Dismiss antitrust suit, BCBSM says to court

January 4, 2011
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Blue Cross Blue Shield of Michigan is awaiting a January response to its request that the U.S. District Court in Detroit dismiss the antitrust lawsuit brought against it by the U.S. Department of Justice and the state attorney general.

“Hopefully, the jurist will dismiss the lawsuit. If that happens, that’s the end of the process,” BCBSM Vice President for Corporate Communications Andrew Hetzel said. Similar antitrust cases in other states have never gone to trial, he added.

BCBSM, the largest health insurer in Michigan, argued that it is protected from antitrust action by law and that the government failed to show “economic harm caused by anticompetitive behaviors in specific geographic markets or within specific products.”

The lawsuit, filed by the DOJ and Michigan Attorney General Mike Cox, contends that BCBSM’s contracts with at least 70 of the state’s 131 acute care hospitals included “most favored nation” clauses that violated state and federal antitrust laws.

BCBSM agreed to pay higher hospital rates in exchange for guarantees that all other insurers would pay at least as much or more, sometimes setting terms for how much more, according to the suit.

That caused hospital rates to rise, and Michigan companies and consumers have paid inflated insurance premiums as a result, the suit argues.

Hetzel denied the allegations, saying the MFN clauses are one tool the state’s largest insurer uses to keep costs down for its nearly 4 million members.

BCBSM Vice President and Chief Legal Counsel Jeffrey Rumley said that the nonprofit insurer’s special status and obligation to insure everyone should exempt it from the litigation.

“The government’s lawsuit … fails to recognize that the Michigan Blue Cross plan was enabled by state law and recognized by our Legislature as a primary vehicle to achieve critical public policy goals of the state — namely, statewide access to health care at reasonable cost for all of Michigan’s citizens,” Rumley said in a press release.

“U.S. Supreme Court precedent has long protected such state-related entities from federal antitrust claims, and that should continue to be the case here.”

With an entire state law aimed at operating and overseeing BCBSM, Hetzel said the nonprofit company labors under checks and balances that others in the business escape.

“We do feel strongly in our ability to do whatever we can to be able to successfully negotiate the lowest possible prices for our customers,” he said.

“We do feel very strongly that we should be allowed to continue using all of the tools at our disposal to achieve the cost savings our customers expect us to negotiate on their behalf.”

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