Judge Allows Lawsuit To Continue – Blue Cross’s Favored Nations Contracts At Issue


A federal judge has denied a request from Blue Cross Blue Shield of Michigan to dismiss a suit filed by federal and state governments, alleging the payor’s use of certain hospital contracts stifles competition, according to a Detroit News report.

In a court hearing, U.S. District Judge Denise Page Hood said she would produce a written order denying BCBS’ request, allowing the lawsuit by the U.S. Justice Department and former Michigan Attorney General Mike Cox to proceed. Judge Hood said she is still “tweaking” the order, according to the report.

The state and U.S. government claim BCBS contracts with more than half of Michigan’s hospitals prevent them from charging other insurance companies lower prices. The governments also argue that, in some cases, BCBS agreed to boost reimbursements to hospitals if they charged competing insurance companies higher rates.

BCBS argued to dismiss the case, citing its use of the “most favored nation” clause has already been approved by the state insurance commissioner and the contract conditions help keep costs down for beneficiaries.

Read the Detroit News report on BCBS Michigan and its pending lawsuit.