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In re Blue Cross Blue Shield Antitrust Litigation

United States District Court, N.D. Alabama, Southern Division

April 5, 2018

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

          R. DAVID PROCTOR UNITED STATES DISTRICT JUDGE.

         I. Introduction

         As the 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).

         Currently 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).[1] 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).

         II. Relevant Undisputed Facts

         The 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.

         A. The History of Blue Cross and Blue Shield Organization

         Nearly 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 Marks”).[2]

         During 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).[3] 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).

         By 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).

         The 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).

         The 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).

         In 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).

         In 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).

         At some 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).

         By the 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).

         B. History of the Blue Cross and Blue Shield Marks

         In 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 12).

         Both 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 38).[4]

         Between 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.).

         Previously, 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).[5] 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.).

         Hospital 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.).

         C. The Structure of Blue Cross and Blue Shield Organization

         At 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).

         The 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).

         The 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 at 29).

         The 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).

         In 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).

         In 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 7).

         Today, 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).

         Under 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).

         Also 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. (Id.).

         D. History of Service Areas

         There 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).

         Since 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).

         The 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 11).
• 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).[6]
• 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 11).[7]
• 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).

         There 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).

         In 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).

         In the 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).

         Prior 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).

         CEOs of 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).

         The 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).

         E. History of Blue Rules

         Over 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.

         i. 1982 Long-Term Business Strategy

         At the 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.” (Id.).

         ii. 1985 Assembly of Plans

         The 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 31-32; 1353-48).

         The revised 1991 Blue Cross License Agreements resulting from the Assembly of Plans contain the following provision regarding service areas:

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 54).

         After 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).

         iii. The Development of the BlueCard Program

         In 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).

         In 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). ...


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