In Re Blue Cross Blue Shield Antitrust Litigation MDL 2406
MEMORANDUM OPINION. Signed by Judge R David Proctor on 10/20/2016. (AVC)
2016 Oct-20 PM 04:44
U.S. DISTRICT COURT
N.D. OF ALABAMA
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 the Provider Track.
This matter is before the court on the Motion for Summary Judgment filed by Defendants
National Account Service Company, LLC (“NASCO”) and Consortium Health Plans, Inc.
(“CHP”). (Doc. # 658). NASCO and CHP argue that they are entitled to summary judgment
because Provider Plaintiffs1 have failed to present evidence showing that there is a genuine
factual dispute on two issues: (1) whether NASCO or CHP is an instrumentality to the alleged
conspiracies between Blue Cross/Blue Shield insurance plans (collectively referred to as “Blue
Plans”) and the Blue Cross Blue Shield Association of America (“BCBSA”); and (2) whether
NASCO or CHP has consciously committed to the alleged conspiracies between the Blue Plans
In the big picture, the parties’ litigation over this particular motion for summary judgment
may be seen as merely a skirmish in this mammoth multidistrict litigation. The court’s ruling
will not substantially affect the litigation landscape.2 Nevertheless, the court understands this:
the motion is very important to both NASCO and CHP who, based on the claims in the
For ease of reference, this opinion refers to Provider Plaintiffs as “Plaintiffs.”
Importantly, the court notes that both NASCO and CHP have explicitly refrained from addressing
whether Plaintiffs have shown anticompetitive conduct by the other Defendants. (Doc. # 658, Brief in Support of
NASCO’s and CHP’s Motion for Summary Judgment at 14 n. 6).
Complaint, face the prospect of joint and several liability on claims seeking significant damages,
costs, and attorney’s fees. Accordingly, the court has given its full consideration to the briefs
and evidence presented by the parties. After careful review, and for the reasons explained below,
the court concludes that NASCO and CHP are entitled to summary judgment on all of Plaintiffs’
Section 1 and Section 2 conspiracy claims.
The Rule 56 Evidence and the Undisputed Facts3
A. Procedural History
In the Second Amended Provider Complaint, Plaintiffs allege that, decades ago, the Blue
Plans agreed to consolidate geographically. As a result, by the end of 1985 only one Blue Plan
existed in each state. (Doc. # 236 at ¶ 189). According to Plaintiffs, by 1987, the Defendants
who were then members of BCBSA agreed to operate in exclusive service areas. (Doc. # 236 at
¶ 190). BCBSA set rules and regulations for Blue Plans to abide by in the Blue Cross License
Agreement and Blue Shield License Agreement (collectively referred to as “Licensing
Agreements”). (Doc. # 236 at ¶ 192). Under the Licensing Agreements, the Blue Plans agreed
to not use the Blue Cross and Blue Shield trademarks and tradenames outside a designated
service area. (Doc. # 236, ¶ 196). Moreover, Plaintiffs allege that Defendants conspired to fix
prices for medical providers in geographic service areas by achieving market dominance through
their allocation of geographic service areas. (Doc. # 236 at ¶ 229). Finally, Plaintiffs contend
that the Blue Plans engaged in a horizontal conspiracy in which each refused to deal with (and
The facts set out in this opinion are gleaned from the parties’ submissions of facts claimed to be
undisputed, their respective responses to those submissions, and the court’s own examination of the evidentiary
record. All reasonable doubts about the facts have been resolved in favor of the nonmoving party. See Info Sys. &
Networks Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir. 2002). These are the “facts” for summary
judgment purposes only. They may not be the actual facts that could be established through live testimony at trial.
See Cox v. Admr. U.S. Steel & Carnegie Pension Fund, 17 F.3d 1386, 1400 (11th Cir. 1994).
collectively boycotted) healthcare providers outside of its exclusive geographic area. (Doc. #
236 at ¶ 229-30).
In the Second Amended Provider Complaint, Plaintiffs also allege that the Blue Plans and
BCBSA implemented these conspiracies through NASCO and CHP. (Doc. # 236 at ¶¶ 238-46).
They allege that NASCO is owned by certain Blue Plans and BCBSA, and that it exists to
implement the alleged anticompetitive conspiracies among the Blue Plans by (1) ensuring Blue
Plans’ compliance with BCBSA mandates, (2) providing a forum for them to conduct the
conspiracies, and (3) ensuring that the agreements in the conspiracy were implemented. (Doc. #
236 at ¶¶ 239-40). With regard to CHP, Plaintiffs assert that CHP implements the conspiracies
by providing a forum to “share claims data reflecting provider reimbursements on a nationwide
basis.” (Doc. # 236 at ¶ 241).
NASCO and CHP moved to dismiss the claims against them. (Doc. # 259). The court
denied their motion to dismiss because the Second Amended Complaint presents plausible
antitrust conspiracy claims against NASCO and CHP. (Doc. # 370). Nevertheless, the court
granted expedited discovery to determine the role that NASCO and CHP played in the alleged
antitrust conspiracies. (Doc. # 370).
B. Formation of the National Accounts Program
In 1982, BCBSA proposed a Long-Term Business Strategy. (Doc. # 689, Ex. 3 at 22).
This strategy suggested that all Blue Cross insurance plans and Blue Shield insurance plans
should become joint Blue Cross and Blue Shield plans by 1984. (Doc. # 689, Ex. 3 at 53).
