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BlueCross BlueShield Hit with Price-Fixing Lawsuit

By Stephanie Robinson

On October 29, 2010, health insurance giant BlueCross BlueShield?s Michigan unit was sued for illegal price-fixing under the Sherman Act by Michigan plaintiffs seeking class-action certification. A copy of the complaint is available here. In their complaint, the plaintiffs allege that BCBS forced hospitals to include ?most favored nation? or ?MFN? clauses in their provider contracts, under which the hospitals allegedly agreed to charge other commercial insurers either at least as much as ? or more than ? they charged BCBS for the same services, thereby giving BCBS a competitive advantage in the marketplace. BCBS Michigan also is facing an antitrust lawsuit filed by the U.S. Department of Justice based on essentially the same set of facts. Antitrust litigation almost always is a complicated affair, but this lawsuit has the potential to turn into a legal quagmire, especially in light of the incendiary nature of the nation?s pending health-care debate. The outcome likely will hinge on the ability of BCBS? lawyers to show that the ultimate effect of the MFN language is not anticompetitive, which is a defense that will require significant discovery efforts and expert testimony. Requests for MFN clauses can be fairly common in a variety of contexts when one of the parties at the table is able to wield sufficient leverage during the negotiations process. However, businesses with sufficient market share need to be careful when drafting agreements that include MFN language, because third parties who are left out of the MFN relationship ? or who believe that they have been damaged by it ? may scour any operative contracts for provisions that can be used to cast doubt on the agreement. U.S. antitrust law can be a very powerful weapon for aggrieved consumers and jilted vendors. Developments in this lawsuit should be very interesting to watch.

Full post as published by Business and Technology Law on November 11, 2010 (boomark / email).