Attorney General sues Blue Cross Blue Shield, accuses insurance giant an 'illegal monopoly'
(FOX 2) - The Michigan Attorney General is accusing Blue Cross Blue Shield of operating a monopoly in the state during an announcement of a lawsuit against the insurance giant.
Dana Nessel said Michigan has the lowest reimbursement rates in the Midwest, causing "devastating" impacts on Michigan families.
A federal lawsuit filed by her team argues BCBS owns an "illegal health insurance monopoly" with a coverage majority in the state, and used its leverage to "abuse" the marketplace, Nessel said.
Blue Cross Blue Shield sued
Big picture view:
Blue Cross Blue Shield of Michigan controls 65% of the insurance market in the state and 79% of the Preferred Provider Organization market, Nessel said on Thursday.
She said the company gained that control not through market power of skillful business acumen, the state attorney general said, but "by a series of illegal and anti-competitive agreements and conspiracy with the entire Blue Cross and Blue Shield network."
After obtaining dominance, Nessel said they "abused" their role by lowering health care provider rate payments "to near the lowest in the nation."
She said BCBS conspired with insurance licensees known as "Blue Marks" to eliminate competition for insurance for some of Michigan's biggest employers.
As quality of care fell, inflated prices for health insurance and medical benefit coverage rose, Nessel alleged.
"Health care providers in Michigan have no meaningful alternative to contracting with blue mark companies. If your doctor, for example, declined to accept Blue Cross, they automatically become an out of network provider for basically two thirds of commercially insured patients in the state," she said.
What are the violations?
Local perspective:
Filed in the U.S. District Court of Eastern Michigan, the state's lawsuit alleges:
- Two counts of violations of the Sherman Act
- Four counts of violations of the Michigan Antitrust Reform Act
- One count of public nuisance
- One count of unjust enrichment
What they're saying:
"Medical professionals have been forced to reduce services, replace medical staff with administrative positions to address the red tape, close facilities or exit the Michigan market entirely, which has significantly degraded the health care landscape in our state and led to worse and worsening health outcomes for our state residents," Nessel said.
The other side:
The insurance provider issued a statement that it was "blindsided" by the lawsuit.
"Blue Cross Blue Shield of Michigan has not yet been served and therefore we cannot comment on the specific merits of the case. We fundamentally disagree with the Attorney General’s characterization of an uncompetitive insurance market in Michigan. Competition exists everywhere in our state’s insurance markets, with strong local and national insurers competing with us every day. For nearly 90 years, Blue Cross has provided coverage for citizens across Michigan, in every county, without exception. This heritage, and the quality of products and services we provide, is foundational to our success in Michigan."
The Source: The Michigan Attorney General and Blue Cross Blue Shield of MIchigan were cited for this story.