On March 30, United States District Court Judge Denise Page Hood (E.D. Mich.) handed Blue Cross Blue Shield of Michigan a victory, dismissing an antitrust action filed against it by the City of Pontiac in which the City alleged that Blue Cross's use of "most favored nation" clauses in its provider contracts violated the antitrust laws. (City of Pontiac v. Blue Cross Blue Shield of Michigan, Case No. 11-10276, Eastern District of Michigan).
The action, which was filed by the City in January of 2011 against Blue Cross and twenty-two Michigan hospitals, alleged that the defendants' inclusion of "most favored nation" clauses in their provider contracts, requiring the hospitals to charge other insurers more than they charged to Blue Cross for provider services, constituted a per se violation of the antitrust laws.
Ruling on Blue Cross's motion to dismiss the Complaint, Judge Hood held that the City's antitrust allegations did not state a claim. Specifically, Judge Hood noted that the City had pled a per se violation, and that while some horizontal agreements are subject to per se condemnation, "all vertical price restraints are judged under the rule of reason." Because "Blue Cross and the hospital defendants are at different levels of the market," with Blue Cross acting as a purchaser of hospital services from the hospital defendants, "the relationship between Blue Cross and the hospital defendants is vertical." Accordingly, the Court held that "in light of the City of Pontiac's reliance on a per se violation analysis, which this Court rejects . . . the Court finds that the City of Pontiac fails to state a plausible claim under the Sherman Act and the Michigan antitrust laws."
After finding that the City of Pontiac had also failed to allege a claim of unjust enrichment, the Court dismissed the City's complaint, bringing this portion of the closely watched MFN actions to a close. (Notably, litigation between Blue Cross of Michigan and the DOJ over the use of most favored nation clauses, which is the subject of a separate action, continues at this time, as do other related civil actions. In the DOJ case the government contends that Blue Cross's contracts constitute a "rule of reason" antitrust violation which, unlike a per se violation, will require that the DOJ also prove that Blue Cross's alleged conduct has had anticompetitive effects in the market, a more difficult task for an antitrust plaintiff ).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
