United States District Court, N.D. Alabama, Southern Division
IN RE BLUE CROSS BLUE SHIELD ANTITRUST LITIGATION This document relates to all Case.
MEMORANDUM OPINION SECTION 1 STANDARD OF REVIEW AND
SINGLE ENTITY DEFENSE
DAVID PROCTOR UNITED STATES DISTRICT JUDGE.
Supreme Court has observed, “the ‘central evil
addressed by Sherman Act § 1' is the
‘elimin[ation of] competition that would otherwise
exist.'” Am. Needle, Inc. v. Nat'l Football
League, 560 U.S. 183, 195 (2010) (quoting Areeda &
Hovenkamp ¶ 1462b, at 193-194).
before the court are (1) the parties' respective motions
for partial summary judgment on the standard of review
applicable to Plaintiffs' claims under Section 1 of the
Sherman Act, 15 U.S.C. § 1 (Docs. # 1348, 1350, 1353),
and (2) Subscriber Plaintiffs' motion for partial summary
judgment on Defendants' “single entity”
defense. (Doc. # 1434). The motions have been fully briefed.
(Docs. # 1431, 1432, 1435, 1551, 1552, and 1554). And, the
parties have conducted discovery that the court found
necessary before deciding the appropriate standard of review
for the Sherman Act claims. See In re Blue Cross Blue
Shield Antitrust Litig., 26 F.Supp.3d 1172, 1186-87
(N.D. Ala. 2014). See also Nat'l Bancard Corp. v.
VISA U.S.A., Inc., 779 F.2d 592, 596 (11th Cir. 1986).
Relevant Undisputed Facts
facts set out in this opinion are gleaned from the
parties' submissions of facts claimed to be undisputed,
their respective responses to those submissions, and the
court's own examination of the evidentiary record. All
reasonable doubts about the facts have been resolved in favor
of the nonmoving party. See Info. Sys. & Networks
Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir.
2002). These are the “facts” for summary judgment
purposes only. They may not be the actual facts that could be
established through live testimony at trial. See Cox v.
Admr. U.S. Steel & Carnegie Pension Fund, 17 F.3d
1386, 1400 (11th Cir. 1994). Some familiarity with the Blue
Cross and Blue Shield organizations is presumed.
The History of Blue Cross and Blue Shield
one hundred years ago, Justice Holmes reminded us that a
“page of history is worth volumes of logic.”
N.Y. Trust Co. v. Eisner, 256 U.S. 345, 349 (1921).
In order to properly assess Plaintiffs' claims and
Defendants' arguments, the court begins with a discussion
of the history of the Blue Cross and Blue Shield organization
and the trademarks (the “Blue
the Great Depression, the majority of the population was
medically underserved because most people simply could not
afford hospital and medical care. (Docs. # 1349 at 11; 1431
at 14; 1435 at 10, n. 4). In response, local hospitals and
medical societies developed prepaid plans to serve
Americans' healthcare needs in local areas. (Docs. # 1349
at 11; 1431 at 14; 1435 at 10). On occasion, a subscriber
prepaid at one hospital but desired services from a different
hospital at the time of illness. To remedy this problem,
multi-hospital plans became the norm. (Docs. # 1349 at 11;
1431 at 15; 1435 at 11).
1939, the American Hospital Association (“AHA”)
issued “Standards for Non-Profit Hospital Service
Plans.” (Doc. # 1350-13). Under these standards,
approval by the AHA's Commission on Hospital Service gave
a Plan “permission to identify the plan by using the
seal of the American Hospital Association superimposed upon a
blue cross.” (Docs. # 1350-13 at 5-6; Doc. # 1353-19 at
6). The approval program for Blue Cross Plans was controlled
by the Blue Cross Commission. (Doc. # 1353-5 at 11-12). The
AHA standards discouraged the establishment of new Plans
where the community was already being “adequately
served by existing Blue Cross Plans.” (Doc. # 1353-5 at
14). The Blue Cross Commission promoted one Plan per service
area to reduce administrative costs through economies of
scale, as well as to reduce health care costs by obtaining
participation of hospitals on more favorable terms to the
Plans. (Doc. # 1431-29 at 13-15).
