As the lead counsel for the healthcare provider plaintiffs in the Blue Cross Blue Shield antitrust litigation, we’ve been hearing from hospitals, healthcare facilities, and medical professionals who want to know whether to participate in the recent settlement. The landmark settlement includes $2.8 billion in monetary relief and substantial changes to the BlueCard program and the Blues’ operations, increasing efficiency and accountability.
We know that other attorneys and litigation funders are making attractive-sounding pitches for providers to opt out of the settlement and pursue their own litigation. Of course, we think the settlement is outstanding and encourage everyone to participate, but some may think we’re biased. To provide transparency and clarity, we’ve contrasted those pitches with the opinion of an unbiased source—the Court overseeing the case.
The Pitch: Prior rulings in this case will give providers that opt out an easy path to victory, or at least a great settlement.
The Court: “This litigation is extraordinarily complex.” “If the parties continue to litigate these cases, they would need to devote additional significant time and enormous resources to preparing various complex damages models. There is simply no guarantee that Provider Plaintiffs would recover a final judgment more favorable than the considerable $2.8 billion in monetary relief and extraordinary injunctive relief secured by them in the Settlement.”
The Bottom Line: Despite the prior rulings in this case, any plaintiff’s claims will face serious defenses that no court has decided yet and proving damages will be extremely complex.
The Pitch: If a provider opts out, its claims will be worth far more than what it would get in the settlement.
The Court: “Blue Cross and Blue Shield of Alabama has the highest market share of any Blue Plan in the United States. Thus, a similar damages estimate in other markets with greater competition would be lower.”
The Bottom Line: Some attorneys appear to be using a damages model for Alabama hospitals to estimate damages for hospitals nationwide. It took several years and tens of millions of dollars to develop our damages model, which produced damage estimates specific to the market conditions in Alabama. Anyone using Alabama numbers to estimate damages in other states has not done their homework.
The Pitch: A provider that opts out is likely to get a quick settlement.
The Court: “It would take many years to complete these cases, and even when completed in the trial court, the parties undoubtedly face years of appeals of class certification decisions, verdicts, and/or decisions on the merits.” “The court suspects that the Blues would litigate each one to its conclusion rather than enter into piecemeal settlements.”
The Bottom Line: It took twelve years to resolve this case, and there is no reason to think that separate litigation would not also take numerous years to resolve. As the Court said, “Any potential future recovery must be discounted significantly to account for the immense time and expenses it would take to put plaintiffs in a position to receive any recovery.”
The Pitch: A provider who opts out of the settlement may be able to get the benefit of the improvements the Blues have agreed to implement (the “injunctive relief”).
The Court: “Those who opt out will, by the terms of the Settlement, opt out of all the benefits of the settlement – i.e., both the monetary and the injunctive relief.”
The Bottom Line: Under the settlement agreement, providers who opt out have no entitlement to the benefit of the improvements to the Blues’ system.
The Pitch: There is little downside to opting out because a provider will only pay expenses and attorneys’ fees if it recovers from the Blues.
The Court: “The cost of litigating these cases is exorbitant. It would be enormous for a large health care provider and, for smaller healthcare providers, the cost would simply be prohibitive.”
The Bottom Line: Litigation funders will advance the expenses of litigation, but they expect a significant return on their investment if the provider recovers. Depending on the arrangement a provider agrees to, it may need to recover multiple times what it would receive in the settlement to cover fees and expenses. And it still will not be entitled to the settlement’s injunctive relief, such as the transformation of BlueCard and expanded contracting opportunities.
We have spent the last twelve years fighting for providers in this litigation, and we are proud of the result. As the Court said, “the recovery provided for in the Provider Settlement Agreement is an excellent achievement.”
If you have any questions about what an attorney or a litigation funder has told you, we’d like to hear from you. Please reach out to Joe Whatley (jwhatley@whatleykallas.com) and Edith Kallas (ekallas@whatleykallas.com) at Whatley Kallas LLP.