In Re Blue Cross Blue Shield Antitrust Litigation MDL 2406
MEMORANDUM OPINION. Signed by Judge R David Proctor on 4/16/2018. (KAM)
2018 Apr-16 PM 01:49
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
IN RE: BLUE CROSS BLUE SHIELD
(MDL No. 2406)
Master File No. 2:13-CV-20000-RDP
) This document relates to Provider Track Cases
This case is before the court on Provider Plaintiffs’ Motion for Partial Summary Judgment
Regarding Issues Decided in United States v. Anthem. (Doc. # 1392). In this summary judgment
motion, Provider Plaintiffs seek judgment as a matter of law against Defendant Anthem, Inc. as to
fifteen facts that concern (1) the relationship between the Blue Cross Blue Shield Plans and the
Blue Cross Blue Shield Association (the “Association”), (2) the appropriate market definitions for
an antitrust analysis, (3) factors that may be considered in determining market concentration, and
(4) factors that may be considered in determining anticompetitive effects. (Doc. # 1392 at 5,
9-10). The motion has been fully briefed (see Docs. # 1481, 1482, 1569), and the court held oral
argument on this motion on October 4, 2017. (See Doc. # 1607). At the Special Master’s
request, the court held the motion during the pendency of the parties’ mediation sessions. The
motion is now ripe for decision. After careful review, and for the reasons explained below, the
court concludes that Provider Plaintiffs’ motion (Doc. # 1392) is due to be denied.
In July 2016, the United States, eleven states, and the District of Columbia (collectively
referred to as the “United States”) sued to enjoin a proposed merger between Anthem and Cigna
Health and Life Insurance Company (“Cigna”). United States v. Anthem, Inc., 236 F. Supp. 3d
171, 186 (D.D.C.), aff’d, 855 F.3d 345 (D.C. Cir. 2017) (“Anthem I”). The United States sought
to enjoin the proposed Anthem-Cigna merger under Section 7 of the Clayton Act because the
merger would “harm competition in the sale of commercial healthcare” to national accounts and
large group employers. Id. at 186-87. The Anthem I bench trial began in November 2016 and
ended in January 2017. Id. at 187.
The D.C. District analyzed the proposed Anthem-Cigna merger under a three-part test
provided in United States v. Baker Hughes, Inc., 908 F.2d 981 (D.C. Cir. 1990). Anthem I, 236 F.
Supp. 3d at 191-92. Ultimately, the court concluded that (1) the United States had established a
prima facie case of a presumptively anticompetitive merger, (2) Anthem and Cigna had introduced
evidence to rebut the presumption, and (3) the United States had ultimately showed that the effect
of the merger would be to lessen competition “in the market for sales to national accounts within
[ ] fourteen states.” Id. at 192. First, the district court applied the Baker Hughes test to analyze
the effect of the proposed merger on the market for sale of health insurance to national accounts
within the fourteen states where Anthem holds a Blue license. See id. at 193-253. Second, the
district court addressed the effect of the proposed merger on the sale of health insurance to large
group employer accounts in the Richmond, Virginia Core-Based Statistical Area (“CBSA”). Id.
at 253-59. The district court enjoined the proposed Anthem-Cigna merger because of its effect on
competition in the national account market and its effect on competition in the Richmond large
group market. Id. at 259.
Anthem sought an expedited appeal in the D.C. Circuit Court of Appeals. (Doc. # 1482-1
at 3-12). The D.C. Circuit agreed to hear the appeal on an expedited basis. (United States v.
Anthem, Inc., Case No. 17-5024, Doc. # 1662008 (D.C. Cir. Feb. 17, 2017)). Anthem challenged
the district court’s judgment “on the principal ground that the court improperly declined to
consider the claimed billions of dollars in medical savings.” United States v. Anthem, Inc., 855
F.3d 345, 348 (D.C. Cir.), petition for cert. dismissed, 137 S. Ct. 2250 (2017) (“Anthem II”). In
April 2017, the D.C. Circuit affirmed both grounds for the district court’s injunction of the
proposed Anthem-Cigna merger. See Anthem II, 855 F.3d at 349, 364 (affirming the district
court’s national-account market ruling); id. at 349, 368 (affirming the district court’s ruling with
regard to Richmond’s large-group market). Anthem filed a petition for writ of certiorari with the
Supreme Court, but withdrew that petition in June 2017. Anthem, Inc. v. United States, 137 S. Ct.
