By Andrew Longstreth
NEW YORK, Feb 20 (Reuters) - A litigation onslaught facing
the Blue Cross and Blue Shield Association and its 38 member
health plans over alleged antitrust violations has snowballed
ahead of a legal status conference scheduled for Thursday.
Three more lawsuits were filed last week alleging a
conspiracy among the Blue Cross and Blue Shield Association and
its member plans to divide the U.S. healthcare market into
geographical areas that allowed plans to avoid competing with
each other. At least 27 lawsuits have now been filed.
The litigation, which has gained national attention amidst a
debate over rising healthcare costs, questions the legality of
licensing agreements the Blue Cross and Blue Shield Association
has with member plans nationwide.
Plan subscribers and healthcare providers allege that
through those agreements, the Blue Cross and Blue Shield member
plans have agreed not to compete with one another, in violation
of the Sherman Act and other state antitrust laws.
Plaintiffs are seeking an order to prevent the Blue Cross
and Blue Shield Association from restricting competition among
member plans in certain states. Plaintiffs are also asking for
three times the amount of their actual damages.
Tilden Katz, a spokesman for the Blue Cross and Blue Shield
Association, said in a statement that the litigation was without
merit.
In December, the Judicial Panel on Multidistrict Litigation
ordered that the litigation be consolidated into one proceeding
in the Northern District of Alabama in Birmingham before Judge
R. David Proctor.
A status conference scheduled for Thursday in Birmingham is
expected to address how the litigation will proceed. Around 80
lawyers are expected to be in attendance.
Among the issues on the agenda are how to resolve discovery
issues; whether plaintiffs' lawyers should file a consolidated
complaint on behalf of both subscribers and healthcare
providers; and which legal issues need immediate attention.
Some of the lawyers for the plaintiffs want Judge Proctor to
establish a procedure that will ultimately address whether the
licensing agreements at issue in the case are illegal on their
face or whether they should be evaluated under their specific
circumstances.
The Blue Cross and Blue Shield Association will likely argue
that the terms in its licensing agreements are justified in the
maintenance and protection of its trademark, said Barak Richman,
a professor at Duke University School of Law who specializes in
antitrust.
"That's an argument I find very hard to make convincing,"
Richman said. "Horizontal territorial divisions are among the
most abhorrent antitrust violations."
Katz said in a statement that the Blue Cross and Blue Shield
"system provides specific advantages: affordable access to a
broad network of doctors and hospitals, serviced by a local
company with a deep commitment to the community."
At the status hearing on Thursday, David Zott and Daniel
Laytin of Kirkland & Ellis and Craig Hoover of Hogan Lovells are
expected to speak for the Blue Cross and Blue Shield entities.
Joe Whatley and Edith Kallas of Whatley Drake & Kallas have
been designated to speak for the healthcare provider plaintiffs.
David Boies of Boies, Schiller & Flexner and Greg Davis of Davis
& Taliaferro are expected to speak for the subscriber plaintiffs
The case is In Re: Blue Cross Blue Shield Antitrust
Litigation, U.S. District Court, Northern District of Alabama,
13-20000.
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