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MDL NO. 2406: Summary Judgment Bid Partly Granted

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Judge David Proctor of the U.S. District Court for the Northern
District of Alabama, Southern Division, granted in part and denied
in part the parties cross motions in the case captioned IN RE:
BLUE CROSS BLUE SHIELD ANTITRUST LITIGATION (MDL No. 2406), Master
No. 2:13-CV-20000-RDP (N.D. Ala.)

Blue Cross and Blue Shield of Alabama (BCBSAL) has employed rating
classifications for its group insurance products as follows: (a)
for groups of 2-14, BCBSAL has applied a community-rating
methodology, and adjusts base rates using benefit plan and group-
size adjustment factors; (b) for groups of 15-50, BCBSAL has
applied a demographic-rating methodology, and adjusts base rates
using demographic adjustment factors such as gender and age; and
(c) for groups of 50 or more, BCBSAL has applied an experience-
rating, or merit-rating, methodology, adjusting base rates using
the claims experience of each group.

From January 1, 2008, through the present, the two Alabama
subscriber plaintiffs named in the subscriber track amended
consolidated class action complaint, CB Roofing, Inc. and American
Electric Motor Services, Inc. (AEMS), purchased products covered
by BCBSAL’s Small Group category of business. CB Roofing became a
BCBSAL customer in 2009. Since 2009, CB Roofing has had either two
or three enrolled subscribers. AEMS became a BCBSAL customer
before 2008. Since 2008, AEMS has had between two and four
enrolled subscribers. BCBSAL’s undisclosed cap and hold variances
were not applied to the premiums paid by either CB Roofing or
AEMS.

On November 14, 2016, subscriber plaintiffs moved for leave to
amend their complaint in American Electric Motor Services, Inc.,
et al. v. Blue Cross Blue Shield of Alabama, et al., and to file a
second amended consolidated class action complaint in In Re Blue
Cross Blue Shield Antitrust Litigation MDL 2406 to add small group
plaintiffs Consumer Financial Education Foundation of America,
Inc., Fort McClellan Credit Union, Rolison Trucking Co. LLC,
Conrad Watson Air Conditioning, Inc., Hilton Cooper Contracting,
Inc., and Bradford Building Company, Inc.

On November 22, 2016, the court granted subscriber plaintiffs’
motions, and on December 2 and 7, 2016, respectively, subscriber
plaintiffs filed their amended class action complaint and their
second amended consolidated class action complaint adding those
plaintiffs and alleged that BCBSAL charges at least some of their
subscribers health insurance premium rates that were never filed
or approved because such rates vary from the base rates it files
with the state.

Before the court are defendants’ amended and restated motion based
on the Filed Rate Doctrine for summary judgment on the Alabama
subscribers’ damages claims and Alabama subscriber plaintiffs’
cross-motion for partial summary judgment on the Filed-Rate
Doctrine. With regard to the Filed Rate Doctrine, the parties have
stipulated to the following facts: (1) the doctrine does not apply
to the damages claims of plaintiffs whose groups contained more
than fifty members because BCBSAL did not file rates for such
market segment; and (2) the parties consent to entry of judgment
as a matter of law against BCBSAL with respect to its Filed Rate
Defense targeted at plaintiffs’ groups which contain more than
fifty members.

Defendants contend that application of the doctrine entitles them
to summary judgment on the damages claims asserted by the two
subscriber plaintiffs. Subscriber plaintiffs respond that it is
actually they who are entitled to judgment as a matter of law on
the affirmative defense because BCBSAL has systematically charged
rates that varied from the rates they filed with the Alabama
Department of Insurance.

Judge Proctor held that the Filed Rate Doctrine is judicially
created and finds its origins in principles of federal preemption.
In the antitrust context, it operates to bar treble damages claims
that are based upon challenges to rates that have been filed with
regulatory agencies. The Filed Rate Doctrine only bars recovery of
money including treble damages. It has no effect on claims for
declaratory or injunctive relief.  Thus, the Filed Rate Doctrine
only bars claims for money damages by subscriber plaintiffs who
were charged and paid rates that were actually filed and approved.
Defendants’ amended and restated motion based on the Filed Rate
Doctrine for summary judgment on the Alabama subscribers’ damages
claims, and Alabama subscriber plaintiffs’ cross-motion for
partial summary judgment on the filed-rate are each due to be
granted in part and denied in part.

A copy of Judge Proctor’s memorandum opinion datede February 23,
2017, is available at https://goo.gl/3P8Cyv from Leagle.com.