Shortly thereafter, in August 2017, Provider Plaintiffs asked the court to enter partial
summary judgment on collateral estoppel grounds, finding the following fifteen facts to be
undisputed for purposes of Plaintiff’s claims against Anthem:
1. “No two Blue companies will ever bid on the same large group or national
account, and no Blue licensee may bid on an account headquartered in another
licensee’s state without receiving a ‘cede’ from that carrier.” [Anthem I, 236 F.
Supp. 3d at 189].
2. “Access to a network of medical care providers is an essential component of
any commercial health insurance plan….Anthem gains access to a national
network for its customers by virtue of its membership in the Blue Cross Blue Shield
Association.” [Anthem I, 236 F. Supp. 3d at 189].
3. “There are important aspects of Blue Cross Blue Shield Association
membership—in particular, the mutuality and cooperation involved in the cedes,
the potential for Blue Card revenue, and the best efforts rules—that redound to the
benefit of the Association as a whole.” [Anthem I, 236 F. Supp. 3d at 220 n. 22].
4. “Like all other members of the Blue Cross Blue Shield Association, Anthem
receives Blue Card fees for network access and administrative services when it
‘hosts’ a member of another Blue plan.” [Anthem I, 236 F. Supp. 3d at 189].
5. The “market for the sale of health insurance to ‘national accounts’ – customers
with more than 5000 employees, usually spread over at least two states” is a
relevant product market. [Anthem I, 236 F. Supp. 3d at 179, 193-202].
6. The market for national accounts includes both insured and Administrative
Service Only (ASO) business. [Anthem I, 236 F. Supp. 3d at 201].
7. The Association rules are significant to the determination of the relevant
geographic market for the sale of medical coverage to National Accounts.
[Anthem I, 236 F. Supp. 3d at 179, 203].
8. Anthem’s service area is a relevant geographic market for the sale of medical
coverage to National Accounts. [Anthem I, 236 F. Supp. 3d at 179, 206].
9. The sale of commercial insurance to “large group” employers of more than 100
employees is a relevant product market. [Anthem I, 236 F. Supp. 3d at 254].
10. Core-Based Statistical Areas are relevant geographic markets for the sale of
health insurance to “large group” employers of more than 100 employees.
[Anthem I, 236 F. Supp. 3d at 255-56].
11. It is appropriate to aggregate all members of Blue plans within a service area
when calculating market concentration. [Anthem I, 236 F. Supp. 3d at 208-10].
12. It is permissible to use a “build-up approach” and focus on major competitors
when calculating market concentration. [Anthem I, 236 F. Supp. 3d at 211].
13. It is permissible not to account for slicing when calculating market
concentration. [Anthem I, 236 F. Supp. 3d at 211-12].
14. Regional firms and niche companies that lack a national network are not
viable options for the vast majority of national accounts. [Anthem I, 236 F. Supp.
3d at 180, 224].
15. Slicing, TPAs, private exchanges, or other alternative vehicles cannot replace
competition. [Anthem I, 236 F. Supp. 3d at 180-81 224-29].
(Doc. # 1392 at 9-10) (alterations adopted).1
Standard of Review
Collateral estoppel, now more commonly referred to as issue preclusion, is available when:
“(1) the issue at stake is identical to the one involved in the prior litigation; (2) the issue was
actually litigated in the prior suit; (3) the determination of the issue in the prior litigation was a
Provider Plaintiffs’ motion cited the slip opinion pages for Anthem I to support these proposed facts. For
ease of reference, the court has examined the Anthem I opinion and included the page numbers to the Federal
Supplement, Third Series.
critical and necessary part of the judgment in that action; and (4) the party against whom the earlier
decision is asserted had a full and fair opportunity to litigate the issue in the earlier proceeding.”
Miller’s Ale House, Inc. v. Boynton Carolina Ale House, LLC, 702 F.3d 1312, 1318 (11th Cir.
2012). “The initial question of whether collateral estoppel is available . . . is a legal question,” not
a discretionary one. Matter of McWhorter, 887 F.2d 1564, 1566 (11th Cir. 1989).
