Blue Cross and Blue Shield companies reached an agreement on October 30, 2020 to settle a legal dispute challenging elements of Blue Cross Blue Shield Association licensing agreements. After eight years of litigation, the Blue Cross Blue Shield Association did not admit fault, but they did agree to a settlement to end litigation. In the settlement, BCBS agreed to make operational changes as well as to provide payment to members of the class involved in the case. The settlement agreement amount is $2.67 billion. This is a very significant settlement amount and has garnered the attention of many employers, individuals, and attorneys.
Who are potential class members?
Potential members of the class include the following groups to the extent they were covered by a BCBS health policy during the covered period:
- Individuals and insured group health plans between February 8, 2008 and October 16, 2020.
- Self-funded plans between September 1, 2015 and October 16, 2020.
What do Employers Need to Do?
Potential Class Members will receive a formal notification via mail or email. In addition to your notification as an employer, many of your employees will also receive notification directly. Although you are not obligated to notify employees of the settlement, we understand the direct communication from the Claim Administrator to employees is likely to spark many questions back to HR.
Vita drafted sample communication you may choose to send to your employees about the settlement; please reach out to your Vita account manager or click “Contact Us” on our website if you have any questions or if you did not receive a copy of the sample employee-facing communication.
It is also possible to opt into the lawsuit as a member via the link on the settlement website (www.BCBSsettlement.com). (Link) www.BCBSsettlement.com
What do Employees need to do?
Employees who were covered under your health plan will be receiving notification of the settlement and of their option to file a claim directly. If employees wish to file a claim, they can do so on the official settlement website or via mail. Although the online claim form has many optional fields, the following are the only required fields:
- Personal identifying information (name and contact details)
- Health plan name selected from a dropdown menu
- Employer name for the group policy
- Payment elections and review/signature
Importantly, the detailed policy information, coverage date information, and premium allocation does not need to be completed.
Sharing the Settlement with Employees
If an employer group health plan receives a settlement amount, will it be necessary to share the proceeds of the settlement with employees? According to the settlement site’s FAQ (#35), no. Since employees are eligible to participate in the settlement directly and receive a payment for their estimated portion of premiums, employers can retain any settlement they receive if they choose to file a claim.
Realistically, how much might we get?
This is the key question that everyone is asking. And the answer is that it is VERY difficult to tell because it is based on the number of respondents that join the lawsuit as class members. But, in the interest of trying to apply some measure of thought to the otherwise completely unknown equation, we share some “back of the napkin” thoughts . . . with the understanding that no one has ANY real idea and that these numbers may be completely off base.
- 158,000,000: People covered by Employer sponsored plans. This rough analysis does not include individual plans or ASO plans. (Source: Kaiser Family Foundation)
- 52,666,667: People covered by a BCBS plan (1 in 3)
- $2,677,000,000: Total settlement amount
- $1,900,000,000: Expected approximate distributable settlement (those who submit a valid, timely claim)
- $146,154,000: Approximate award per year of coverage (13 years)
- $2.78: Total award per year / Total people covered per year*
*Assuming all group health plan claimants file, but not considering individual plans or ASO contracts. Adding these elements would further reduce the total award per year per person covered.
Example Application to Employer Plan
- 100: Employees
- $278: For employer per year
- 5: Years of coverage
- $1,387: Potential total award
Dilute for Employee Contributions
- If employees contributed to health plan via contributions, settlement proceeds would need to be passed through to plan participants.
Enhance If Less Than 100% of Claimants Join Lawsuit
Once again, these are very rough numbers . . . the roughest possible. It is also important to realize that the actual final settlements will most certainly be calculated based on actual premium volume, not on number of covered lives, so that adds an additional measure of variability to this rough analysis. That said, we wanted to put out at least some measure of number-thought to provide context on the $2.67 billion total settlement number.
- Unweighted average claimants per class action suit = 21%
- Unweighted medium claimants per class action suit = 8%
- However, most potential class members in class action lawsuits are simply just letter or postcard. This suit is a very high profile one with lots of media coverage. Also, the bulk is employer based, so single employers will be collecting for groups of employees. Add to that the reality that essentially all large plans with significant potential settlements will certainly file, thus bringing up the both the average and the medium numbers. Thus, it is expected that a significantly higher than average number of claimants will file. This means that the potential award per employee per year will likely remain low (because we can assume that essentially all large stakeholders will join).
Do I need an Attorney or a Firm for Representation?
Be aware that there are a number of law firms that are reaching out to potential members of the class and offering representation services with the promise of streamlining the process. Essentially all such firms offer their services on a no-up-front-cost, contingency basis. Some even offer advance payments of the estimated expected settlement distributions. The fee for this service is typically 20% of the settlement amount.
It is important to be aware that you do not need to retain the services of such a law firm in order to receive a potential benefit. You can “go direct” (as most class members do) and simply register as a member of the Class Action group directly on the formal website.
While the formal notice materials outline full details about timing, following is a summary of key dates:
- Spring 2021: Formal notices sent (Some employers have indicated already receiving their notifications)
- July 28, 2021: Deadline to Opt Out of Class Action Suit
- November 5, 2021: Deadline to file to participate in the Class Action Suit
Tips for Filing a Claim
If you receive a formal notification, look for the Unique ID. While it is not absolutely necessary, having the Unique ID will make it easier to file a claim.
Postcard Notice looks like this:
Email Notice looks like this:
The online claim form has many optional fields for both employers and employees, which is likely to spark questions from your work force. For example, the following are optional fields: member ID, group #, coverage dates, and allocation of premiums. Employees will be able to submit their online claim form without this information.
Required fields include the Health Plan Name (selected from a drop-down menu) and Employer Name. Employers may wish to proactively provide this information to employees to mitigate the number of questions received from individuals.
Formal resources for the class action lawsuit can be found below. The website includes Frequently Asked Questions, important reference documents, and a link to file a claim.
BCBS Lawsuit: The Details
The litigation was particularly hard-fought and expensive, with the production of over 15 million pages of documents, over 120 depositions, and over a dozen motions to dismiss the plaintiffs’ claims. The unique nature of this anti-trust lawsuit has been characterized in court papers as “historic.”
What Was Alleged?
This lawsuit alleges violations of the antitrust laws by the Blue Cross Blue Shield Association of health plans. It purports that that BCBS companies colluded to create territories within the US, an act that would be in violation of antitrust laws. The claim was that this resulted in individuals, insured group health plans, and self-funded plans paying higher premium and ASO costs than they would in a competitive market.
Nitty Gritty Anti-Competition Details
In addition to the settlement payment of nearly $2.7 billion to the class plaintiffs, BCBS agreed to modification of alleged anticompetitive practices. Specifically, BCBS agreed to remove two of the mechanisms that are “pretty flatly anticompetitive” with regard to Blue plan subscribers. First, the agreement would remove a BCBS Association rule that requires two-thirds of each Blue insurer’s total national revenue to come from Blue-branded plans. Second, BCBS agreed to remove the existing setup that requires national employer subscribers to work with a Blue insurer that covers the location of the employer’s headquarters. This new agreement would allow competition between a smaller, in-state Blue insurer and other out-of-state Blue insurer for large national employers.
Potential Marketplace Impact
While the monetary settlement in this case is significant, equally so is the potential impact on health insurance markets going forward. It is clear that there will be greater competition among the various BCBS companies going forward. However, potentially equally significant is that the new BCBS competition will likely stimulate a competitive response from other national and regional health insurance companies.