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New Blue Cross Class Action Lawsuit Implicates Hospitals

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Mindi M. Johnson
Foster Swift Health Care Law Report
February 2011

On January 21, 2011, the City of Pontiac filed a class action lawsuit against Blue Cross Blue Shield of Michigan ("Blue Cross") and 21 hospitals and health systems (collectively, the "Hospital Defendants").  The complaint alleged that Blue Cross unlawfully restrained trade in violation of the Sherman Act and Michigan Antitrust Reform Act by including 'most favored nation' ("MFN") clauses in its contracts with hospitals.  (The effect of these clauses was to allegedly raise the minimum prices that hospitals could charge to Blue Cross' competitors.)   

The complaint also alleged that, by signing and enforcing contracts with Blue Cross that contained MFN clauses, the Hospital Defendants conspired with Blue Cross to fix and inflate the price of hospital services in Michigan.  In its prayer for relief, Plaintiff requested that the court: (1) certify the class action; (2) adjudge that the contracts between Blue Cross and the Hospital Defendants that contained MFN clauses were per se violations of the Sherman Act and Michigan Antitrust Reform Act; (3) reform the contracts to strike the illegal terms, and enjoin the Defendants from agreeing to or enforcing similar provisions in the future; (4) award treble damages, plus costs and attorneys' fees; (5) hold each Defendant jointly and separately liable; and (6) order all Defendants to refund monies unjustly obtained.

The City of Pontiac action is based on the lawsuit filed against Blue Cross by the United States Department of Justice and Michigan Attorney General last fall.  It is intriguing however, in that it names 22 co-defendants and requests monetary damages for the alleged antitrust violations.

If you would like more information on the Blue Cross proceedings or have questions on how your organization may be impacted, please contact one of the experts in our Health Care Practice Group.