Blues plans allegedly conspire to avoid competition

A lawsuit accuses Blue Cross and Blue Shield of Alabama, other plans of violating antitrust laws

Blue Cross and Blue Shield of Alabama has been conspiring with other Blues plans to avoid competing with each other, according to a lawsuit filed against the state's largest health insurer.

A retired Alabama chiropractor claims in the lawsuit that the Blue Cross Blue Shield Association's (BCBS) anti-competitive rules have driven up insurance costs and reduced payments to doctors and hospitals, especially in areas where a Blues plan leads the market. Alabama Blues dominates 90 percent of the state's insurance market, reported the Birmingham News.

"These limitations would not be possible if the market for health insurance was truly competitive and if the [Alabama Blue Cross] and the other Blues were not conspiring to divide markets and eliminate competition," the complaint stated.

Additionally, the lawsuit alleges that BCBS's license agreements with its health plans that prohibit them from selling insurance in each others' markets violate federal antitrust laws, the Birmingham Business Journal reported.

The lawsuit includes 45 Blue Cross plans nationwide, in addition to Alabama Blue Cross and the BCBS. It seeks to bar the anti-competitive practice and award chiropractor Jerry Conway, who filed the lawsuit, with three times the damages he allegedly suffered.

Alabama Blue Cross, however, said it has done nothing wrong. "Our company operates in compliance with a license from the Blue Cross and Blue Shield Association," spokeswoman Koko Mackin said. "We comply with all state and federal laws and do not believe the allegations of the lawsuit have any merit."

Although BCBS didn't specifically address this case, it argued in a similar lawsuit in North Carolina that courts often rule that limiting competition within a brand isn't illegal, the Birmingham Business Journal noted.

To learn more:
- read the complaint (.pdf)
- see the Birmingham News article
- check out the Birmingham Business Journal article

Related Articles:
Blues must stop using 'most-favored nation' clauses
Michigan Blues wants Aetna antitrust lawsuit dismissed
Report: Scarce competition among insurers
Blue Cross anti-trust probe expands: Do some hospitals get sweetheart deals?