Blue Cross $30M Deal Undone by Wrongly Sealed Filings

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By Perry Cooper

June 7 — The fairness of a $30 million class deal can't be determined thanks to court orders sealing most of the filings in an antitrust suit against Blue Cross Blue Shield of Michigan, the Sixth Circuit ruled ( Shane Grp. Inc. v. Blue Cross Blue Shield of Mich., 6th Cir., No. 15-1544, 6/7/16 ).

Class members can't participate meaningfully in the settlement approval process unless they can review the documents in the court record, Judge Raymond M. Kethledge wrote June 7 for the U.S. Court of Appeals for the Sixth Circuit.

Price-Fixing Allegations

Plaintiffs sued Blue Cross under the Sherman Act, 15 U.S.C. § 15, for allegedly agreeing to pay hospitals higher rates if the hospitals would charge even higher rates to other commercial health insurers.

Most of the parties' filings were placed under seal, with the justification that they contained trade secrets or sensitive financial information.

The parties reached a $30 million settlement, which included $10 million in attorneys' fees, $3.5 million in costs and thousands in incentive awards and administrative fees. That left just $14.7 million to be shared by the 3 to 7 million class members.

The deal won preliminary and final approval over objectors' challenges that they couldn't adequately assess the fairness of the deal without access to the court record.

‘Bentley Rates.'

The Sixth Circuit called foul, saying it was “unmistakable” that “every document that was sealed in the district court was sealed improperly.”

Instead, the parties should have argued “on a document-by-document, line-by-line basis” that specific information in the filings met the demanding requirements for seal.

The court also questioned the calculation of the attorneys' fees, calling the hourly rates claimed “Bentley rates.”

It ordered the district court to unseal the documents and to restart the settlement approval process.

Judges Eugene E. Siler Jr. and Deborah L. Cook joined the opinion.

Varnum LLP represented the objectors.

Cohen Milstein Sellers & Toll PLLC represented the plaintiffs.

Sidley Austin LLP reprsented Blue Cross.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editors responsible for this story: Steven Patrick at spatrick@bna.com and Jeffrey D. Koelemay at jkoelemay@bna.com