Blue Cross Blue Shield could be in trouble following a federal court ruling that an antitrust case against the insurer can proceed.
U.S. District Judge David R. Proctor of Birmingham, Alabama, ruled (PDF) late last week that decades-old agreements made by the insurer to divide its service areas could potentially limit competition and would be reviewed as inherent violations of the Sherman Antitrust Act of 1890, which bars companies from limiting trade or artificially raising prices.
The plaintiffs include a number of small employers insured by BCBS along with several healthcare providers which claim the insurer's actions led to higher premiums and lower reimbursement rates.
BCBS Association licenses Blues plans to 36 independent companies, but the majority of Blue plans do not overlap service areas. Proctor said the health insurance plans branded by BCBS were "at least as anticompetitive" as two other agreements struck down by the U.S. Supreme Court. The ruling will allow the case to move forward for the court the further evaluate.
Although the ruling is just one step in what is a long and drawn out legal battle, antitrust experts say the decision is a substantial setback for the insurer.
“This is a fairly definitive ruling on the most important question of this case,” said Barak D. Richman, a professor at Duke University School of Law told The Wall Street Journal, adding that it could provide a framework for state attorneys general to "seek changes in the way the Blues are doing their business."
BCBSA said it will appeal the ruling.
“The District Court stated that it is constrained by authority from the late 1960s and early 1970s, which we believe is inapplicable for a number of reasons," Scott Nehs, general counsel for the insurer, said in a statement. "The Blue Cross and Blue Shield System has served Americans well for almost a century, and we are disappointed by the court’s ruling with respect to certain aspects of the BCBS System."