The court has broad discretion to determine whether offensive collateral estoppel is
appropriate in a particular action. Cotton States Mut. Ins. Co. v. Anderson, 749 F.2d 663, 666
(11th Cir. 1984). Fairness to both parties is a primary consideration, id. (citing Parklane Hosiery
Co. v. Shore, 439 U.S. 322, 331 (1979)), and the Eleventh Circuit has advised district courts to
“cautiously” apply offensive collateral estoppel. Ray v. Birmingham City Bd. of Educ., 845 F.2d
281, 283 (11th Cir. 1988). Generally, nonmutual offensive collateral estoppel should not be
applied if a plaintiff easily could have joined in the earlier action or if its application would be
unfair to a defendant. See Parklane Hosiery, 439 U.S. at 331. Here, Defendant Anthem has not
argued that Provider Plaintiffs could have joined the earlier action, so the court need not consider
that Parklane factor.
Anthem argues that none of the four elements of issue preclusion are met here. At least
one of these elements presents an apparent issue of first impression: whether, in a Sherman Act
suit against multiple parties, unrelated to the merger, market-definition-related findings from a
Section 7 Clayton Act suit to enjoin a merger are entitled to collateral estoppel effect against one of
the merging entities.2 Anthem’s challenges to some of the elements are stronger than others.3
At oral argument, Provider Plaintiffs’ counsel conceded that he was unaware of a case presenting a similar
collateral estoppel issue. (Doc. # 1607 at 23).
Nevertheless, because the court concludes that equitable considerations decisively weigh against
Provider Plaintiffs’ motion for collateral estoppel, it is unnecessary to discuss all the factors at
length. See Shaffer v. R.J. Reynolds Tobacco Co., 860 F. Supp. 2d 991, 999 n. 3 (D. Ariz. 2012)
(declining to discuss all collateral estoppel factors where inconsistent verdicts, plaintiffs’ failure to
show the necessity of all 749 factual findings to the prior judgment, and the lack of a jury trial in
the prior action weighed against the exercise of collateral estoppel); Grisham v. Philip Morris,
Inc., 670 F. Supp. 2d 1014, 1037 (C.D. Ca. 2009) (concluding that “procedural fairness
considerations” weighed against applying issue preclusion, even if plaintiffs showed that the four
factors for issue preclusion were met).
Here, the court concludes that applying nonmutual collateral estoppel is unwarranted for at
least two reasons. First, doing so would greatly prejudice the interests of the Defendants other
than Anthem who did not participate in Anthem I or Anthem II. This concern is illustrated by
Schwab v. Philip Morris USA, Inc., 449 F. Supp. 2d 992, 1078-79 (E.D.N.Y. 2006), rev’d on other
grounds sub nom., McLaughlin v. Am. Tobacco Co., 522 F.3d 215 (2d Cir. 2008). In that opinion,
the court explained that the factual issues for which the plaintiffs sought estoppel likely met the
four factors required for collateral estoppel. Schwab, 449 F. Supp. 2d at 1078-79. Notably, the
court found that the tobacco company defendants (like Anthem) had a fair opportunity to litigate
the issues during the earlier nine-month bench trial where at least 84 witnesses testified, the
For example, the court is inclined to agree with Defendant Anthem that proposed finding number 3 -which was discussed in a footnote in Anthem I --was not a critical or necessary part of the market determinations in
Anthem I. And, the court notes that some of Provider Plaintiffs’ proposed findings -- such as proposed finding
number 7 -- are summations or simplifications of the findings made by the district court in Anthem I. (See Doc. #
1392 at 9) (proposing a finding that “Association rules are significant to the determination of the relevant geographic
market”). See also Anthem I, 236 F. Supp. 3d at 179, 203 (concluding that the Association’s rules impacted the
determination of the geographic market directly and immediately affected by the proposed Anthem-Cigna merger
because those rules limited Anthem-Cigna competition for national accounts to a fourteen-state market, absent cedes).
On the other hand, the court is inclined to agree with Provider Plaintiffs that Anthem had a full and fair opportunity to
litigate the issues in the bench trial in Anthem I and the appeal in Anthem II.
tobacco companies had a strong interest in ensuring their ability to use certain brands, competent
and experienced defense counsel represented the companies, and some of the litigated issues were
necessary for the verdict. Id. at 1078-79.