Moreover, it proposed that only one Blue Plan should conduct business in a single state, “except
where business reasons dictate otherwise, by [the] end of 1985.” (Doc. # 689, Ex. 3 at 54).
BCBSA identified several critical factors for long-term success, including “greater
uniformity and consistency of performance for national accounts.” (Doc. # 689, Ex. 3 at 41). To
improve market performance, BCBSA stated that Control Plans4 should have full authority to
“structure national account syndicates” in order to “retain the present book of business and aid
new business.”5 (Doc. # 689, Ex. 3 at 58). It also proposed that Blue Plans “[i]nvestigate the
feasibility of establishing a national account marketing company to concentrate on new business
acquisition” because selling insurance to national accounts required specialized staff. (Doc. #
689, Ex. 3 at 59).
BCBSA and “select Control Plans” intended to prepare a report on
sponsorship of the marketing company, ownership, capitalization, and the role of Blue Plans in
reserving accounts. (Doc. # 689, Ex. 3 at 59).
In 1992, BCBSA’s National Account Marketing Committee recommended that Blue
Plans “with a vested interest” in national accounts should create a “voluntary consortium” that
would formulate strategies for selling insurance to national accounts, develop relationships with
consultants, and “develop expertise in managed care.” (Doc. # 689, Ex. 33 at 32).
Marketing Committee also recommended that the Blue Plans in the consortium develop a
national pricing strategy. (Doc. # 689, Ex. 33 at 32). It recognized that “national account
business is not a sound investment for many [Blue] Plans.” (Doc. # 689, Ex. 33 at 36). It
suggested that BCBSA maintain authority over membership issues and “use of the name and
mark.” (Doc. # 689, Ex. 33 at 36).
A Control Plan is a Blue Plan that controls the geographic area in which a national account is
headquartered and enjoys a contractual relationship with that national account. (See Doc. # 658, Ex. 1 at 59; Ex. 4 at
According to CHP’s Chief Executive Officer, the BCBSA defines a national account as “any account with
members headquartered in one service area, members outside a service area, and two hundred fifty or more”
members or employees. (Doc. # 658, Ex. 5 at 48-49).
NASCO was founded in 1987 as a general partnership between BCBSA and subsidiaries
of five specific Blue Plans. (Doc. # 658, Ex. 1 at 28-30). NASCO was initially formed to
provide “a national account servicing capability for the [Blue Cross Blue Shield] System.”
(Doc. # 659, Ex. 2 at 3). NASCO is incorporated as a for-profit corporation, but it seeks to earn
a “minimal profit” of approximately $500,000 per year.
(Doc. # 659, Ex. 1 at 121-22).
Generally, it uses any additional profits to develop new systems and capabilities for the Blue
Plans. (Doc. # 659, Ex. 1 at 122).
NASCO’s executive committee, which is comprised of the Chief Executive Officer of
NASCO and a representative from each of its Blue owners, is responsible for the day-to-day
business operations of the company. (Doc. # 658, Ex. 1 at 57, 89). Among other duties, the
executive committee approves the prices charged to NASCO’s users for various services. (Doc.
# 658, Ex. 1 at 60-61).
Currently, NASCO provides “back office business functions” exclusively to Blue Plans,
including systems that support member enrollment, billing, claims processing, “member and
provider servicing,” and reporting. (Doc. # 659, Ex. 1 at 41, 44). It integrates certain BlueCard
software into its claims processing system.6 (Doc. # 658, Ex. 1 at 62).
The parties dispute whether NASCO participates in the Blue Plans’ process of obtaining
discounts from medical providers. According to NASCO, it is not involved in negotiating
contracts with medical providers, negotiating provider discounts, creating provider networks, or
negotiating with providers. (Doc. # 658, Ex. 1 at 290-91). According to Plaintiffs, NASCO’s
systems assist Blue Plans in obtaining provider discounts by integrating BlueCard and Blue
A representative for NASCO stated that it integrates BlueCard software into its claims processing system
because all Blue Plans are required to support the BlueCard system, and NASCO’s integration of the software
eliminates the need of its members “to do that development work in-house.” (Doc. # 658, Ex. 1 at 96).
software from BCBSA.7
(Doc. # 689 at 4-5).
Specifically, Plaintiffs assert that NASCO
integrated a Blue feature into its system that allows a Blue Plan to access provider pricing data in
the database of another Blue Plan. (See Doc. # 689, Ex. 5 at 1 (stating that a Blue update
allowed users “to see another Plan’s Formats Database”); Doc. # 689, Ex. 4 at 132-33 (indicating
that the Formats Database included “Institutional Line Level Pricing”)). Moreover, Plaintiffs
state that NASCO has a “stated purpose[ ] to help Blue Plans secure and increase provider
differentials.” (Doc. # 689 at 4). But, the 1989 report cited by Plaintiffs shows only that
NASCO’s business plan built on the “Par Plan concept” established by BCBSA and that NASCO
endorsed a marketing recommendation to “[s]ecure and increase provider differentials,” not that
NASCO acted with a purpose of increasing provider differentials. (Doc. # 689, Ex. 1 at 3, 22,
The parties also dispute whether NASCO is involved in enforcing the exclusive service
areas allegedly created by BCBSA. NASCO avers that it has no involvement in “developing,
maintaining, or enforcing plan service areas.” (Doc. # 658, Ex. 1 at 291). In contrast, Plaintiffs
maintain that NASCO complies with BCBSA mandates and has required Control Plans to verify
that they have not violated the exclusive service areas created in the license agreement with
BCBSA. (Doc. # 689, Ex. 1 at 24 (“NASCO requires that all Control Plans using its system
verify that the acceptance of each account will not violate the designated service area . . . .”);
Doc. # 689, Ex. 6 at 6 (asserting that Blue Plans select NASCO due to its compliance with
“BCBS mandates”)). NASCO’s corporate representative testified that BCBSA is a member of
NASCO because it “wanted to make sure that [it] had a voice in the strategy and the oversight of
Blue, or BlueSquared, is a web application developed by BCBSA that facilitates claims processing
between Blue Plans. BCBSA requires Blue Plans to use Blue, but they are free to use it inside or outside of
NASCO’s system. (Doc. # 658, Ex. 1 at 247-48).
