d/b/a BlueCross Blue Shield of Kansas (“BCBS-KS”); (7) Blue Cross and Blue Shield of Kansas City (“BCBS-KC”); (8) Blue Cross and Blue Shield of Massachusetts, Inc. (“BCBS-MA”); (9) Blue Cross Blue Shield of Michigan Mutual Insurance Company (“BCBS-MI”); (10) Blue Cross Blue Shield of Mississippi, a Mutual Insurance Company (“BCBS-MS”); (11) Blue Cross and Blue Shield of North Carolina (“BCBS-NC”); (12) Blue Cross and Blue Shield of Rhode Island (“BCBS-RI”); (13) Blue Cross and Blue Shield of South Carolina (“BCBS-SC”); (14) Blue Cross Blue Shield of Tennessee, Inc. (“BCBS-TN”); (15) Blue Cross and Blue Shield of Vermont (“BCBS-VT”); (16) Blue Cross and Blue Shield of Wyoming (“BCBS-WY”); (17) California Physicians’ Service, d/b/a Blue Shield of California (“California Physicians’ Service”); (18) Cambia Health Solutions, Inc., and its affiliates and/or assumed names Regence BlueShield of Idaho (“Cambia-ID”), Regence Blue Cross Blue Shield of Oregon (“Cambia-OR”), Regence Blue Cross Blue Shield of Utah (“Cambia-UT”), and Regence Blue Shield (of Washington) (“Cambia-WA”); (19) Capital Blue Cross (“Capital”); (20) CareFirst, Inc. and its subsidiaries or affiliates Group Hospitalization and Medical Services, Inc., CareFirst of Maryland, Inc., and CareFirst BlueChoice, Inc., which collectively d/b/a CareFirst BlueCross BlueShield (CareFirst, Inc., CareFirst of Maryland, Inc. and CareFirst BlueChoice, Inc. are referred to herein, together, as “CareFirst-MD”, and CareFirst, Inc., Group Hospitalization and Medical Services, Inc. and CareFirst BlueChoice, Inc. are referred to herein, together, as “CareFirst-DC”); (21) GoodLife Partners, Inc. and Blue Cross and Blue Shield of Nebraska (together “GoodLife”); (22) GuideWell Mutual Holding Corporation and Blue Cross and Blue Shield of Florida, Inc. d/b/a Florida Blue (together “GuideWell”); (23) Hawaii Medical Service Association d/b/a Blue Cross and Blue Shield of Hawaii (“Hawaii Medical”); (24) Health Care Service Corporation, a Mutual Legal Reserve Company d/b/a Blue Cross and Blue Shield of Illinois (“HCSC-IL”), Blue Cross and Blue Shield of Montana, (“HCSC-MT”), including its predecessor Caring for Montanans, Inc., Blue Cross and Blue Shield of New Mexico (“HCSC-NM”), Blue Cross and Blue Shield of Oklahoma (“HCSC-OK”), and Blue Cross and Blue Shield of Texas (“HCSC-TX”); (25) HealthyDakota Mutual Holdings and Noridian Mutual Insurance Company d/b/a Blue Cross Blue Shield of North Dakota (together “Noridian”); (26) Highmark, Inc. and Highmark Health both d/b/a Highmark Blue Shield and Highmark Blue Cross Blue Shield and including Highmark Inc. predecessor Hospital Service Association of Northeastern Pennsylvania f/d/b/a Blue Cross of Northeastern Pennsylvania (together, “Highmark Northeastern PA”); Highmark Blue Cross Blue Shield Delaware Inc. d/b/a Highmark Blue Cross Blue Shield Delaware (“Highmark-DE”), Highmark West Virginia Inc. d/b/a Highmark Blue Cross Blue Shield West Virginia (“Highmark-WV”); Highmark Inc. affiliates HealthNow New York Inc. and HealthNow Systems, Inc. together d/b/a Highmark Blue Cross Blue Shield of Western New York and f/d/b/a BlueCross BlueShield of Western New York (“Highmark Western NY”) and Highmark Blue Shield of Northeastern New York f/d/b/a BlueShield of Northeastern New York (“Highmark Northeastern NY”); (27) Horizon Healthcare Services, Inc., d/b/a Horizon Blue Cross Blue Shield of New Jersey (“BCBS-NJ”); (28) Independence Health Group, Inc. and Independence Hospital Indemnity Plan, Inc., and its subsidiary or division Independence Blue Cross (together “Independence”); (29) Lifetime Healthcare, Inc. and Excellus Health Plan, Inc., d/b/a Excellus BlueCross BlueShield (together “Excellus”); (30) Louisiana Health Service & Indemnity Company d/b/a Blue Cross and Blue Shield of Louisiana (“Louisiana Health”); (31) PREMERA and Premera Blue Cross (“Premera-WA”), which also does business as Premera Blue Cross Blue Shield of Alaska (“Premera-AK”); (32) Triple-S Management Corporation and Triple S-Salud, Inc. (together “Triple-S”); (33) USAble Mutual Insurance Company d/b/a Arkansas Blue Cross and Blue Shield and as Blue Advantage Administrators of Arkansas (“USAble”); (34) Wellmark, Inc., including its subsidiaries and/or divisions, Wellmark Blue Cross and Blue Shield of Iowa (“Wellmark-IA”) and Wellmark of South Dakota, Inc. d/b/a Wellmark Blue Cross and Blue Shield of South Dakota (“Wellmark-SD”) (collectively, “Wellmark”); and (35) the Blue Cross and Blue Shield Association (“BCBSA”).

[v] Complaint, p. 13, § 1.

[vi] Id., § 2.

[vii] Id., p. 14, § 5.

[viii] Id., p. 70, § 275.

[ix] Id., p. 71, 278.

[x] Id., p. 73, § 283.

[xi] Id., p. 91, § 370.

[xii] Id., p. 99, § 406.