American Medical Association (“AMA”) also
approved the concept of prepayment plans, and promulgated
approval standards for such plans. (Docs. # 1349 at 12; 1431
at 15; 1435 at 13). The AMA set up the Associated Medical
Care Plans (“AMCP”) “to administer the
approval program” for Blue Shield Plans. (Doc. # 1353-7
at 84-85). Medical care plans that met the AMA/AMCP's
standards likewise could use a blue shield emblazoned with a
caduceus. (Docs. # 1353-20 at 16; 1431 at 15; 1435 at 13).
taxation of excess profits and the freezing of wage rates
during World War II stimulated employer participation in
paying the cost of hospitalization and other medical
protection for employees. This change enabled employers to
give a small wage increase to their employees at very little
net cost to themselves by paying part or all of the cost of
group health insurance. (Doc. # 1353-4 at 76). After the war,
the Taft-Hartley Act established health benefits as a
condition of employment (Doc. # 1353-7 at 93), and the
National Labor Relations Board ruled that health insurance
was “a mandatory subject of collective
bargaining.” Cross, W.W., & Co., 77
N.L.R.B. 1162 (1948).
1947, in an effort to better compete with commercial
insurance companies for employer-sponsored plans, Plans
started experimenting with syndicates. (Doc. # 1353-7 at 94).
Under these arrangements, a Plan in a state where a
company's home office was located negotiated benefits at
a certain price. (Id.). Plans in other regions or
states where the company had operations were given the
details of the arrangement, and those Plans could choose to
participate in the arrangement. (Id.). The
“Home” Plan guaranteed full delivery to the
company and accepted all or part of the underwriting risk,
depending on the cooperating Plans' agreed participation.
(Id.). “Within five years, some 250 syndicates
were providing coverage to about 1.2 million people.”
(Doc. # 1353-7 at 94). By working together, Plans were able
to service national accounts, including the Federal Employees
Health Benefit Program. (Doc. # 1353-1 at 16; 1431 at 18;
1435 at 17).
1972, the AHA transferred ownership of the Blue Cross Marks
to the Blue Cross Association. (Doc. # 1349-1 at 32). On a
separate track, the AMA-sponsored AMCP changed its name to
the Blue Shield Medical Care Plans, then it became the
National Association of Blue Shield Plans, and then later the
Blue Shield Association. (Doc. # 1349-1 at 32-33).
point in the 1970s, the Blue Cross and Blue Shield
Associations concluded that the Blue System needed cohesive
national unity, which they believed could be achieved by
working together. (Doc. # 1353-55 at 2). The staffs of the
two associations began to consolidate in 1977 or 1978 (Doc. #
1349-1 at 33), but the associations did not legally merge
until 1981 or 1982. (Id.). The associations merged
in order to reduce duplication, increase efficiency, reduce
administrative costs, enjoy economies of scale, and achieve
greater coherence in the Blue Cross and Blue Shield system.
(Doc. # 1353-10 at 80). At that time, the Blue Cross and Blue
Shield names and Marks were brought under the control of one
organization, the Blue Cross and Blue Shield Association
(“the Association”), which was governed by its
Member Plans. (Doc. # 1352-43 at 3).
early 1980s, the Blue System was suffering from declining
reserves, increasing financial instability, decreasing
customer satisfaction, and declining business volume. (Doc. #
1349-7 at 9-24). According to the 1982 Long-Term Business
Strategy, the Blue Plans viewed “collective
strength” as their “only real defense”
against business declines. (Doc. # 1349-7 at 23-24).
