As the late, great Ray Charles once sang, “here we go again.”
Blue Cross Blue Shield of Michigan has once again proposed a $30 million settlement for a lawsuit challenging its use of “most favored nation” clauses in contracts with providers. And, once again, a group of 26 self-insured companies is poised to object to the settlement.
The most favored nation clauses required Blue Cross Blue Shield to pay high rates to providers in return for an agreement that the providers would charge at least the same, if not higher, rates to the insurer’s competitors. The suit claimed that the clauses caused a 16 percent increase in health-care prices in Michigan over a decade.
This litigation, as well as enforcement actions by the federal government, resulted in Michigan passing a law banning the use of most favored nation clauses going forward unless those clauses are specifically approved by the state insurance commissioner.
A federal judge approved an original settlement of the case
in March 2015 for $30 million, with
$15 million of that amount going to attorneys’ fees and costs.
But a group of class members objected, claiming that the
court had improperly sealed all of the filings in the case, making it
impossible for them to judge whether the settlement fairly represented the
damages alleged. Those damages ranged from $118 million to almost $900 million,
depending on whose estimates used
The U.S. Court of Appeals for the Sixth Circuit agreed in June of this year, vacating the judge’s approval and ordering her to unseal large portions of the record for the objectors to review. Additionally, the appeals court questioned the calculation of attorneys’ fees in the case, calling them “Bentley rates, not Cadillac rates.”
Four months after the Sixth Circuit’s order, Blue Cross Blue Shield and the named plaintiffs have presented the court with a nearly identical settlement, and are still working on unsealing the court filings. The attorney for the original objectors told me that his clients planned to once again object to the settlement, decrying the lack of “a single new piece of information” to support it.
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