Healthcare providers accuse Blue Cross and Blue Shield of acting as a cartel

Two federal lawsuits — one brought on behalf of healthcare providers and one on behalf of individual and small-employer customers — claim Blue Cross and Blue Shield insurers are engaging in cartel-like behavior by divvying up markets to avoid competing against one another, according to The Wall Street Journal.

The two lawsuits name all 37 Blue Cross and Blue Shield companies, which cover about a third of Americans, and the Blue Cross Blue Shield Association as defendants.

The lawsuits focus on the licensing agreements the Blue Cross Blue Shield Association has with insurers, which usually involve companies having exclusive rights to the Blue Cross and Blue Shield names within a certain region, according to the report.

In their lawsuit, the customers claim they are paying inflated premiums due to the illegal market division the companies are engaging in and other actions on the part of the Blue association, such as placing limitations on the amount of non-Blue-brands business insurers can do.

The healthcare providers claim the Blue association's agreements lead to decreased competition causing them to be paid much less because of decreased competition in their regions.

However, Scott Nehs, general counsel of the Blue association, denies those claims. "There's no smoky room involved, there's no dividing up," he told The Wall Street Journal.

The defendants tried to get the lawsuits dismissed, but U.S. District Judge R. David Proctor refused to do so. In declining to dismiss the claims, Judge Proctor said the plaintiffs "have alleged a viable market-allocation scheme," according to the report.

The lawsuits could take years to resolve if a settlement is not reached, and it is unclear whether the parties are involved in settlement negotiations at this time, according to the report.


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