NASCO” and because NASCO “had to make sure [it was] aligned with the requirements that the
[Blue Plans] had to meet.” (Doc. # 658, Ex. 1 at 44). He further testified that BCBSA joined
NASCO so that NASCO would have more credibility with prospective Blue Plan members.
(Doc. # 658, Ex. 1 at 45).
Finally, the parties dispute whether NASCO acts as an agent for BCBSA or the Blue
Plans. Plaintiffs assert that NASCO is not an agent for either BCBSA or the Blue Plans. In
support of this assertion, they cite to a Data Access Agreement between BCBSA, an unidentified
Blue Plan, and NASCO, which states that “[e]ach Party’s status in all matters pursuant to this
Agreement shall be that of an independent vendor and not an agent of the other party.” (Doc. #
689, Ex. 32 at 1, 8). NASCO responds that Plaintiffs’ characterization of its relationship with the
Blue Plans and BCBSA is inaccurate because its status in the Data Access Agreement is
inapposite as to whether it shares a unity of interest with them. (Doc. # 731 at 8).
CHP was founded in 1994 as a for-profit corporation. (Doc. # 659-6 at 7). It is owned by
several Blue Plans.
(Doc. # 658-5).
And while only “Blue-owned entities” can become
members of CHP (Doc. # 658-4 at 61), BCBSA does not own any portion of CHP (Doc. # 658-4
at 56). Nevertheless, CHP and its member plans “collaborate with the [BCBSA] to develop
programs and capabilities to support national accounts,” and CHP’s representative described the
company’s relationship with BCBSA as “a very collaborative relationship” where the parties “try
to delineate responsibilities so that we can effectively use [their] plan resources.” (Doc. # 658-4
at 56). CHP “has agreed to comply with all [BCBSA] rules and regulations.” (Doc. # 658-4 at
271). Moreover, it is undisputed that CHP only assists a Blue Plan with responding to a request
for information if (1) the prospective purchaser is headquartered in the Blue Plan’s service area
or (2) if the account has been ceded by the Blue Plan who operates in the service area where the
purchaser is located. (Doc. # 689-58 ¶ 63).
CHP’s board of directors includes its Chief Executive Officer and one representative
from each of the Blue Plans that own CHP. (Doc. # 658-4 at 49). CHP charges Blue Plans for
services on a fee-for-service model. (See Doc. # 659-8 at 9 (fee schedule for services to member
and non-member Blue Plans)). CHP has never distributed profits to shareholders and “strive[s]
to set a budget that allows [it] to break even every year,” although it has earned a profit some
years. (Doc. # 658-4 at 94).
CHP offers services that assist Blue Plans in obtaining business from large health
insurance accounts. The parties do not dispute that CHP provides sales strategy and training,
targeted marketing, relationship development with brokers for certain health insurance accounts,
market research, and assistance in responding to requests for information.
(Doc. # 658,
Undisputed Relevant Material Facts ¶ 19, Doc. # 689 ¶ 19). Among other marketing tools, CHP
produces ValueQuest, which provides an estimate of the total cost of care for a population of
consumers. (Doc. # 658-6 at 9). To access ValueQuest, Blue Plans must provide CHP with
“claims and membership data.” (Doc. # 658-6 at 10).
Additionally, CHP manages a “Transfer Reimbursement Program,” and all of its
members agree to comply with the “Transfer Pricing Program Manual.” (Doc. # 659-11 at 3).
CHP members “agree to disclose . . . provider discounts to the Control Member in all
Consortium National Accounts at the time of each claim.” (Doc. # 659-4 at 3). If a member is
unable to identify the applicable provider discount for an individual claim, it must provide “its
best estimate of the discount” and provide that discount to the national account or the control
member. (Doc. # 659-11 at 3).
The parties disagree about the extent to which CHP shares provider pricing information
from one Blue Plan with other Blue Plans. CHP asserts that it collects claims data from its
members, sends it to a third party for aggregation, and uses the aggregated data. (See Doc. #
658-4 at 195-96). CHP’s Membership Policies provide that “information concerning marketing
and sales efforts” from one member “will be available to each of the Members; provided,
however, that in no event will Members be provided with . . . other non-aggregated pricing or
price-related information of another Member.” (Doc. # 659-11 at 4 (emphasis in original)).
