BCBS in Michigan faces class-action lawsuit

A class-action lawsuit has been filed against Blue Cross Blue Shield of Michigan, piggy-backing a federal case brought last month against Michigan's largest insurer.

In the new case, which was filed in federal court in Detroit, plaintiffs charge that Blue Cross Blue Shield used its market clout to prevent hospitals from providing competing health insurers the same kind of discounts it receives. Blue Cross' illegal contracts with hospitals led the plaintiffs to pay "artificially inflated prices for healthcare services," Crane's Detroit Business reports.

The question in each lawsuit is whether the practice of most-favored-nation (MFN) clauses went too far and whether Blue Cross Blue Shield used its dominant market position across Michigan--where it holds a 60 percent market share--to force hospitals to go along with MFNs, according to the Michigan Business Review.

MFNs have never been deemed illegal by the courts, though the federal government has challenged them unsuccessfully in the past. The clauses are "a legitimate part of the procurement process and trying to exact the best price," Jeffrey Rumley, Blue Cross' general counsel, told the Michigan Business Review. "Our position is the use of MFN clauses is a perfectly acceptable practice," he added.

The plaintiffs are seeking three times their damages, attorney's fees and to stop Blue Cross from negotiating or enforcing MFN clauses. The lawsuit does not indicate what the plaintiffs' damages were, or if either party was insured by Blue Cross or a competitor, according to the Detroit News.

To learn more:
- read Crane’s Detroit Business article
- read the Michigan Business Review story
- read the Detroit News piece

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