History of the Blue Cross and Blue Shield Marks
1934, the St. Paul hospital Plan began using a blue cross
symbol. (Docs. # 1349 at 11; 1431 at 15; 1435 at 11). The
first use of the Blue Shield Service Mark was by the Western
New York Plan, located in Buffalo, New York, in 1939. (Doc. #
1350-35 at 2). Other Plans began using these same symbols as
well. (Id.; Docs. # 1349 at 11; 1431 at 15; 1435 at
the St. Paul and Buffalo Plans acquiesced in, and even
encouraged, other Plans to use the Cross and Shield Marks
during this time period. (Docs. # 1349 at 11; 1431 at 15;
1435 at 12). The St. Paul Plan allowed Plans in every
bordering state (North Dakota, South Dakota, Wisconsin, and
Iowa) to use the Blue Cross Marks. (Doc. # 1353-4 at 29-30).
The Buffalo Plan allowed Plans in Syracuse and Rochester
(locations close to Buffalo) as well as other Plans in New
York to use the Blue Shield Mark. (Doc. # 1353-5 at
1939 and 1947, the Shield Mark was used by various
organizations for intrastate non-profit prepaid medical
plans. (Id.). In 1946, the Commission of Associated
Medical Care Plans was formed by certain medical plans. (Doc.
# 1350-35 at 2). The Blue Shield Medical Care Plans is the
successor to AMCP. (Doc. # 1432 at 15). On December 13, 1947,
the Blue Shield Medical Care Plans (the “National
Organization”) formally adopted the Shield Mark as the
official service mark for the Organization. (Docs. # 1350-35
at 2; 1353-48). Thereafter, in 1950, Blue Shield Medical Care
Plans applied for federal registration of the Blue Shield
Marks. (Docs. # 1353-46; Doc. # 1353-48). The Blue Shield
Medical Plans had permission from the first user, the Buffalo
Plan, to apply for registration. (Docs. # 1353-101; 1436-11
at 135-40). After the application for federal registration,
on December 1, 1952, the users of the Shield Mark entered
into an Agreement (the “1952 Agreement”) relating
to the Collective Service Mark “Blue Shield.”
(Id.; Doc. # 1352-227 at 24). Although the Plans
“recogni[zed] that the words ‘Blue Shield'
and the identifying symbol are the property of the
National Organization, ” the 1952 Agreement is silent
as to the assignment of any rights in the Shield Mark to the
National Organization. (Doc. # 1353-48 at 3) (emphasis
added). It is also silent as to the creation and/or existence
of any exclusive service areas. (Id.). Under the
1952 Agreement, the Blue Shield Plans were granted
“permission” to use the Blue Shield Marks in
interstate and foreign commerce. (Id.).
in 1947 and 1948, the AHA applied for and received federal
registrations for the Blue Cross Marks, stating that it had
adopted and was using the Marks. (Docs. # 1350-40, 1530-41,
and 1530-42). However, at that time, the AHA did not have an
assignment from the first user, the St. Paul Plan, and did
not receive a formal assignment of the rights to the Blue
Cross Mark until 1954. (Doc. # 1436-11 at 56-57). After
registering the Blue Cross Mark, the AHA had existing Plans
sign License Agreements. (Doc. # 1353-11 at
7-8). The License Agreements for four Plans --
Connecticut, Minnesota, Wisconsin, and Rockford, Illinois --
were subject to exceptions. (Docs. # 1353-11 at 8; 1353-101).
Those Plans retained the right to their state registrations
of the Blue Cross name and Mark. (Id.).
Service Corporation of Alabama, the predecessor to Blue Cross
Blue Shield of Alabama, first used the Blue Cross Mark in
1939. (Doc. # 1431-91 at 98). It first used the Blue Shield
Mark in 1947. (Id.).
The Structure of Blue Cross and Blue Shield
present, the Blue Plans are 36 independent companies and each
company sells health insurance. (Docs. # 1351 at 10; 1432 at
17). The Blue Cross and Blue Shield Association itself does
not underwrite any insurance policies. (Docs. # 1351 at 11;
1432 at 17; 1556 at 9). The governance structure of the
Association is set out in its bylaws, which were approved by
a vote of the Member Plans. (Docs. # 1351 at 11; 1432 at 17;
1556 at 9; 1532-6). The Plans are governing members of the
Association. (Docs. # 1352-39 at 46-47; 1352-6 at 12-14). The
Plans may amend or repeal the bylaws and adopt new bylaws.