In contrast, Plaintiffs assert that CHP shares data between members, and that data
includes provider discounts and differentials. (See Doc. # 689 Relevant Material Facts ¶ 64
(“The data CHP shares between Blue [P]lans is sufficient to show provider discounts and
differentials.”)). Specifically, the CHP Capabilities Book notes that CHP provides “[d]iscount
benchmarking analysis” for Blue Plans, through which Blue Plans receive analysis of their
“network discounts relative to competitors’ networks.” (Doc. # 689-33 at 23). CHP produces
the discount benchmarks with data that Blue Plans submit for ValueQuest. (Doc. # 689-33 at
23). The intended primary users of benchmarking analysis are sales executives, actuaries, and
provider contracting and network executives for Blue Plans. (Doc. # 689-33 at 24).
Furthermore, CHP’s Sales Executive Team has indicated that a goal of CHP is to
“[s]upport client objective to drive membership to higher quality, lower cost providers.” (Doc. #
689-37 at 9).
This goal is achieved, in part, by ensuring “[n]ational delivery of benefit
differentials” through several mechanisms, including “hard steerage.” (Doc. # 689-37 at 9).
CHP’s Chief Executive Officer described hard steerage as an “employer benefit plan design”
where a national account can specify that it will only reimburse employees for certain medical
services if they use certain providers. (See Doc. # 658-4 at 173).
Finally, the parties also dispute whether CHP acts as an agent for BCBSA. Plaintiffs
assert that CHP is not an agent of BCBSA and point to a National Account Support Agreement
between CHP and BCBSA that designates the parties’ status “in all matters under this
Agreement” as that of an independent contractor. (Doc. # 689-36 at 1, 10). NASCO, like CHP,
responds that Plaintiffs’ characterization of the relationship between CHP and BCBSA is both
inaccurate and unsupported by the cited exhibit. (Doc. # 731 at 11).
Summary Judgment Standard
Under Federal Rule of Civil Procedure 56(c), summary judgment is proper “if the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). The party asking for summary judgment always bears the initial responsibility of
informing the court of the basis for its motion and identifying those portions of the pleadings or
filings which it believes demonstrate the absence of a genuine issue of material fact. Id. at 323.
Once the moving party has met its burden, Rule 56(c) requires the non-moving party to go
beyond the pleadings and – by pointing to affidavits, or depositions, answers to interrogatories,
and/or admissions on file – designate specific facts showing that there is a genuine issue for trial.
Id. at 324.
The substantive law will identify which facts are material and which are irrelevant. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (“Anderson”). All reasonable doubts
about the facts and all justifiable inferences are resolved in favor of the non-movant. See Allen v.
Bd. of Pub. Educ. For Bibb Cty., 495 F.3d 1306, 1314 (11th Cir. 2007); Fitzpatrick v. City of
Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). A dispute is genuine “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. If
the evidence is merely colorable, or is not significantly probative, summary judgment may be
granted. See id. at 249.
When faced with a “properly supported motion for summary judgment, [the non-moving
party] must come forward with specific factual evidence, presenting more than mere
allegations.” Gargiulo v. G.M. Sales, Inc., 131 F.3d 995, 999 (11th Cir. 1997). As Anderson
teaches, under Rule 56(c) a plaintiff may not simply rest on her allegations made in the
complaint; instead, as the party bearing the burden of proof at trial, she must come forward with
at least some evidence to support each element essential to her case at trial. See Anderson, 477
U.S. at 252. “[A] party opposing a properly supported motion for summary judgment ‘may not
rest upon the mere allegations or denials of [her] pleading, but . . . must set forth specific facts
showing that there is a genuine issue for trial.’” Id. at 248 (citations omitted).
Summary judgment is mandated “against a party who fails to make a showing sufficient
to establish the existence of an element essential to that party’s case, and on which that party will
bear the burden of proof at trial.” Celotex Corp., 477 U.S. at 322. “Summary judgment may be
granted if the non-moving party’s evidence is merely colorable or is not significantly probative.”
Sawyer v. Sw. Airlines Co., 243 F. Supp. 2d 1257, 1262 (D. Kan. 2003) (citing Anderson, 477
U.S. at 250-51).
“[A]t the summary judgment stage the judge’s function is not himself to weigh the
evidence and determine the truth of the matter but to determine whether there is a genuine issue
for trial.” Anderson, 477 U.S. at 249. “Essentially, the inquiry is ‘whether the evidence presents
a sufficient disagreement to require submission to the jury or whether it is so one-sided that one
party must prevail as a matter of law.” Sawyer, 243 F. Supp. 2d at 1262 (quoting Anderson, 477
U.S. at 251-52); see also LaRoche v. Denny’s, Inc., 62 F. Supp. 2d 1366, 1371 (S.D. Fla. 1999)
(“The law is clear . . . that suspicion, perception, opinion, and belief cannot be used to defeat a
motion for summary judgment.”).
The summary judgment standard of Rule 56 applies to an antitrust suit, just as it applies
to any other suit. Gulf States Reorganization Grp., Inc. v. Nucor Corp., 822 F. Supp. 2d 1201,
1208-09 (N.D. Ala. 2011) (discussing the Supreme Court’s disavowal of cases disfavoring
summary judgment in antitrust suits), aff’d, 721 F.3d 1281 (11th Cir. 2013). “But antitrust law
limits the range of permissible inferences from ambiguous evidence in a § 1 case,” as “conduct
as consistent with permissible competition as with illegal conspiracy does not, standing alone,
support an inference of antitrust conspiracy.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 588 (1986) (citing Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764
(1984)). Indeed, “summary judgment may be especially appropriate in an antitrust case because
of the chill antitrust litigation can have on legitimate price competition.”