Nevertheless, the Schwab court declined to employ
collateral estoppel on fairness grounds for three reasons. Id. at 1079. First, collateral estoppel
could not be used against one defendant who had prevailed in the earlier action. Id. The court
expressly recognized that “[a]pplication of estoppel to all but one of many defendants would
confuse the jury, making administration of the case more difficult.” Id. Second, the defendants
had prevailed in other suits that raised the factual issues for which the plaintiffs sought issue
preclusion. Id. Third, the court found that “little efficiency would be gained” by applying
offensive collateral estoppel because “plaintiffs’ proof of reliance and damages would almost
certainly—as a matter of legal burden and persuasive strategy—require presentation of all
evidence available to them of defendants’ alleged scheme.” Id. At least one other court has
declined to apply nonmutual collateral estoppel in a situation where it would not be applied against
all defendants. See In re Light Cigarettes Marketing Sales Practices Litig., 691 F. Supp. 2d 239,
251 (D. Me. 2010) (declining to apply collateral estoppel where “a significant question” existed as
to whether it could be applied against one of the two defendants).4
In one crucial respect, even stronger equities weigh against applying offensive collateral
estoppel here than in Schwab. The Schwab opinion questioned the utility of offensive collateral
estoppel where it could be used against all but one of the defendants. Cf. Schwab, 449 F. Supp. 2d
at 1079. Here, Provider Plaintiffs would only be able to apply offensive collateral estoppel
Similarly, the Restatement (Second) of Judgments states that a court may decline to apply collateral
estoppel if “[t]reating the issue as conclusively determined may complicate determination of issues in the subsequent
action or prejudice the interests of another party.” Restatement (Second) of Judgments § 29(6). The Restatement
explains that “little is gained by way of economy in foreclosing retrial of the issue, because substantial recanvassing of
the evidence will in any event be necessary.” Id. § 29, comment h.
against the substantial majority of the Blue Defendants currently in this MDL.5 It would likely be
confusing if the court instructed the jury to apply certain market-related findings against Anthem
while also instructing the jury to make its own trial evidence-based, independent findings on
similar issues when deliberating over the claims against the other Defendants. Provider Plaintiffs
asserted during oral argument that the findings could be implemented to advance a set of pretrial
motions against Defendant Anthem alone. (Doc. # 1607 at 24). But, Provider Plaintiffs have not
filed those motions at this time, and Provider Plaintiffs have not sought to limit their requested
summary judgment to pretrial matters. (See Doc. # 1392 at 23) (“The Court should grant
summary judgment with regard to the findings of fact and conclusions of law in the DOJ Action
that are set forth above.”). Accordingly, the court concludes that the inapplicability of collateral
estoppel to the vast majority of Defendants strongly weighs against applying it against Anthem
with regard to the fifteen facts presented by Provider Plaintiffs.
Second, nonmutual offensive collateral estoppel is not warranted here because Provider
Plaintiffs seek to incorporate findings from a bench trial to a jury trial. Several courts have
concluded that the fact that an initial proceeding was a bench trial can weigh against applying
nonmutual collateral estoppel in the subsequent action, even though standing alone it cannot
justify a refusal to apply collateral estoppel. See, e.g., Shaffer, 860 F. Supp. 2d at 998; In re Light
Cigarettes, 691 F. Supp. 2d at 251; Grisham, 670 F. Supp. 2d at 1036. Consistent with those
opinions, the court concludes that the non-jury nature of Anthem I is a sub-factor that weighs
against applying collateral estoppel here.
The accelerated Alabama actions include Provider actions against Defendant Anthem, other Blue Plan
Defendants, and the Association. (See, e.g., Conway v. Blue Cross Blue Shield of Ala., No. 2:12-cv-02532-RDP,
For the reasons explained above, even if Provider Plaintiffs were able to show that issue
preclusion is permissible under the four elements described in Miller’s Ale House for some or all
of the proposed findings, the court concludes that procedural fairness considerations decisively
weigh against allowing the nonmutual offensive collateral estoppel requested by Provider
Plaintiffs. Accordingly, the court exercises its discretion to deny Provider Plaintiffs’ Motion for
Partial Summary Judgment Regarding Issues Decided in United States v. Anthem. (Doc. # 1392).
An Order consistent with this Memorandum Opinion will be entered.
DONE and ORDERED this April 16, 2018.
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE
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