BCBS of Michigan Again Offers $30M in Antitrust Settlement

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By Matthew Loughran

Oct. 12 — Blue Cross Blue Shield of Michigan has again offered $30 million to settle antitrust claims against it for the way that it structured its contracts with health-care providers in Michigan ( Shane Grp., Inc. v. Blue Cross Blue Shield of Mich, E.D. Mich., No. 2:10-cv-14360, proposed settlement 10/11/16 ).

This is the second time the insurer has offered that amount to cover the $118 million in damages alleged by about 3 million to 7 million purchasers of health-care services in the state. The U.S. Court of Appeals for the Sixth Circuit sent the original settlement back to the district court in June, finding the court hadn’t permitted objectors sufficient access to the court filings to make a proper objection to the settlement (110 HCDR, 6/8/16).

“This case affects the legal rights of millions of people in Michigan,” Bryan R. Walters from Varnum LLP in Grand Rapids, Mich., told Bloomberg BNA.

Walters, the attorney for the class members who objected to the original settlement, said his clients intended to object again to the newly proposed settlement.

Representatives from BCBSM declined Bloomberg BNA's requests for comment. However, in the motion for settlement approval, class counsel told the court that “nothing has changed that would warrant the court reversing its conclusion two years ago that the settlement is a fair, reasonable, and adequate resolution of plaintiffs’ claims.”

Nearly Identical Settlement

The new settlement agreement includes nearly identical terms to the agreement that Judge Denise Page Hood of the U.S. District Court for the Eastern District of Michigan approved in March 2015.

The class members' motion for preliminary approval of the new settlement asserted the Sixth Circuit's reversal wasn't based on a rejection of the actual terms of the settlement but instead was based on the way that the court administratively handled the approval process.

The motion also noted the parties have worked hard to obtain consent from third parties to publicly file their previously sealed documents and their expectation that “before notice of the settlement is disseminated, much or all of the remainder will be unsealed by consent or court order.”

However, Walters expressed doubts about whether the new settlement conformed to the Sixth Circuit's opinion.

“One of the reasons the Sixth Circuit rejected the original settlement was because the entire process was shrouded in secrecy,” he said. “Now the plaintiffs and BCBSM propose the same settlement that was rejected by the Sixth Circuit without sharing a single new piece of information.”

Most-Favored-Nation Clauses

The case involves the use by BCBSM of “most-favored-nation” clauses in its provider agreements. Under those provisions, BCBSM allegedly agreed to pay hospitals high rates as long as those same hospitals charged the same or even higher rates to the commercial health insurers that were competitors of BCBSM.

An earlier settlement attempt by the insurer and representatives for the class members garnered an objection from 26 self-insured companies who claimed the settlement wasn't fair because it included attorney fee agreements that resulted in the class members receiving only a fraction of their alleged damages. Additionally, the objectors claimed the district court had improperly sealed all the relevant court filings, which prevented them from effectively challenging the full settlement agreement.

After the Sixth Circuit's remand, Judge Hood again refused to allow the objectors to intervene and become separate parties to the case.

However, the judge did order the parties to include the objectors and to begin the process of unsealing the court filings, in anticipation of an amended settlement agreement.

The class is represented by Cohen, Milstein, Sellers & Toll in Washington, Fink + Associates Law in Bloomfield Hills, Mich., Gustafson Gluek PLLC in Minneapolis and the Miller Law Firm in Rochester, Mich.

BCBSM is represented by Hunton & Williams LLP in Washington, Dickinson Wright in Detroit and Bodman PLC in Detroit.

The objectors are represented by Varnum in Grand Rapids, Mich.

To contact the reporter on this story: Matthew Loughran in Washington at mloughran@bna.com

To contact the editor responsible for this story: Peyton M. Sturges at psturges@bna.com

For More Information

The proposed settlement agreement is at http://src.bna.com/jj0.

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