United States v. Blue Cross Blue Shield Of Michigan

809 F.Supp.2d 665 (2011)

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Nature of the Case

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Facts

D is a Michigan nonprofit healthcare corporation. D is subject to federal taxation but is exempt from state and local taxation. D provides commercial and other health insurance products and health maintenance organization products. D competes with for-profit and nonprofit health insurers. D covers more than 60% of the commercially insured population. It insures more than nine times as many Michigan residents as its next largest commercial health insurance competitor. D had revenues in excess of $10 billion in 2009. P purchases hospital services on behalf of its insureds from all 131 general acute care hospitals in Michigan. D includes MFNs in many of its contracts with hospitals. It has MFNs or similar clauses with at least 70 of Michigan's 131 general acute care hospitals. These 70 hospitals operate more than 40% of Michigan's acute care hospital beds. D's MFNs require a hospital to provide services to D's competitors either at higher prices or at prices no less than D pays. D's MFN-plus clauses require that some hospitals charge competitors as much as 40% more than they charge D. 'Equal-to MFNs' require the hospitals to charge other commercial health insurers at least as much as they charge D. Under these agreements, D agreed to pay more to these hospitals, raising D's own costs, and its customers' costs, in exchange for the equal-to MFN. A community hospital that declines to enter into these agreements would be paid approximately 16% less by D than if it accepts the MFN clause. P contends that MFNs have deterred or prevented competitive entry and expansion in health insurance markets in Michigan. P sued D under Section 1 of the Sherman Act, 15 U.S.C. § 1 (Count One) and Section 2 of the Michigan Antitrust Reform Act, M.C.L. § 445.772 (Count Two). In lieu of an Answer, D filed a Motion to Dismiss.