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In re Blue Cross Blue Shield Antitrust Litigation

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

April 16, 2018

IN RE BLUE CROSS BLUE SHIELD ANTITRUST LITIGATION

          MEMORANDUM OPINION

          R. DAVID PROCTOR UNITED STATES DISTRICT JUDGE.

         This case is before the court on Provider Plaintiffs' Motion for Partial Summary Judgment Regarding Issues Decided in United States v. Anthem. (Doc. # 1392). In this summary judgment motion, Provider Plaintiffs seek judgment as a matter of law against Defendant Anthem, Inc. as to fifteen facts that concern (1) the relationship between the Blue Cross Blue Shield Plans and the Blue Cross Blue Shield Association (the “Association”), (2) the appropriate market definitions for an antitrust analysis, (3) factors that may be considered in determining market concentration, and (4) factors that may be considered in determining anticompetitive effects. (Doc. # 1392 at 5, 9-10). The motion has been fully briefed (see Docs. # 1481, 1482, 1569), and the court held oral argument on this motion on October 4, 2017. (See Doc. # 1607). At the Special Master's request, the court held the motion during the pendency of the parties' mediation sessions. The motion is now ripe for decision. After careful review, and for the reasons explained below, the court concludes that Provider Plaintiffs' motion (Doc. # 1392) is due to be denied.

         I. Background

         In July 2016, the United States, eleven states, and the District of Columbia (collectively referred to as the “United States”) sued to enjoin a proposed merger between Anthem and Cigna Health and Life Insurance Company (“Cigna”). United States v. Anthem, Inc., 236 F.Supp.3d 171, 186 (D.D.C.), aff'd, 855 F.3d 345 (D.C. Cir. 2017) (“Anthem I”). The United States sought to enjoin the proposed Anthem-Cigna merger under Section 7 of the Clayton Act because the merger would “harm competition in the sale of commercial healthcare” to national accounts and large group employers. Id. at 186-87. The Anthem I bench trial began in November 2016 and ended in January 2017. Id. at 187.

         The D.C. District analyzed the proposed Anthem-Cigna merger under a three-part test provided in United States v. Baker Hughes, Inc., 908 F.2d 981 (D.C. Cir. 1990). Anthem I, 236 F.Supp.3d at 191-92. Ultimately, the court concluded that (1) the United States had established a prima facie case of a presumptively anticompetitive merger, (2) Anthem and Cigna had introduced evidence to rebut the presumption, and (3) the United States had ultimately showed that the effect of the merger would be to lessen competition “in the market for sales to national accounts within [ ] fourteen states.” Id. at 192. First, the district court applied the Baker Hughes test to analyze the effect of the proposed merger on the market for sale of health insurance to national accounts within the fourteen states where Anthem holds a Blue license. See Id. at 193-253. Second, the district court addressed the effect of the proposed merger on the sale of health insurance to large group employer accounts in the Richmond, Virginia Core-Based Statistical Area (“CBSA”). Id. at 253-59. The district court enjoined the proposed Anthem-Cigna merger because of its effect on competition in the national account market and its effect on competition in the Richmond large group market. Id. at 259.

         Anthem sought an expedited appeal in the D.C. Circuit Court of Appeals. (Doc. # 1482-1 at 3-12). The D.C. Circuit agreed to hear the appeal on an expedited basis. (United States v. Anthem, Inc., Case No. 17-5024, Doc. # 1662008 (D.C. Cir. Feb. 17, 2017)). Anthem challenged the district court's judgment “on the principal ground that the court improperly declined to consider the claimed billions of dollars in medical savings.” United States v. Anthem, Inc., 855 F.3d 345, 348 (D.C. Cir.), petition for cert. dismissed, 137 S.Ct. 2250 (2017) (“Anthem II”). In April 2017, the D.C. Circuit affirmed both grounds for the district court's injunction of the proposed Anthem-Cigna merger. See Anthem II, 855 F.3d at 349, 364 (affirming the district court's national-account market ruling); id. at 349, 368 (affirming the district court's ruling with regard to Richmond's large-group market). Anthem filed a petition for writ of certiorari with the Supreme Court, but withdrew that petition in June 2017. Anthem, Inc. v. United States, 137 S.Ct. 2250 (2017).

         Shortly thereafter, in August 2017, Provider Plaintiffs asked the court to enter partial summary judgment on collateral estoppel grounds, finding the following fifteen facts to be undisputed for purposes of Plaintiff's claims against Anthem:

1. “No two Blue companies will ever bid on the same large group or national account, and no Blue licensee may bid on an account headquartered in another licensee's state without receiving a ‘cede' from that carrier.” [Anthem I, 236 F.Supp.3d at 189].
2. “Access to a network of medical care providers is an essential component of any commercial health insurance plan….Anthem gains access to a national network for its customers by virtue of its membership in the Blue Cross Blue Shield Association.” [Anthem I, 236 F.Supp.3d at 189].
3. “There are important aspects of Blue Cross Blue Shield Association membership-in particular, the mutuality and cooperation involved in the cedes, the potential for Blue Card revenue, and the best efforts rules-that redound to the benefit of the Association as a whole.” [Anthem I, 236 F.Supp.3d at 220 n. 22].
4. “Like all other members of the Blue Cross Blue Shield Association, Anthem receives Blue Card fees for network access and administrative services when it ‘hosts' a member of another Blue plan.” [Anthem I, 236 F.Supp.3d at 189].
5. The “market for the sale of health insurance to ‘national accounts' - customers with more than 5000 employees, usually spread over at least two states” is a relevant product market. [Anthem I, 236 F.Supp.3d at 179, 193-202].
6. The market for national accounts includes both insured and Administrative Service Only (ASO) business. [Anthem I, 236 F.Supp.3d at 201].
7. The Association rules are significant to the determination of the relevant geographic market for the sale of medical coverage to National Accounts. [Anthe ...

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