McGahee v. N.
Propane Gas Co., 858 F.2d 1487, 1493 (11th Cir. 1988) (citing Matsushita, 475 U.S. at 594).
Therefore, an antitrust plaintiff must present evidence that tends to exclude the possibility that a
defendant’s conduct was as consistent with permissible competition as with illegal conduct,
when viewed in the light most favorable to the plaintiff. Gulf States, 822 F. Supp. 2d at 1209.
Plaintiffs claim that NASCO and CHP conspired with their codefendants to violate
Section 1 of the Sherman Act by allocating geographic service areas, engaging in a group
boycott of medical providers outside of the Blue Plans’ respective geographic service areas, and
fixing prices for services provided by medical providers.8 NASCO and CHP contend that
Plaintiffs’ Section 1 Sherman Act conspiracy claims fail for two reasons. First, Defendants
argue that they cannot be parties to the alleged conspiracies between the Blue Plans and BCBSA
because they are not competitors to the Blue Plans, do not function as instrumentalities to further
the conspiracies, and act as “pawns” to their owners who cannot engage in concerted action with
them. Second, Defendants claim that Plaintiffs have presented insufficient evidence of their
“conscious commitment” to the conspiracies. The court addresses below Defendants’ arguments
for summary judgment, and Plaintiffs’ responses, in turn.
A. Legal Standards for a Conspiracy Under Section 1 of the Sherman Act
Section 1 of the Sherman Act provides that:
Every contract, combination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several States, or with foreign nations,
is declared to be illegal.
15 U.S.C. § 1. The Supreme Court has recognized, though, that Section 1’s prohibition of all
contracts and conspiracies that restrain trade does not apply to “every conceivable agreement”
between persons or companies because Section 1 is not meant to address “the entire body of
private contract.” American Needle, Inc. v. National Football League, 560 U.S. 183, 189-90
(2010) (internal quotation omitted) (“Not every instance of cooperation between two people is a
NASCO and CHP argue that any claim against them under Section 2 of the Sherman Act fails because:
(1) Plaintiffs have not claimed that NASCO or CHP engaged in independent conduct that violated Section 2; and
(2) Plaintiffs cannot show that NASCO or CHP are capable of concerted conduct with the Blue Plans and the
BCBSA or that they consciously committed to a conspiracy to monopsonize healthcare provider markets. (Doc. #
658, Brief in Support of NASCO’s and CHP’s Motion for Summary Judgment at 15 n. 7). Regarding the Section 2
claims, the court concludes that Plaintiffs’ monopsonization claim (Count IX of the Consolidated Second Amended
Provider Complaint) does not include as its targets either NASCO or CHP because Count IX limits the Defendants
targeted to “ones identified as a having a market share of 40% or more in at least one geographic area.” (Doc. # 236
¶ 443). Obviously, NASCO and CHP do not fall within that definition. Moreover, Plaintiffs’ monopsonization
conspiracy claim against NASCO and CHP (Count X of the operative Provider Complaint) fails because they have
not pointed to any admissible evidence that NASCO or CHP deliberately entered into a conspiracy “with the specific
intent of achieving a [monopsony].” Levine v. Central Florida Medical Affiliates, Inc., 72 F.3d 1538, 1556 (11th
Cir. 1996) (including specific intent to achieve a monopoly as an element of a Section 2 conspiracy claim).
potential ‘contract, combination …, or conspiracy, in restraint of trade.’”). Section 1 of the
Sherman Act is distinct from Section 2 because it only applies to defendants that engage in
concerted action. Id. at 190-91. “[C]oncerted action susceptible to sanction by section 1 is
activity in which multiple parties join their resources, rights, or economic power together in
order to achieve an outcome that, but for the concert, would naturally be frustrated by their
competing interests (by way of profit-maximizing choices).”
Virginia Vermiculite, Ltd. v.
Historic Green Springs, Inc., 307 F.3d 277, 282 (4th Cir. 2002).
The key question to be asked in determining whether defendants have engaged in
“concerted action” is whether a conspiracy joins together separate decisionmakers, who are
separate economic actors pursuing separate economic interests, “such that the agreement
deprives the marketplace of independent centers of decisionmaking.” American Needle, 560
U.S. at 195 (internal quotation omitted).
Applying this standard, the court examines the
substance of the relationship between the parties to the alleged conspiracy, rather than the form
of their relation, in order to determine whether they are capable of conspiring. Id. For example,
coordinated action between a corporation and an unincorporated division or a wholly owned
subsidiary does not constitute concerted action because the coordinated action “does not
represent a sudden joining of two independent sources of economic power previously pursuing
separate interests.” Id. at 195-96 (quoting Copperweld Corp. v. Independence Tube Corp., 467
U.S. 752, 770-71 (1984)). On the other hand, if an agreement joins together independent centers
of decisionmaking, then the entities are capable of entering a conspiracy under Section 1, “and
the court must decide whether the restraint of trade is an unreasonable and therefore illegal one.”
Id. at 196.