(Id.). Each Member Plan has also agreed to be bound
by the Association Rules. (Docs. # 1350 at 12; 1432 at 11).
Association's bylaws recognize that each of its Member
Plans is autonomous in its operations. (Docs. # 1351 at 10;
1432 at 17; 1556 at 9; 1532-6). The Plans are financially
independent entities. (Docs. # 1556 at 9; 1352-6 at 7). The
Blue Cross and Blue Shield License Agreements provide,
“Nothing herein contained shall be construed to
constitute the parties hereto as partners or joint venturers
. . . .” (Doc. # 1350-4 at 6).
Association is led by a Chief Executive Officer and President
who, together with an executive team, are responsible for the
day-to-day operations of the Association. (Docs. # 1352-39 at
46-47; 1352-6). The Association's Board of Directors is
comprised of the CEO of each of the Member Plans plus the CEO
of the Association. (Docs. # 1432 at 18; 1352-6). By majority
vote, the Association Board of Directors elects the President
of the Association on an annual basis. (Id.). The
Association Board may also remove the President of the
Association by majority vote. (Id.). The Blue Plan
CEOs have fiduciary responsibilities to both their individual
Plan and the Association. (Docs. # 1352-41 at 29-30; 1436-75
Membership Standards of the Association are adopted and
amended by an affirmative vote of three-fourths of Plans and
an affirmative vote of three-fourths of the total then
current weighted vote of all Plans (a
“double-three-quarters” vote). (Docs. # 1432 at
11, 19; 1352-127 at 11). The Member Plans may also amend the
Association bylaws (id.), and the Association's
Rules can be eliminated, by a double-three-quarters vote of
the Plans. (Doc. # 1432 at 22).
1972, the AHA transferred ownership of the Blue Cross Marks
to the Blue Cross Association. (Docs. # 1353-57 at 2; 1432 at
15-16). Blue Cross Plans then signed a license agreement with
the Blue Cross Association. (Doc. # 1353-11 at 8). Those 1972
license agreements provided:
The rights hereby granted are exclusive to Plan within the
geographical area served by the Plan on the effective date of
this License Agreement, except that BCA itself reserves the
right to use the Licensed Marks and Licensed Name in said
area, and except to the extent that said area may overlap the
area or areas served by one or more other licensed Blue Cross
Plans on the effective date of this License Agreement, as to
which overlapping areas the rights hereby granted are
non-exclusive as to such other Plan or Plans only.
(Doc. # 1353-100 at 2).
1982, the Blue Shield Association (the successor to Blue
Shield Medical Care Plans) and the Blue Cross Association
merged into the Blue Cross and Blue Shield Association. (Doc.
# 1432 at 16). As a result of the merger, the Association now
owns the Blue Cross and Blue Shield names and Marks (the
“Blue Marks”), and it in turn grants licenses to
the Member Plans to use the Blue Marks. (Doc. # 1352-41 at
each Plan has signed a License Agreement with the
Association. (Docs. # 1352-49 through 1352-128). Each of
these License Agreements identifies an exclusive
“service area” where a Member Plan may use the
Blue Marks. (Docs. # 1352-49 through 1352-128; 1432 at 11,
19-20). The Association has a “Map Book” which
memorializes the Plans' defined service areas. (Docs. #
1432 at 20; 1352-164 at 52-53, 241-46, 270). Under the
License Agreements, subject to certain exceptions related to
National Accounts and Government Programs, the Plans agreed
that a “Plan may not use the Licensed Marks and Name
outside the Service Area … .” (Docs. # 1432 at
11, 20; 1352-127; 1352-49 through 1352-128).
the License Agreements, the Association may impose monetary
fines on a Plan that uses the Blue Marks outside its service
area. (Docs. # 1351 at 19; 1432 at 21). After thirty
days' written notice and an opportunity to be heard, on a
double-three-quarters vote, a Plan's License Agreement
may be terminated for continued use of the Marks outside the
Plan's service area. (Id.). The License
Agreements themselves can be modified or terminated by a
“double-three-quarters” vote of the Plans. (Docs.
