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MTA Sues Blue Cross, Opts Out of $2.7 Billion Antitrust Deal (1)

Nov. 4, 2021, 3:03 PMUpdated: Nov. 4, 2021, 5:18 PM

The Metropolitan Transportation Authority and New York’s other transportation agencies filed federal antitrust claims in Manhattan against the Blue Cross and Blue Shield health insurance network, saying they had opted out of a multidistrict class action that settled for nearly $2.7 billion.

The lawsuit, filed late Wednesday, targets the BCBS Association and more than three dozen affiliates, accusing them of basing their business model on an unlawful agreement to carve up the nationwide health insurance market into regional “service areas.”

The market allocation agreement “stifled or outright removed competition,” leading to inflated administrative fees for self-funded insurance plans like those offered by the transportation agencies, according to the complaint in the U.S. District Court for the Southern District of New York.

A BCBS Association spokesperson told Bloomberg Law in a statement Thursday that the organization is “unable to provide specific details on active litigation.”

But “Blue Cross Blue Shield plans remain focused on the goal we have had for more than 90 years: improving access to quality health care for all Americans and the health of our local communities,” the statement said.

The allegations echo claims that have been advancing for years in a federal court in Alabama, where health plan subscribers and the BCBS affiliates are seeking final approval from Judge R. David Proctor for the $2.67 billion settlement he tentatively signed off on in December 2020.

Counsel for the plan subscribers—led by Boies Schiller Flexner LLP and Hausfeld LLP—are asking for more than $600 million in fees for their work over the course of the case, which began in 2013.

That multidistrict litigation also includes claims on behalf of health care providers, like hospitals and doctors, who haven’t settled. The providers are moving forward with their bid to have the case certified as a class action.

Although the transportation agencies are opting out of the multidistrict settlement, their complaint cites a 2018 ruling by Proctor determining that the alleged market allocation agreement—if proven—constitutes a “per se” antitrust violation.

The judge got that critical threshold issue right, the suit says.

Cause of Action: Sections 1, 2, and 3 of the Sherman Act.

Relief: Damages, an injunction, costs, and fees.

Attorneys: The transportation agencies are represented by Calcaterra Pollack LLP.

The case is Metro. Transp. Auth. v. Blue Cross & Blue Shield of Ala. Inc., S.D.N.Y., No. 21-cv-9101, complaint filed 11/3/21.

(Updated with comment from the BCBS Association in fourth and fifth paragraphs.)

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com