For any Sherman Act conspiracy, an antitrust plaintiff must present direct or
circumstantial evidence that reasonably tends to show that the conspirators “had a conscious
commitment to a common scheme designed to achieve an unlawful objective.” Monsanto, 465
U.S. at 764 (internal quotation omitted). Thus, an antitrust plaintiff must present evidence
excluding the possibility that the alleged conspirators acted independently. Dunnivant v. Bi-State
Auto Parts, 851 F.2d 1575, 1580 (11th Cir. 1988). And a party does not consciously commit to
an anticompetitive conspiracy if it merely “agree[s] to purchase products or provide a service
under conditions set by the other party.” Toscano v. Professional Golfers Assn., 258 F.3d 978,
984 (9th Cir. 2001).
B. NASCO and CHP are Not Instrumentalities of the Alleged Sherman Act
Defendants NASCO and CHP argue that, as a matter of law, they are not capable of
engaging in concerted action with the Blue Plans and BCBSA. More specifically, they claim
that they are not instrumentalities of the conspiracies. The court agrees.
Members of a single legal entity may violate Section 1 of the Sherman Act when the
entity is controlled by a group of competitors and “serve[s], in essence, as a vehicle for ongoing
concerted activity.” American Needle, 560 U.S. at 191. Plaintiffs contend that NASCO and
CHP are fundamentally similar to the joint ventures classified as instrumentalities in American
Needle, United States v. Topco Assocs., Inc., 405 U.S. 596 (1972), and United States v. Sealy,
Inc., 388 U.S. 350 (1967). (Doc. # 689 at 20). A close analysis of the functions performed by
NASCO and CHP reveals, though, that they are quite different from the instrumentalities in these
cases and actually perform no anticompetitive conduct.
In Sealy, approximately thirty manufacturer-licensees owned almost all of the stock in
Sealy, which provided licenses to sell products under the Sealy name and trademarks. Sealy, 388
U.S. at 351-52. Sealy conspired with the manufacturers to fix minimum prices for Sealy
products, police the prices, and allocate exclusive territories. Id. Specifically, Sealy agreed to
not authorize another license to manufacture or sell products in a designated area, and the
licensee agreed to not manufacture or sell products with the Sealy label outside of its designated
area. Id. at 352. The Supreme Court held that Sealy was “an instrumentality of the licensees for
purposes of the horizontal territorial allocation” because it was a joint venture by the licensees,
the licensees controlled Sealy’s operations, and its actions were approved by directors who were
licensees and stockholders. Id. at 353-54.
Similarly, in Topco, approximately twenty-five independent supermarket chains formed a
cooperative association to purchase and distribute branded products. Topco, 405 U.S. at 598.
The supermarket chains who were members of Topco owned all of its stock and had complete
control over its operations. Id. at 598-99. Topco entered into agreements with its members that
designated the territory in which they could sell the branded products, and all members had an
exclusive license or a “de facto exclusive” license to sell products within a geographic territory.
Id. at 602. Moreover, Topco allocated some territorial areas “to members who [did] no actual
business in those areas on the theory that they may wish to expand at some indefinite future
time.” Id. The Supreme Court held that Topco’s actions constituted a per se violation of Section
1 in the form of a horizontal allocation of territory because Topco’s structure and
decisionmaking process was essentially similar to the instrumentality’s structure, decisionmaking
process, and anticompetitive territorial allocation in Sealy. Id. at 608-09.
And, in American Needle, the Supreme Court held that National Football League
Properties (NFLP), a joint venture between thirty-two National Football League (NFL) teams,
could commit concerted activity in violation of Section 1 by making decisions on how to market
the NFL teams’ intellectual property. American Needle, 560 U.S. at 187, 200. The NFLP’s
decisions regarding marketing of intellectual property were classified as concerted conduct
because the competing NFL teams each owned a share of the jointly managed assets, decided
who received licenses to use the intellectual property, acted in their own financial interests by
deciding how to license use of the intellectual property, and received individual economic
benefits separate from the NFLP’s profits by licensing the intellectual property through a joint
venture. Id. at 200-01.
Plaintiffs argue that NASCO and CHP are instrumentalities of the conspiracies alleged in
They contend that NASCO is structurally identical to the instrumentalities in
American Needle, Topco, and Sealy, has committed itself to the goals of the conspiracies, and
has endorsed the conspirators’ goals of securing and increasing provider differentials. Moreover,
Plaintiffs claim that NASCO “continues to develop ways to implement the Blues’ conspiracies”
by allowing Blue Plans to access provider pricing information and implementing software to
support BlueCard claims processing. (Doc. # 689 at 19). Likewise, they contend that CHP is
structurally identical to the instrumentalities in American Needle, Topco, and Sealy as it helps
Blue Plans obtain anticompetitive rates from medical providers by supporting the national
delivery of benefit differentials, providing pricing information to Blue Plans from other Blue
Plans, and enforcing exclusive service areas. (Doc. # 689 at 21-22). According to Plaintiffs,
NASCO and CHP do not need to be competitors to engage in concerted action because they are
instrumentalities of the conspiracies. (Doc. # 689 at 24-25).