# 1352-49 through 1352-128).
under the License Agreements, the Association's rules, or
both, a Plan generally may not develop a provider network or
contract with a healthcare provider outside its service area
for services to be provided under the Blue Marks. (Docs. #
1350 at 12; 1432 at 11). However, a Plan may contract with a
healthcare provider in a county contiguous to the Plan's
service area under certain defined conditions and for limited
purposes. (Id.). A Plan may also contract with
certain types of providers nationwide, such as laboratories,
durable medical equipment providers, and specialty
pharmacies, but medical professionals, hospitals, and
outpatient facilities are not among these types.
History of Service Areas
have been efforts to enforce exclusivity of the Plans'
service areas, but some competition between Plans has been a
fact of life from the earliest days of the Blues'
organization. (Doc. # 1353-4 at 50).
in the 1940s, the service areas of each Plan have been
recorded, initially in three-ring binders called service
manuals. (Doc. # 1352-164 at 52-53, 241-46, 270). The
three-ring service manuals have been replaced by Map Books.
(Id.). The 1976 version of the Map Book, for
example, notes that the area served by the Blue Shield Plan
in Alabama was the entire state of Alabama. (Doc. # 1433-7 at
2). These Map Books are not public record. They are
considered by the Association to be “highly sensitive,
” are not distributed to the Plans, and are distributed
only to a limited number of employees. (Doc. # 1553-3 at 2).
majority of the Plans' service areas are exclusive,
i.e., they do not overlap with another Plan's
service area. (Doc. # 1432 at 11). In some cases, however,
Blue Plans have overlapping service areas. For example, the
following overlaps exist:
• Anthem Blue Cross offers Commercial Health Insurance
Coverage across California, in the same geographic region as
Blue Shield of California. (Docs. # 1436-79 at 8; 1436-81 at
• Regence BlueShield of Idaho and Blue Cross of Idaho
both offer Blue branded Commercial Health Insurance Coverage
in Idaho. (Docs. # 1436-79 at 8; 1436-81 at 11)
• WellPoint, Inc. (Empire Blue Cross) offers Commercial
Health Insurance Coverage in eight counties in upstate New
York, where Blue Shield of Western New York (whose parent
company is HealthNow) also offers coverage. Lifetime
HealthCare, Inc. was also an overlapping Plan in New York.
(Docs. # 1436-79 at 8; 1436-81 at 11).
• In Pennsylvania, Highmark BCBS, Capital Blue Cross,
Blue Cross of NE Pennsylvania, and Independence Blue Cross
are overlapping Plans. (Docs. # 1436-80 at 7; 1436-81 at
• Three Cambia Plans (Regence BlueShield (in
Washington), Regence BlueCross BlueShield of Oregon, and
Regence BlueShield of Idaho) offer Blue branded Commercial
Health Insurance Coverage in all but seven counties of
Washington (Ferry, Stevens, Pend Oreille, Spokane, Lincoln,
Adams, and Douglas) and Premera offers Commercial Health
Insurance (under Blue Cross and/or Blue Shield licenses) in
overlapping Washington counties. (Docs. # 1436-79 at 8;
1436-81 at 11).
have been other instances of overlapping service areas for
the Blue Cross Mark (at least for some periods of time) in
Illinois, Kentucky, Maryland, New York, North Carolina, Ohio,
and Virginia. (Docs. # 1350-27 & 1350-28). There have
been other instances of overlapping service areas for the
Blue Shield Mark (again, at least for some periods of time)
in Illinois, Ohio, and Wisconsin. (Docs. # 1350-27 &
1350-28). Currently, in California, Idaho, and Pennsylvania,
different Plans have the right to use different Marks, one
the Cross and the other the Shield. In Washington, Plans have
licenses to use different Marks, except in one county where
two Plans have licenses to use the Shield Mark. In New York,
there are fourteen counties with multiple licensees, but in
half of those counties, the rights are to different Marks. In
Georgia and Ohio, one Plan has a statewide license to use the
Blue Marks, and another has a license in a small number of
counties. (Doc. # 1432 at 12-13).
