Latest on the Blue Cross Blue Shield settlement: Numbers revealed on filed claims, opt-outs (updated)

Oct. 8 update

The lead attorneys for the class of plaintiffs in the Blue Cross Blue Shield provider litigation are highlighting portions of the judge’s final approval of the $2.8 billion settlement, saying his comments should provide reassurance about the ability to bring future litigation against the Blues.

Per the settlement terms, participants cannot sue the Blues over legal claims that are considered factually identical to those decided in the lawsuit. Some experts have said the criteria may be too broad or vague and thus could constrain providers from litigating future misconduct.

Although the 6,000-plus providers that opted out of the settlement likely were motivated by the prospect of securing more in damages than they would receive in the class action, some also expressed trepidation about the language concerning which claims would be released from future litigation. The same question also was behind an objection to the settlement lodged by a regional affiliate of HCA Healthcare (see below).

Future litigation eligibility

Attorneys with Whatley Kallas, LLP, the lead firm representing the plaintiffs in the 13-year-old litigation, said Judge David Proctor’s final approval of the settlement clarifies that issues are off limits in future legal challenges only if they were directly involved in the class action or have been addressed as part of the injunctive relief required of the Blues.

Because the injunctive relief includes reforms to the BlueCard program, which sets the coverage terms and conditions for BCBS members seeking healthcare outside their home service area, some provider advocates have wondered whether any BlueCard-related legal claim would be released from future litigation.

Proctor said the scope of the release should not be misconstrued.

“Just because we have a dispute between a provider and a Blue entity over reimbursement under BlueCard, that does not ipso facto mean that that’s released,” the judge wrote in dismissing HCA’s objection to the settlement.

Still, as seen in an April ruling, whether a follow-up complaint is subject to litigation likely will depend on case-by-case circumstances and interpretations.

The April ruling involved a class member in litigation involving Blues plan subscribers. That class action began in combination with the providers’ lawsuit before the two cases were split into parallel tracks adjudicated by the same court.

In the April decision, Proctor said a self-insured employer that participated in the subscriber settlement could not bring additional legal claims against Anthem Health Plans of Virginia (a Blues plan). The complaint involved the matter of exclusive service areas, an issue that was at the heart of the settled antitrust litigation.

Sept. 23 update

Processing of payouts to provider participants in the class-action lawsuit against Blue Cross Blue Shield can proceed, with no objections having been lodged to the court’s final approval of the $2.8 billion settlement, the lead representatives for the class of plaintiffs announced Tuesday.

Whatley Kallas, LLP, said the settlement administrator is moving forward with evaluating the payment claims filed by providers. After legal and administrative fees and expenses are deducted from the total pot, roughly $1.85 billion is available as payments, with 92% ($1.7 billion) for hospitals and the remainder for individual providers and medical groups.

Payouts will be apportioned primarily based on each recipient’s amount billed to the Blues between 2008 and 2024, along with a coefficient that reflects the harm inflicted on reimbursement rates in the recipient’s geographic area.

Whatley Kallas said it will post information on its website and will continue to conduct outreach about both the claims payment process and the opportunity for providers in the settlement to capitalize on injunctive relief that the firm says will be worth $17.3 billion in administrative and process improvements made by the Blues.

The settlement administrator also will be posting information on the settlement website, the firm said.

Aug. 20 update

On Aug. 19, Judge David Proctor of the Northern District of Alabama federal court issued his final approval of the settlement.

Proctor addressed concerns about the scope of the release language, which establishes what types of legal claims will be subject to litigation arising from any future disputes between the class-action provider participants and Blue Cross Blue Shield plans (see below for more context).

“The release language was negotiated by the parties as part of the overall settlement, it is sufficiently clear, and it does not violate the IFP [identical factual predicate] doctrine,” Proctor wrote.

The IFP doctrine refers to the concept that future legal claims by class-action participants are precluded from litigation only if they entail the same essential set of facts as the issues in the settled lawsuit.

Original story (Aug. 15)

Close to 6,500 provider organizations chose to opt out of the $2.8 billion class-action settlement with Blue Cross Blue Shield, according to recently filed court documents.

