Vice Chancellor J. Travis Laster entered an order governing the schedule of post trial briefing in the Anthem Cigna litigation.
To view Order: Anthem Cigna Post Trial Schedule
Law360 (March 19, 2019, 10:30 PM EDT) — Health care provider class attorneys on Tuesday alerted an Alabama federal judge to recent Anthem Corp. testimony in Delaware that they say contradicts Blue Cross Blue Shield Association denials that the group’s rules, including nationwide limits on member revenues from “non-Blue” businesses, are anticompetitive.
The concern appeared in a notice filed in a multidistrict litigation antitrust case against BCBS companies in the U.S. District Court for the Northern District of Alabama. The notice recapped developments during a 10-day Chancery Court trial over dueling damages claims following the collapse of the $54 billion Anthem Inc.-Cigna Corp. merger in 2017.
Witnesses for Anthem — largest of the nation’s BCBS companies — were described as giving seemingly contradictory testimony on the association’s “National Best Efforts” rule during the Delaware trial. The rule bars the association’s 36 members from deriving more than a third of their revenues from non-Blue ventures.
Although Anthem and other Blues have defended the practice as legal in the MDL, the provider attorneys noted that Anthem General Counsel Thomas C. Zielinski testified in Delaware that the company “had internally concluded that those rules were anticompetitive, and even considered a challenge to the legality of those rules,” dubbed a “nuclear option” in one instance.
Seth Thomas Gulledge, Staff Writer
Durham’s Blue Cross and Blue Shield of North Carolina is joining forces with Portland-based Cambia Health Solutions, the parent company of Regence Blue Cross Blue Shield of Oregon, to form a $16 billion affiliation covering more than six million people – with Patrick Conway as CEO.
The two not-for-profits are entering into a strategic affiliation that would mean a long-term management services contract that would include sharing management, administrative, operational and other corporate services together. The new entity will be called Cambia Health Solutions. The headquarters will be located in both Durham, and Portland, Oregon.
The “strategic affiliation” of two health insurers that operate Blue Cross and Blue Shield plans in five states makes it more difficult for Anthem to expand using the valuable Blues brand in new markets.
Cambia Health Solutions and Blue Cross and Blue Shield of North Carolina (Blue Cross NC) said this week the are forming a “strategic affiliation” that merges operations and management of two companies operating Blues plans on the East and West coasts.
That makes it less likely the larger Cambia wants to sell to the publicly-traded, investor-owned Anthem, which is the nation’s second largest health insurer and operates Blues plans in 14 states. Anthem had no comment about the Cambia-Blue Cross NC deal, but Anthem executives said earlier this month they are focused on growing and adding on to the business that they have.
It’s tough for Anthem to buy other Blues plans for a variety of reasons, making the health insurer “landlocked” as its rivals have been known to say when it comes to certain marketing.
Rules of the Blue Cross Blue Shield Association prevent Anthem from using the well-recognized Blue Cross and Blue Shield brand in regions where Anthem doesn’t have the Blue Cross license or own a Blues plan. The Blue Cross Blue Shield Association (BCBSA) is a trade group and lobby for 36 “locally operated” Blue Cross and Blue Shield companies, which are able to market their Blue brand via licenses with the association.
Law360 (March 14, 2019, 7:59 PM EDT) — The University of Pittsburgh Medical Center on Thursday urged an Alabama federal judge to let it join the multidistrict litigation against the Blue Cross Blue Shield network and let other “Blues” contract with UPMC in place of its rival, Highmark Health.
UPMC had sought to contract directly with other, non-Highmark Blue Cross Blue Shield insurers after Highmark, a Pittsburgh-based Blue Cross affiliate, purchased a struggling local hospital chain and set itself up as an integrated hospital network directly competing with UPMC. But UPMC said it was rebuffed by the other insurers in part because the Blues allegedly had agreements that kept them from coming in and competing in Highmark’s exclusive 29-county territory.
In a brief filed Thursday with the U.S. District Court for the Northern District of Alabama, UPMC argued that the Blues’ geographic restrictions on where they could operate was an illegal market allocation and a per se violation of the Sherman Act, so UPMC should be able to seek an injunction letting it contract with other, non-Highmark Blues.
“The court held that the Blues’ adoption of exclusive service areas, together with other restraints whose existence is undisputed, ‘constitute a per se violation of the Sherman Act,’” the brief says. “When UPMC has sought out contracts with the non-Highmark Blues, the reply has always been consistent with the BCBSA’s response that ‘the license agreements and related rules provide that plans may generally only contract on a Blue basis with providers in their respective service areas’ — the precise restriction the court has held the providers may challenge on a per se basis.”
By: Anna Wilde MathewsUpdated March 12, 2019 2:09 p.m. ET
Cambia Health Solutions and Blue Cross and Blue Shield of North Carolina will merge their managements in a combined structure that will retain the Cambia name. The two not-for-profits said they aim to bolster their investments and speed progress in developing new health-data approaches and consumer tools, among other areas.
The move will draw close national attention because both are members of the Blue Cross Blue Shield group of insurers, which includes 36 companies. Collectively, the Blue insurers are a unique and powerful force in the industry, covering more than 100 million Americans, with deep local market share and a key role in the Affordable Care Act marketplaces. But in recent years the Blue insurers have largely sidestepped industry consolidation that created massive national players, with many remaining independent firms focused on just one state.
Health Care Service Corp., which operates Blue Cross and Blue Shield plans in a handful of states, did not pay any federal taxes in 2018 and received a $1.7 billion tax refund, according to its latest financial report.
The tax refund boosted the health insurance conglomerate’s net profit to $4.1 billion last year, which compares to $1.3 billion in 2017, according to Axios, which first reported about Health Care Service’s tax refund.
JC REINDL | DETROIT FREE PRESS |
The top boss at Blue Cross Blue Shield of Michigan has reached the pinnacle of executive pay in Michigan, getting more in total compensation than CEOs at several bigger for-profit companies across the state.
Blues CEO Daniel Loepp, 61, who received $19.2 million in total compensation last year — a record for Michigan’s largest insurance company — is also one of the highest-paid bosses of any health insurer in the nation.
Law360 (March 7, 2019, 9:38 PM EST) — Anxious Blue Cross companies flirted with raising member breakaway costs to as high as $10 billion as Blue member Anthem Inc. pursued a doomed, $54 billion merger with Cigna Corp. the group’s president said Thursday during a Chancery Court trial on the two insurance giants’ damage claims.
Blue Cross Blue Shield Association President Scott P. Serota said the never-approved Blue member “re-establishment” fee hike, considered in 2015 and 2016, reflected defensive concerns that an Anthem-Cigna hybrid would exit the association, shed its geographic franchise restrictions and take on the remaining Blues nationwide.
Instead, the Justice Department won a suit to block the deal on antitrust grounds in early 2017. Anthem — the nation’s largest Blue insurer — and non-Blue Cigna immediately began pursuing billions in damage claims against one another in Delaware for the merger collapse. And the Blues associations’ own antitrust baggage, geographic franchise rules and business restrictions became part of the litigation scrum.
“The plans don’t want to hear that a member of the association is going to compete aggressively against them. That’s not something they would be excited about hearing,” Serota testified during the ninth day of the 10-day proceeding before Vice Chancellor J. Travis Laster. Restoring Blue-branded insurance in Anthem’s 14-state area, Serota said, would be a costly problem.
“I didn’t do the math, but it was a big number,” Serota said of the scale of the change considered by members, a move that could have weaponized fees established to finance replacement of Blue companies in the event of a departure. Association members also considered changes that would have prevented Cigna from accessing Anthem provider discounts, Serota said.