September 1985, Community Mutual Insurance Company
(“CMIC”) began marketing and selling health
insurance under the Blue Cross and Blue Shield Marks in Ohio.
(Doc. # 1429-9 at 21). The Association filed a Complaint
against CMIC seeking to enjoin CMIC's marketing and sales
outside of its exclusive service area (“ESA”).
(Id.). Although a temporary restraining order was
issued, after an evidentiary hearing, the Association's
request for a preliminary injunction against CMIC was denied.
(Id.). The Ohio Attorney General intervened in the
lawsuit and asserted a counterclaim alleging that the
Association's system of allocating ESAs violated
antitrust laws. (Id.). The Association agreed to
dismiss its claims against CMIC if the counterclaim against
it was dismissed. (Id.). As a condition of that
settlement, the Association agreed, for a period of time, not
to pursue litigation seeking to enforce the ESAs against any
of the Ohio Plans. (Doc. # 1429-9 at 22).
1980s, the Attorney General of Maryland also sued the
Association, alleging that its use of ESAs violated federal
and state antitrust laws. (Doc. # 1350-21 at 2). The
Association agreed to a settlement that allowed two Plans to
compete using the Blue Marks throughout the State of Maryland
until “completion of the Assembly of Blue Cross and
Blue Shield Plans” or January 1, 1991, whichever was
later. (Doc. # 1350-21 at 6).
to January 1988, West Virginia had two Blue Plans which were
licensed in mutually exclusive service areas in West
Virginia. (Doc. # 1551 at 12). These Plans violated the terms
of their License Agreements by competing in each other's
service areas. (Id.) Neither Plan objected to the
competition. (Doc. # 1431-4 at 2). Nevertheless, the
Association considered various options to address the
situation, including a merger between the Plans. (Doc. #
1431-4 at 2).
the various Blues have had occasion to address ESAs. For
example, a summary of conversations with four Blue CEOs in
1986 recognized that “[t]he major advantage of an
exclusive franchise area was seen in the lessening of
competition as well as the opportunity to discuss plans and
proposals with companies in the same industry knowing that
those ideas would not be used against you.” (Doc. #
1436-12). And in interviews conducted by the Association in
which questions about ESAs were asked, Plan CEOs stated that
ESAs create “[l]arger market share because other Blues
stay out and do not fragment the market” (Doc. #
1350-22 at 3), and allow for aggressive bargaining. (Doc. #
1350-23 at 3). “In turn, national accounts enjoy local
discounts.” (Id.). One CEO reported that
“Plans benefit from the exclusive service areas because
it eliminates competition from other Blue Plans” and
that without service areas, “there would be open
warfare.” (Doc. # 1350-24 at 2).
discovery to this point in the case, while broad, has focused
particularly on Alabama. As of 2016, nine Plans, other than
Blue Cross and Blue Shield of Alabama (“BCBSA”),
had at least 10, 000 members who resided in Alabama: Anthem
(150, 912); HCSC (97, 497); Highmark (45, 234); BlueCross
BlueShield of Tennessee (37, 111); Blue Cross Blue Shield of
Michigan (29, 579); USAble Mutual Insurance Company
(Arkansas) (22, 705); BCBSM (Minnesota) (16, 834); Horizon
Healthcare Services (New Jersey) (11, 357); and Blue Cross
and Blue Shield of North Carolina (10, 192). In total, these
Plans had in excess of 400, 000 members residing in Alabama.
(Docs. # 1350 at 17-18; 1432 at 17).
History of Blue Rules
the past three decades, the Blue Plans and the Association
have adopted several strategies and Association rules that
are relevant to the Sherman Act claims at issue in this MDL.