Settlement advocates say the opt-outs are a small fraction of the class.

The published list of opt-outs (scroll to the bottom of the linked page) was part of a flurry of court activity leading up to a July 29 deadline for providers to submit a settlement claim, although late submissions may still be considered for payment. That date coincided with a hearing for the presiding judge to consider final approval of the settlement. Judge David Proctor of the Northern District of Alabama federal court has yet to issue his ruling but had granted preliminary approval last year.

Per a filing by attorneys with Whatley Kallas, LLP, more than 1 million settlement claims were filed as of July 27. They said the 6,500 opt-outs represent less than 1% of a class that consists of essentially all providers that do business with the Blues.

Whatley Kallas has touted the settlement amount, the largest ever in a healthcare antitrust case, along with injunctive relief that the firm says will amount to $17.3 billion for class members. Driving that value is a projected savings of $7.55 per BlueCard claim, owing to lower administrative burden.

A court-approved five-person committee will oversee compliance by the Blues over a five-year period, according to a court filing.

A winding road

The case thus may be nearing a conclusion 13 years after it began as various complaints filed by Blues customers and contracted providers. The numerous lawsuits centered on anticompetitive business practices that allegedly involved a conspiracy among the plans to divide markets and, in turn, gain leverage to charge higher premiums and depress provider payments.

In 2013, the cases were consolidated into one, with the Northern District of Alabama selected as the venue. The following year, the litigation was split into a provider track and a subscriber track. Subscribers settled with the Blues for $2.67 billion, although appeals by class members including Home Depot have delayed the payouts since the agreement was finalized in 2022.

Concerns voiced

Three objections, including one by a branch of HCA Healthcare, have been lodged by providers in the class.

HCA’s complaint is about the scope and ambiguity of the release, meaning the provision of the settlement that prevents class members from taking up related litigation against the Blues. Among hospital advocates, there has been concern that the release would constrain settlement recipients from contesting future misconduct.

“HCA — as the largest hospital system in the country — is particularly impacted by the uncertainty in the reach of the release,” the health system stated. “But nearly all providers will encounter the difficulties occasioned by the ambiguity of the release as to whether ordinary course claims that involve the BlueCard Program are released by this settlement.”

Future legal claims by class members are supposed to remain eligible for litigation if they arise from the ordinary course of doing business with the Blues, but HCA expressed trepidation that any claim involving the BlueCard program would be shielded from a lawsuit. Claims are barred from litigation if they are deemed to be factually identical to the issues decided in the settlement.

In response, Whatley Kallas said an appellate ruling in the subscriber lawsuit establishes, in part, that future legal claims by settlement participants in both the subscriber and provider cases are prohibited only for claims that “either were raised or could have been raised during the litigation that preceded the settlement.”

Centralizing the opt-out cases

In an Aug. 8 ruling, the U.S. Judicial Panel on Multidistrict Litigation declined the request of 12 sets of opt-out plaintiffs to keep their cases in various federal courts, affirming that the cases should be transferred to the Northern District of Alabama under Proctor’s oversight.

The cases “involve common questions of fact” with the settled lawsuit, and transferring the cases to a central location “will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation,” the panel wrote in its order.

The 12 plaintiff groups argued that the facts at issue in their respective cases are distinct and specific to each party, but the panel was not swayed.

“Given the number of opt-out actions already filed and the number of involved counsel, transfer of the opt-out actions to a single judge with extensive familiarity with the issues, discovery and players in this litigation will be far more efficient than the parties attempting to informally coordinate pretrial schedules among actions pending in at least seven district courts to date,” the panel wrote.

Among the named plaintiffs are Bon Secours Mercy Health, CommonSpirit Health and Weill Cornell Medicine, with dozens of other providers joining them in the 12 cases. Mayo Clinic, Providence and Trinity Health also are among the organizations that have rejected the settlement.

Through their individual cases, providers think they can substantially exceed their estimated settlement allocations even before factoring in the standard tripling of damages that stem from antitrust violations.