The U.S. Department of Justice is backing health insurer Oscar in the federal antitrust suit that the startup filed against Florida Blue, that state's dominant Blue Cross and Blue Shield plan.
Oscar filed the lawsuit in November, after it began selling health plans in the Orlando area. It said Florida Blue's exclusivity policies prohibiting insurance brokers from selling other insurers' plans had thwarted its business.
Oscar said more than 190 brokers agreed to sell its plans before reneging after Florida Blue reminded them of the exclusivity arrangements and noted it could revoke the right for brokers to sell any Florida Blue plans if they sold an Oscar product.
Florida was one of three states that Oscar expanded into this year. The Manhattan-based insurer in late 2013 started selling plans exclusively to individuals in the New York City area and has added markets each year. It now sells to individuals in 14 markets within nine states as well as small businesses in some of those markets. The company was founded by Joshua Kushner, Kevin Nazemi and Mario Schlosser. Kushner's brother Jared is a White House senior adviser and the son-in-law of President Donald Trump.
Florida Blue controlled 60% of the individual market and about one-third of the small group market in 2017, according to data from the Kaiser Family Foundation.
DOJ argued in a statement filed April 24 that Florida Blue improperly applied the McCarran-Ferguson Act, a law that creates a limited exemption from federal antitrust law for the business of insurance, in seeking to get the U.S. District Court in Orlando to dismiss the case. The government's position was previously reported by law.com.
The federal government said Florida Blue's exclusivity policy for brokers "does not constitute the 'business of insurance'" in terms of transferring risk from a policyholder to an insurer.
"The court should not dismiss Oscar's Sherman Act claims on the basis of Florida Blue's flawed interpretation of the McCarran-Ferguson Act's antitrust exemption," wrote Patrick Kuhlmann, an attorney in the DOJ's antitrust division.
Florida Blue disagreed with the DOJ's interpretation in its response to the government's statement of interest filed on Wednesday.
The insurer said it's policies do constitute the business of insurance, exempting it from the McCarran-Ferguson Act, contradicting the DOJ's position. "To reach this mistaken conclusion, the government describes the law it wishes for—rather than the law that exists—in this circuit," the insurer wrote.
Florida has yet to report enrollment by insurer for its most recent Affordable Care Act open-enrollment period, which ended Dec. 15.
"DOJ sides with insurer Oscar in antitrust suit" originally appeared in Crain's New York Business.