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Conway v. Blue Cross and Blue Shield of Alabama

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

April 16, 2019

JERRY L. CONWAY, D.C., et al., Plaintiffs,
v.
BLUE CROSS BLUE SHIELD OF ALABAMA, et al., Defendants.

          MEMORANDUM OPINION

          R. DAVID PRO'CTOR UNITED STATES DISTRICT JUDGE.

         This case is before the court on the Verified Motion to Intervene for the Limited Purpose of Seeking a Preliminary Injunction filed by Certain University of Pittsburgh Medical Center Hospitals[1] (“UPMC”). (Doc. # 584). In the Motion, UPMC seeks to intervene in this case to pursue a preliminary injunction prohibiting the enforcement of (or compliance with) the exclusive service areas provided for in the License Agreements between BCBSA and the Blue Plans. (Id.). The Motion has been fully briefed. (Docs. # 588-595). For the reasons explained below, the Motion is due to be denied.

         I. Background

         UPMC is “the dominant provider of health care services in western Pennsylvania.” Commw. ex rel. Kane v. UPMC, 129 A.3d 441, 445 (Pa. 2015). “In 2002, UPMC entered into a ten-year ‘provider agreement' with Highmark under which it furnished health care services on an in-patient or out-patient basis to subscribers of Highmark's commercial insurance plans and billed Highmark for those services at specified, negotiated rates.” Kane, 129 A.3d at 445.

         “[I]n the Spring of 2011, UPMC announced it would not agree to renew or renegotiate these provider agreements with Highmark, the majority of which were set to expire on June 30, 2012.” Id. “UPMC cited as its reason Highmark's proposed affiliation with the West Penn Allegheny Health System, which would create another integrated health care delivery system in competition with the UPMC system.” Id. “The Commonwealth [of Pennsylvania] considered the expiration of these agreements as having deleterious consequences for members of Highmark's health insurance plans because, according to the Commonwealth, these members would be subjected to ‘significantly higher out-of-network charges for their health care needs unless they either switched their health care provider away from UPMC or their health plan away from Highmark to one of the health insurers with which UPMC had contracted, albeit at higher prices.'” Id. at 445-46.

         In May 2012, following a mediation organized by the Commonwealth, UPMC and Highmark entered into an agreement that extended certain of the entities' provider agreements until December 31, 2014. Id. at 446. Also in May 2012, UPMC filed a lawsuit against Highmark and West Penn in federal court in Pennsylvania challenging, in part, the Blues' exclusive service areas and Licensing Agreements. (W. D. Pa. No. 2:12-cv-00692-JFC, UPMC v. Highmark, et al., Doc. # 1).

         On August 8, 2012, Blue Cross and Blue Shield Association (“BCBSA”) moved to intervene in the Western District of Pennsylvania case, ostensibly to defend its licenses of the Blue Cross and Blue Shield service names and marks. (W. D. Pa. No. 2:12-cv-00692-JFC, Doc. # 43). After BCBSA designated the case for tag along treatment in this MDL, UPMC amended its Complaint to remove allegations regarding the illegality of the exclusive service areas. (W. D. Pa. No. 2:12-cv-00692-JFC, Doc. # 64). Thereafter, BCBSA withdrew its Motion to Intervene. (W. D. Pa. No. 2:12-cv-00692-JFC, Doc. # 74).

         In May 2014, on at least two occasions, UPMC sent letters to various non-Highmark Blue Plans, seeking to contract directly with them. (Doc. # 585, Ex. E).[2] BCBSA responded to UPMC's letters stating that BCBSA grants Blue Plans the right to use the Blue trademarks only in their respective service areas and thus the non-Highmark Blue Plans could not accept UPMC's offer to contract. (Doc. # 585-6).

         In June 2014, after unsuccessful attempts by the Pennsylvania Office of Attorney General (“OAG”) to mediate a new agreement between Highmark and UPMC, the OAG filed a petition for review in the Commonwealth Court. Kane, 129 A.3d at 447-48. Shortly thereafter, on June 27, 2014, UPMC and Highmark entered into separate, nearly identical, reciprocal Consent Decrees with the OAG. Id. at 448. The 2014 Consent Decrees ran for a term of five years and are set to expire on June 30, 2019. Id. at 450.

         In April 2018, after this court's April 5, 2018 Standard of Review opinion was issued, UPMC renewed its offer to contract directly with the other Blues and was again rebuffed because of the License Agreements. (Docs. # 585-10, 585-11).

         After unsuccessful attempts by the OAG to negotiate modifications to extend the Consent Decrees, which Highmark (but not UPMC) was willing to accept, on February 7, 2019, the OAG filed a Petition to Modify the Consent Decree governing the relationship between UPMC and Highmark. (Doc. # 585 & 31). That petition is pending in the Commonwealth Court of Pennsylvania, No. 334 M.D. 2014. (Id.).

         On February 21, 2019, the same day it filed its Motion to Intervene in this case, certain UPMC entities filed a class action Complaint in the United States District Court for the Middle District of Pennsylvania against Joshua D. Shapiro, the Attorney General of the Commonwealth of Pennsylvania. (M.D. Pa. No. 1:19-cv-00298-JEJ, UPMC Pinnacle, et al. v. Shapiro, Doc. # 1). That case challenges efforts by Shapiro to impose new obligations on Pennsylvania nonprofit entities, including the following relevant requirements:

(a) Nonprofit health plans must contract with any healthcare provider that seeks an MA or commercial contract;
(b) similarly, nonprofit healthcare providers must contract with any insurer that wants a commercial or MA contract;
(c) if the parties to these forced contracts cannot agree on the rates to be paid or the other terms, they must submit to arbitration before a panel empowered to set the terms of the contract for them;
(d) in the event that a nonprofit healthcare provider lacks a contract with a particular insurer, any emergency services provided to that insurer's subscribers must be reimbursed at ...

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