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May 23, 2022

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Blue Cross Gets Big Early Victory in Antitrust MDL Proceeding

Round one of the In re Blue Cross Blue Shield Antitrust Litigation (MDL 2406), a multi-district antitrust action brought against 38 Blue Cross & Blue Shield entities and the Blue Cross Blue Shield Association that is currently pending in Birmingham, Alabama, before District Judge David Proctor, has gone to the Blues, courtesy of a ruling from another District Court Judge more than 800 miles from Birmingham. Specifically, on August 22, Judge Frederico Moreno, District Court Judge for the Southern District of Florida, held that a series of settlement agreements between the Blues and over 600,000 doctors that resolved a prior litigation over which Judge Moreno had presided (In re Managed Care Litigation), barred the doctors from asserting their antitrust claims in the new MDL proceeding. 

The prior case, In re Managed Care Litigation, which was commenced in 2000, concerned a challenge by a group of physicians to the level of reimbursements they received from managed care companies, including the Blues, for covered medical services. The litigation was ultimately resolved through a series of settlements reached by the parties from 2005-2007. As Judge Moreno noted in his recent decision (Musselman v. Blue Cross Blue Shield of Alabama), to settle that litigation the defendants “agreed to make substantial payments to the class members and their counsel and to implement numerous business practice initiatives” and, in exchange, the defendants “received broad releases from the plaintiffs and an injunction from the Court barring releasing parties from bringing released claims” in the future. 

Recognizing that these releases presented a possible obstacle to plaintiffs’ claims in the In re Blue Cross Blue Shield Antitrust Litigation, earlier this year the physician plaintiffs filed a declaratory judgment action in Miami, before Judge Moreno, requesting that he find that their antitrust claims were not released by their earlier settlement (or that the decision should await further discovery, and then be decided by Judge Proctor in Birmingham). In support of their position, the plaintiffs maintained that the claims in the new case were materially different than those in the earlier case, with the earlier case focusing on whether the managed care companies had engaged in business practices that had delayed or reduced their reimbursements, while the new case involves a claim that the Blues’ trademark licensing agreements act as an unlawful agreement among the Blues not to compete with one another, thus reducing the reimbursement levels received by the physicians for their services. Defendants responded to plaintiffs’ action by filing a motion to dismiss the complaint, maintaining that the earlier settlements barred plaintiffs from asserting the claims in their new action. 

Siding with the Blues, Judge Moreno rejected plaintiffs’ arguments in all respects, ruling that (1) the issue was properly before him, because he had retained jurisdiction in the earlier matter to hear any dispute about the interpretation, administration and consummation of the settlement agreement and (2) that plaintiffs’ new claims “share the same operative nucleus of fact” with those previously raised by plaintiffs, and thus fell within the scope of the plaintiffs’ release. In addition, Judge Moreno noted that the plaintiffs had agreed to release any claim that involved “any aspect of any fee for service claim,” and held that plaintiffs’ new antitrust claims were covered under this provision of the release as well. Finally, Judge Moreno also rejected plaintiffs’ argument that, because their claims also involved post-settlement conduct, the release was ineffective, stating that “Both this Court and the 11th Circuit Court of Appeals have consistently rejected the argument that claims involving post-settlement conduct cannot be enjoined by the settlement agreements.” 

In light of Judge Moreno’s ruling, the size and scope of the In re Blue Cross Blue Shield Antitrust Litigation – a potentially massive piece of litigation that is still in its earliest stages - has been materially reduced, with the claims of over 600,000 potential physician class members being resolved in favor of the Blues. Notwithstanding this significant development, however, the new case will undoubtedly continue, at least for now, because Judge Moreno’s ruling has no apparent impact on the claims asserted by the hospital provider plaintiffs in the new case or those of the subscribers/insured class. Accordingly, the case now returns to Birmingham, and Judge Proctor, presumably for a ruling on defendants’ expected motions to dismiss the claims asserted by these plaintiffs, which are expected to be filed early this fall and likely decided closer to year’s end, or early next year. Stay tuned. 

© Copyright 2022 Dickinson Wright PLLCNational Law Review, Volume III, Number 252
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