Federal judge throws out antitrust case against Blue Cross Blue Shield of Michigan

Late last month, a federal judge dismissed an antitrust lawsuit against Blue Cross Blue Shield of Michigan, concluding the plaintiffs did not establish the Detroit-based insurer conspired to lower reimbursement.

Anesthesia Associates of Ann Arbor (A4) originally sued the Blues in 2020, alleging the Detroit-based insurer schemed to pay anesthesiologists below market rate and colluded with hospitals to bar anesthesiologists that charged more than BCBSM's reimbursement rate — resulting in lower quality of care and higher prices for consumers.

"We are pleased with the court's ruling and look forward to defending against the remaining claims," Helen Stojic, director of corporate affairs for BCBSM, wrote in an emailed statement to Crain's.

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It's unclear whether the case will continue in a different court alleging state law violations.

A4 was represented in the case by Boies Schiller Flexner LLP of New York. The Boies Schiller firm is chaired by David Boies, who was special counsel in the Microsoft antitrust lawsuit in 1998 and represented former vice president Al Gore in the 2000 presidential recount in Florida.

Representatives from the firm did not return several calls and emails to comment on the matter.

The original lawsuit was struck down in 2021 by federal Judge Terrance Berg for lack of evidence that BCBSM conspired with hospitals to avoid contracting with A4 after the practice left the insurer's network.

But the judge allowed the anesthesiologist group to refile the suit alleging BCBSM created a monopsony by becoming the state's largest insurer and dictating market prices to a point that lead to a mass exodus of anesthesiologists in the state and thus endangering patients. The group filed an amended suit on Sept. 28 last year.

The A4 lawsuit stemmed from a negotiation breakdown between the practice and BCBSM in Oct. 2020. A day after BCBSM declined to renegotiate with A4, Trinity Health Michigan President and CEO Rob Casalou invoked a clause in its five-year contract to terminate A4 in 180 days. Trinity said after that period, the eight-hospital regional health system would hire its own employed anesthesiologists.

The lawsuit alleged Trinity was induced by BCBSM to terminate the contract.

Lawyers for A4 asked the court to award unspecified treble damages for BCBSM's "tortuous conduct" that would seek to destroy A4 financially.

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"Pursuant to this conspiracy, Michigan hospitals agreed with BCBSM, and each other, to bar anesthesiologists from hospital facilities unless those doctors accepted BCBSM's uniform reimbursement rate, without any upward or downward negotiation," the lawsuit read. "This conspiracy restrained trade through group-boycott conduct and other restraints. BCBSM enforces these illegal boycotts and price-fixing agreements by steering work away from any hospital if an anesthesiologist there seeks a different rate from BCBSM. Because anesthesiologists require access to medical facilities to practice medicine, this conspiracy forces anesthesiologists to accept BCBSM's published rate."

The suit alleges this has led to a shortage of anesthesiologists.

However, Judge Berg, in a written opinion on Dec. 29, said the plaintiff's suit did not "implicate BCBS-MI's direct contractual relationships with Michigan hospitals or A4, Michigan hospitals' conduct toward A4, nor their relationships with each other."

In other words, the suit failed to establish a violation of the U.S. Sherman Act, which outlaws "every contract, combination, or conspiracy in restraint of trade, according to Cornell Law.

Berg wrote that the claims in the federal case would only be "an appendage" to claims that violate state law, not federal.

A4 has vehemently defended its operations in several disputes with hospitals and insurers over the years.

In 2019, a similar dispute erupted between A4 and Trinity Health in which Trinity terminated A4's contract. A4 had threatened to terminate several payer contracts, including Priority Health, Aetna and Blue Cross because it hadn't had a reimbursement increase in at least six years.

Trinity Health sued to prevent A4 from putting its patients in a "surprise billing" situation. A4 countersued to prevent Trinity from recruiting its anesthesiologists and certified registered nurse anesthetists. Trinity and A4 settled various lawsuits and reached a new five-year agreement. The agreement allowed A4's anesthesiologists to continue treating patients at Trinity Health's five Southeast Michigan hospitals.

A4 also had a contract dispute with eight-hospital Beaumont Health over how much Beaumont reimburses A4 for anesthesiology services. A4 contended Beaumont paid the group below its operating costs and that it lost money every day. A4 terminated its contract with Beaumont in March 2020.

This story first appeared in Crain's Detroit Business.