After careful review of the Rule 56 record, the court concludes that Plaintiffs have failed
to show that NASCO and CHP act as instrumentalities of the conspiracies because they have not
shown that NASCO or CHP perform anticompetitive conduct on behalf of their Blue Plan
owners. Unlike the instrumentalities in the Topco and Sealy cases, NASCO and CHP do not
directly allocate territories to the Blue Plans; rather, it is alleged that BCBSA is responsible for
the territory allocation. (See Doc. # 236 ¶¶ 192, 196 (describing the Licensing Agreements
between the Blue Plans and BCBSA)). Cf. Topco, 405 U.S. at 602 (evidence showed agreements
between Topco and supermarket chains to only sell branded products in designated markets);
Sealy, 388 U.S. at 352 (agreements between Sealy and manufacturers to not grant a license to
another manufacturer in a geographic area). Moreover, unlike the instrumentality in American
Needle, NASCO and CHP do not negotiate with medical providers, sign contracts for medical
providers, or set reimbursement rates for medical providers. Cf. American Needle, 560 U.S. at
187 (NFLP granted licensing agreements for NFL teams’ intellectual property). Certainly, CHP
responds to requests for information from national accounts. But, the Rule 56 evidence shows
that its involvement in selling insurance to subscribers does not equate to involvement in the
market for obtaining providers for the Blue Plans’ insurance networks. Thus, NASCO and CHP
do not serve “as a vehicle for ongoing concerted activity” between the Blue Plans and BCBSA.
In fact, Plaintiffs do not argue that NASCO’s or CHP’s conduct, itself, would be
unlawful under Section 1, absent the conspiracies between the Blue Plans. (Doc. # 689 at 2526).
Thus, their conduct is clearly distinguishable from the conduct performed by the
instrumentalities in American Needle, Topco, and Sealy. That is, to the extent a conspiracy took
place here, the conduct of NASCO and CHP falls far short of unlawful conduct under Section 1
of the Sherman Act. And, the instrumentalities in American Needle, Topco, and Sealy engaged
in conduct that the antitrust plaintiffs in those cases contended violated Section 1 by creating
exclusive licensing agreements for intellectual property, granting exclusive manufacturing and
sales territories, and fixing minimum prices for goods.
Plaintiffs contend that NASCO and CHP enforce the market allocation agreements
between the Blue Plans and BCBSA because they do not provide services to Blue Plans if those
services would violate the Licensing Agreements that exist between a Blue Plan and BCBSA.
But Plaintiffs point to no Rule 56 evidence indicating that NASCO or CHP have ever enforced
the geographic market allocations. Indeed, Plaintiffs concede in their response to the Motion for
Summary Judgment that CHP has never “exercised [its] enforcement mechanisms by expelling a
member.” (Doc. # 689 at 15). Moreover, NASCO’s and CHP’s unwillingness to work with a
Blue Plan in violation of the Licensing Agreements is actually conduct consistent with
competing for work with the Blue Plans, as a Blue Plan is unlikely to work with a contractor who
assists another Blue Plan in violating the Licensing Agreements.
Likewise, Plaintiffs’ argument that NASCO and CHP enable the Blue Plans to coordinate
and set prices by sharing pricing information holds no water. Although CHP collects claims data
from Blue Plans in order to produce benchmarks, its membership policies specifically prevent
CHP from providing non-aggregated pricing data from one Blue Plan to another Blue Plan.
(Doc. # 659-11 at 4). Moreover, while NASCO provides access to Blue software that provides
access to a Formats Database, and the Formats Database includes “Institutional Line Level
Pricing,” Plaintiffs have presented no Rule 56 evidence of what is contained in the line level
pricing field or whether NASCO integrated the Blue software in order to enable Blue Plans to
access provider pricing data. (Doc. # 689-7 at 132-33, Doc. # 689-27 at 1). In short, Plaintiffs’
“proof” that Blue Plans share provider price information through NASCO and CHP falls short of
a sufficient showing that they fix prices through NASCO or CHP, especially given that NASCO
and CHP do not negotiate contracts with medical providers or determine reimbursement rates for
providers. For these reasons, Plaintiffs have not presented sufficient evidence for a reasonable
jury to conclude that NASCO or CHP is an instrumentality to the claimed conspiracies between
the Blue Plans and BCBSA.
C. NASCO and CHP Are Pawns of Their Owners
In support of their Motion for Summary Judgment, NASCO and CHP argue that they
actually are “pawns” of their owners who cannot conspire to commit anticompetitive conduct
because they share unified interests with their owners, provide ancillary services exclusively to
the Blue Plans, do not seek to maximize profits, and share economic interests with the Blue Plans
and BCBSA. The argument is on the mark. The court concludes that the Rule 56 evidence, even
when viewed in the light most favorable to Plaintiffs, shows that NASCO and CHP are pawns of
their owners, and, thus, incapable of conspiring with them to violate Section 1 of the Sherman
“The Areeda treatise draws a distinction between ‘pawns’ and ‘principal actors’ due to
the pawn’s ‘subordinate role in performing a discrete, designated task at the direction of [its]
principal.’” Gulf States, 822 F. Supp. 2d at 1219 (quoting 7 P. Areeda & H. Hovenkamp,
Antitrust Law, ¶ 1403 (3d ed. 2010)), aff’d, 721 F.3d 1281 (11th Cir. 2013). “[C]ertain types of
corporate agents, even if separately incorporated, are not capable of conspiring with their
principal where their relationship necessary involves a unity of economic interest and design.”
