Blue Cross Blue Shield Antitrust Litigation – Proposed Settlement (Benefit Minute)
On November 30, 2020, preliminary approval was granted for a settlement agreement to resolve antitrust claims against Blue Cross Blue Shield Association and member plans, including CareFirst. The class action lawsuit was based on allegations that member plans conspired together to divide the country into service areas and then worked to limit competition among the respective Blues Plans and their competitors. The Association and its members denied all wrongdoing but agreed to a settlement to avoid the cost and risk of further litigation.
The Settlement Class
Individuals, fully insured groups (and their employees) and self-funded accounts (and their employees) that purchased or were enrolled in a Blue Cross or Blue Shield health insurance or administrative services plan during the applicable Settlement Class Periods are included in the settlement class. Dependents, beneficiaries (including minors), and non-employees are not eligible to receive payment. Government accounts are excluded from the settlement class as are entities that only had standalone dental and/or vision products.
There are two Settlement Class Periods (timeframe for coverage/TPA services). For individuals and fully-insured groups, it is from February 7, 2008, through October 16, 2020. For self-funded accounts it is from September 1, 2015 through October 16, 2020.
Settlement Benefits and Allocation
The net settlement fund is estimated to be $1.9 billion. This is after deduction of attorneys’ fees, administration expenses and other costs from the $2.67 billion settlement. 93.5% of the net settlement ($1.76 billion) will be distributed to individuals, fully insured groups, and their employees. The remaining 6.5% ($120 million) will be distributed to self-funded accounts and their employees. These two amounts will be distributed independently.
The member plans involved in the settlement have provided premium/administrative fee data for the Settlement Class Period which will be used to determine specific settlement payments. Since employers and their employees typically share premium costs, the settlement distribution plan allocates premiums between the two. A default allocation for each fully insured group has been set follows:
- 15% of the premium for single coverage is deemed to have been paid by the employee
- 34% of the premium for family coverage is deemed to have been paid by the employee
- The remainder is allocated to the fully insured group
For each self-funded account, the default allocation is:
- 18% of the administrative fee for single coverage is deemed to have been paid by the employee
- 25% of the administrative fee for family coverage is deemed to have been paid by the employee
- the reminder is allocated to the self-funded account
If no employees of the group file a claim, the full applicable settlement amount will go to the group. There is an option for fully insured groups and self-funded accounts to submit data or records supporting that a different allocation should be applied. If the total payment for any class member is equal to or less than $5, no payment will be made.
Options Available to Class Members
A class member remains in the settlement class unless specifically opting out. By remaining, the individual or group is legally bound by the settlement agreement and cannot sue, continue to sue, or be part of any other lawsuit that makes claims based on the facts and legal theories involved in this case. A class member still has the right to object to the settlement. A class member who does not opt-out is part of the settlement class even if no claim is filed; however, a claim must be filed to receive a payment from the settlement.
A class member who wishes to opt-out may send a request for exclusion. By opting out, an individual or group will not receive a settlement payment but will maintain the right to sue the defendants for the claims in this case. Opt-outs must be postmarked by July 28, 2021.
Filing A Claim
Both employers and employees should receive notice of the settlement through a Court-approved notice program. This notice will include a unique ID that can be used to file a claim, either online or by mailing a completed claim form. A claim can be filed even if the unique ID is not received or is lost. However, a group or employee will have to provide more information when submitting a claim. All claim forms must be submitted online or postmarked by November 5, 2021. The settlement website is bcbssettlement.com.
Certain third parties are making solicitations to assist with the claims filing process in exchange for a portion of the settlement proceeds. It appears that the claims process is fairly straightforward since the premium/fee data has been provided by the member plans, so third party assistance with filing a claim is likely unnecessary.
Beyond monetary relief, the settlement will impact how the member plans conduct operations. Some of the operational practices which are set to be eliminated include: 1) limiting the amount of “non-Blue” business that a Blue Cross licensee can have outside of the respective service area; 2) limiting the ability of out-of-state Blues to bid for insurance business against a home Blue for larger employers (at least 5,000 employees); and 3) restricting the ability of a Blues member to acquire another Blues member, in most circumstances. The relief also significantly restricts the ability of the Blues to utilize most favored nations clauses in provider contracts.
These operational changes are intended to increase the opportunities for competition in the market for health insurance. As part of the injunctive relief, a Monitoring Committee will be established for five years to mediate any disputes resulting from implementation of the injunctive relief.
Second Blue Bid
Following final settlement approval, certain large, self-funded national employers will be able to request a bid for coverage from a second Blues Plan involved in the settlement. The Second Blue Bid provision was designed to enable 33 million members of the largest, geographically dispersed, self-funded national employers to have the opportunity to receive a Second Blue Bid. The settlement website has a list of the employers that are eligible for a Second Blue Bid.
Approval of Final Settlement Still Pending
As stated above, the settlement is preliminary. The Court still has to decide whether to approve the settlement. Payments will only be made if the Court approves the settlement and after any appeals are resolved.