Blue Cross Blue Shield (BCBS) agreed to pay $2.8 billion to settle a class action antitrust lawsuit brought by hospitals and healthcare providers who allege they were underpaid by BCBS. The $2.8 billion settlement includes both cash payments and new improvements to the BlueCard program overall. While agreeing to the settlement, Blue Cross denied any wrongdoing. The final hearing to approve the deal has been scheduled for late July before Chief Judge R. David Proctor of the U.S. District Court for the Northern District of Alabama.
Now, in a new twist, hundreds of hospitals and healthcare providers have not only rejected the deal but gone one step further by filing a new antitrust lawsuit. With this recent maneuver, doctors and hospitals have opened up a new battlefront in their legal war against BCBS.
In this latest move, the plaintiffs allege BCBS underpaid them by billions of dollars and charge the giant insurance companies with antitrust violations and collusion.
The new class action lawsuits rejecting the $2.8 billion settlement were filed in federal courts in three states: California, Illinois and Pennsylvania. The plaintiffs allege an illegal conspiracy among BCBS that violated federal antitrust law, resulting in higher insurance costs and lower reimbursements for patients.
In a statement after filing the suit in Pennsylvania federal court, Temple University Health System and other plaintiffs accused BCBS of collusion and worse.
“Defendants colluded for one reason: to pay healthcare providers, including plaintiffs, far less than they would have been paid in a competitive market,” Temple University claimed.
In the complaint, the plaintiffs allege, “Defendants’ collusion violated federal antitrust laws.” The complaint goes on to allege, “Defendant Insurance Companies conspired to implement output-reducing restraints on each other Defendant Insurance Company’s ability to compete for the purchase of healthcare services.”
Plaintiffs in court documents say that the defendant insurance companies together “provide health insurance coverage for over 100 million—or one in three—Americans.”
The insurance companies are charged with violating laws by agreeing not to contract with healthcare providers outside of each defendant’s designated geographic area and to fix prices paid to healthcare providers.
The lawsuit notes that the insurance companies violated output-reducing agreements after agreeing to a “National Best Efforts Rule” that limits the defendants from earning more than a third of their revenue from “the sale of services that do not carry a Blue Cross or Blue Shield brand or trademark,” as well as a “Local Best Efforts Rule” that requires the defendants to receive 80 percent of their revenue within an “exclusive service area” to come “from the sale of services using a Blue Cross and/or Blue Shield mark.” According to the complaint, “The effect of these restraints is to ban or otherwise frustrate all competition for the purchase of healthcare services among Defendant Insurance Companies.”
In a prior lawsuit in 2020, BCBS agreed to settle other antitrust claims brought by both individual and commercial subscribers who allege they were overcharged by the insurance companies. In 2024, the U.S. Supreme Court upheld a $2.7 billion settlement from the 2020 case.
The lawsuit references two landmark federal laws prohibiting monopolies, restraints of trade, and other anticompetitive practices: the Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914. In the complaint, the plaintiffs cite sections 4 and 16 of the Clayton Act for their claim “to recover treble damages and costs of suit, including reasonable attorneys’ fees, and injunctive relief against the Defendants for the harm caused by Defendants’ violations of sections 1 and 3 of the Sherman Act.”
The lawsuit calls for a trial by jury.
