The complaint alleges that the defendant's conduct of incorporating into its contracts with hospitals "most favored nation" (MFN) clauses results in antitrust violations and artificially raises prices for health care services
The plaintiff purchased, paid for or became obligated to pay for health care services at a rate contracted for by Blue Cross Blue Shield of Michigan or one of its insurer competitors directly from one or more of the hospitals with which Blue Cross had an agreement that contained a MFN clause or its equivalent.
MFN clauses require hospitals to charge other commercial insurers for health care services at least as much as they charge Blue Cross, or to charge other commercial insurers more than they charge Blue Cross, usually by some fixed percentage. Through this arrangement, the MFNs operate similarly to an illegal resale price maintenance agreement.
The complaint claims that Blue Cross can do this because it enjoys a dominant market position in the commercial health care insurance industry in Michigan, insuring more than 60 percent of the state's commercially insured residents, which is more than nine times its closest competitor.
Blue Cross negotiates for the inclusion of MFNs in exchange for an increase in the hospitals' charges, so even though Blue Cross' costs go up, it is able to lock in a competitive advantage for those hospitals' services vis-?-vis its competitors.
"Instead of using its market position as Michigan's largest commercial health insurer to negotiate against a hospital's proposed price increases, BCBSM [Blue Cross] enables these price increases while further cementing its position as the dominant commercial health insurer through MFNs. This results in rising health care costs for all patients, regardless of whether they are insured by BCBSM, one of its competitors, or are self-insured," plaintiff says..
MFNs have harmed competition by reducing the ability of other health insurers to compete with Blue Cross or actually excluding Blue Cross' competitors in certain markets and artificially raising prices for health care services.
The class action alleges Blue Cross' conduct unreasonably restrains trade in violation of Sections 1 and 2 of the Sherman Act and Section 2 of the Michigan Antitrust Reform Act. Because of Blue Cross' unlawful conduct, the plaintiff and class members have paid artificially inflated prices for health care services and as a result have suffered antitrust injury to their business or property.
The class is defined as: "[a]ll persons or entities in the United States of America and Puerto Rico - except those who solely paid fixed amount co-pays, uninsureds who did not pay their bill, Medicaid and Traditional Medicare patients, BCBSM, co-conspirators, other providers of healthcare services, and the present and former parents, predecessors, subsidiaries and affiliates of BCBSM - who purchased or paid for hospital services at a rate contracted for BCBSM or one of its insurer competitors directly from a hospital with which BCBSM entered into an agreement that included a 'most favored nation' clause ('MFN') or its equivalent from at least as early as January 1, 2007 to the present (the 'Class Period')."