The court discusses certain of these strategies below.
1982 Long-Term Business Strategy
Association's 1982 annual meeting, a “Long-Term
Business Strategy” was presented to the Plans. (Docs. #
1350-15 at 3; 1352-164 at 80-84). In his presentation at the
meeting, the Chairman of the Joint Executive Committee, who
was appointed to work on an integrated business strategy,
reported that “he would try to persuade members that
they could not sustain the status quo and that fundamental
change is the only realistic option.” (Doc. # 1350-15
at 3). The Plans adopted several recommendations contained in
the Long-Term Business Strategy, including requiring
consolidation and allowing only one Plan per state. (Docs. #
1350-15 at 3; 1352-164 at 80-84). Proposition 1.1 of the
Strategy was approved in November 1984 and provided that
“[a]ll Plans to be joint Blue Cross and Blue Shield
Plans, except when needs dictate otherwise, by the end of
1985.” (Docs. # 1350-15 at 3; 1350-18 at 3; 1352-164 at
80-84). Proposition 1.2 of the Strategy, which was also
adopted, stated that there should be “[o]nly one Plan
per State, except when the Association Board of Directors
agrees that business needs dictate otherwise, by the end of
1985 Assembly of Plans
Assembly of Plans sought to examine and redefine the
relationship among the various Plans as well as between the
Plans and the Association. (Doc. # 1349-10 at 11-12). In
1990, the Assembly of Plans made recommendations to the Blue
Plans regarding Service Marks and ESAs. (Doc. # 1349-8 at 3).
Those recommendations included the proposal that the Blue
Cross License Agreements and the Blue Shield License
Agreements be revised to be essentially identical.
(Id.). The proposal would involve supplementation of
the Blue Cross License Agreement. (Doc. # 1349-8 at 31). But
the Blue Shield Agreement was to be essentially replaced with
the Blue Cross Agreement, rather than supplemented, as the
earlier Shield version “was prepared at a stage when
licensing was in its infancy.” (Docs. # 1349-8 at
revised 1991 Blue Cross License Agreements resulting from the
Assembly of Plans contain the following provision regarding
The rights hereby granted are exclusive to Plan within the
geographical area(s) served by the Plan on June 30, 1972,
and/or as to which the Plan has been so granted a subsequent
license, which is hereby defined as the “Service Area,
” except that BCBSA reserves the right to use the
Licensed Marks and Licensed Name in said Service Area, and
except to the extent that said Service Area may overlap the
area or areas served by one or more other licensed Blue Cross
Plans as of said date or subsequent license, as to which
overlapping areas the rights hereby granted are nonexclusive
as to such other Plan or Plans only.
(Docs. # 1349-8 at 7, 1349-11 at 5). The new Blue Shield
License Agreement resulting from the Assembly of Plans
contains a virtually identical provision. (Doc. # 1349-8 at
the advent of the LTBS and AOP, the number of Blue Plans
decreased from 114 in 1980, to 77 in 1990, and stands at 36
today. (Doc. # 1350-19 at 3).
The Development of the BlueCard Program
1992, the BlueCard program was developed to, at least in
part, address inefficiencies in the cooperative methods
employed by the Blue Plans, including the lack of a uniform
process, dissatisfaction of providers with their receivables,
and customer confusion. (Docs. # 1348-6 at 20-21; 1353-53 at
156-68). Under BlueCard, Plans were required to make their
local provider discounts available to all Blue Members, even
if they lived in another Plan's service area. (Doc. #
1352-44 at 56).
1995, Member Plans adopted a license standard requiring all
Plans to participate in BlueCard. (Doc. # 1352-44 at 56).
Following the adoption of BlueCard, Blue enrollment ceased
declining and started increasing. (Doc. # 1353-68 at 12).
BlueCard allowed the Blue Plans to provide subscribers a
single point of contact like insureds enjoyed with the
national insurers. (Doc. # 1353-61 at 2). ...