Siegel Transfer, Inc. v. Carrier Express, Inc., 54 F.3d 1125, 1134 (3d Cir. 1995). For example,
the plaintiffs in the Siegel Transfer litigation alleged that Carrier Express, a freight broker for
Bethlehem Steel, conspired with its commissioned agents and Oak Management, a management
company that oversaw its day-to-day operations. See 54 F.3d at 1128, 1134 (describing one of
the antitrust conspiracy claims raised by the plaintiffs). But the Third Circuit held that Oak
Management was incapable of conspiring with Carrier Express to violate Section 1 of the
Sherman Act because the agents and their principal, Carrier Express, shared “a similar unity of
interest and purpose.” Id. at 1135. Oak Management constituted “an inseparable part of Carrier
Express’ structure” because it handled all of Carrier Express’s day-to-day operations, its
economic success was tied to Carrier Express’s success because it received a percentage of
Carrier Express’s revenue, and it did not compete with Carrier Express. Id.
Several cases address when a separately-incorporated sales agent is incapable of
conspiring with a principal for whom it sells products. For example, the plaintiffs in Siegel
Transfer also claimed that Carrier Express conspired with its commissioned agents to violate
Section 1 of the Sherman Act. 54 F.3d at 1135. But, again, the Third Circuit disagreed, holding
that the commissioned agents were unable to conspire with their principal, Carrier Express, to
violate Section 1 of the Sherman Act because they did not compete with Carrier Express, acted
as an essential conduit between Carrier Express and the companies that hauled its freight, and
had “entirely congruent” economic interests with Carrier Express because they received
commissions for each load of freight for which they arranged transport. Id. Similarly, the
Eighth Circuit has held that sales agents for a furniture manufacturer were incapable of
conspiring with the manufacturer to violate Section 1 of the Sherman Act because they “were so
closely entwined in economic interest and purpose” with the manufacturer that they all formed a
unified economic conscience. Pink Supply Corp. v. Hiebert, Inc., 788 F.2d 1313, 1317 (8th Cir.
1986). The sales agents in Pink Supply did not constitute a separate level in the distribution
chain because they: (1) did not sell furniture directly; (2) merely generated business for other
furniture dealers; (3) had no authority to set prices, arrange terms of sale, or accept orders; and
(4) received a commission from the manufacturer based on total sales of furniture within their
designated territories. Id. at 1316-17.
Here, the undisputed evidence demonstrates that CHP is incapable of conspiring with its
Blue Plan owners to violate Section 1 of the Sherman Act because it is actually a “pawn” of its
owners. As in Siegel Transfer and Pink Supply, CHP does not compete with its owners to obtain
services from medical providers. Moreover, CHP essentially serves as a conduit of information
between certain Blue Plans and entities associated with purchasing insurance for national
accounts by producing targeted marketing materials, developing relationships with brokers, and
responding to requests for information pertaining to national accounts. Therefore, although
Plaintiffs correctly assert that CHP collects provider pricing information from Blue Plans, CHP
uses the information to produce benchmarks, which serve as a marketing tool for Blue Plans. 9
Finally, CHP’s economic interests are entirely congruent with the economic interests of its
members. It receives all of its operating income from Blue Plans that use its services, it does not
seek to obtain a profit for providing those services, and it receives income for performing
services as the Blue Plans request them.10
Likewise, NASCO is a pawn of its Blue Plan owners and BCBSA; therefore, it cannot
conspire with them to violate Section 1 of the Sherman Act because it lacks an independent
economic consciousness from its owners. Like CHP, NASCO does not compete with the Blue
Plans to obtain contracts with medical providers. Rather, it offers back-office services for Blue
Likewise, CHP’s involvement in hard steerage does not alter its primary role as a conduit of information
between Blue Plans and insurance purchasers. Notably, there is no indication in the Rule 56 record that CHP is
involved with negotiations between Blue Plans and medical providers, even if it can be said that it is involved in
negotiations between Blue Plans and insurance purchasers.
NASCO and CHP differ somewhat from the pawns described in Siegel Transfer and Pink Supply
because their income derives from fees for various services, rather than a contingency payment for total income or
total sales obtained by the principal. See Siegel Transfer, 54 F.3d at 1135; Pink Supply, 788 F.2d at 1316-17.
Nevertheless, their economic interests are sufficiently congruent with their owners’ interests that they do not have a
separate economic consciousness. Moreover, the Seventh Circuit has recognized that a single firm can contain
competing financial interests without being subject to scrutiny under Section 1 of the Sherman Act. See Chicago
Professional Sports Ltd. Partnership v. National Basketball Assn., 95 F.3d 593, 598 (7th Cir. 1996) (discussing
potential financial conflicts between different divisions in a company or partners in a professional firm).
Plans who seek to obtain business from national accounts. Although NASCO does not act as a
conduit between the Blue Plans and insurance purchasers or medical providers, it performs
discrete tasks that are designated to it by its owners, and those owners control its executive
committee. See Gulf States, 822 F. Supp. 2d at 1219 (describing an entity that performs discrete,
designated tasks as a potential pawn in a conspiracy). Finally, NASCO’s economic interests are
entirely congruent with the economic interests of its owners because it only provides services for
Blue Plans, it seeks to obtain a minimal profit, and it is paid fees for providing services requested
by the Blue Plans.
In conclusion, the court finds that the Rule 56 evidence, even when taken in the light
most favorable to Plaintiffs, shows that NASCO and CHP are pawns of their Blue Plan owners
who perform discrete, designated tasks on the owners’ behalf. NASCO and CHP share united
economic interests with their Blue Plan owners, and those united interests foreclose them from
entering a conspiracy with their owners to violate Section 1 of the Sherman Act. While this
finding obviously does not foreclose the possibility that NASCO and CHP conspire with entities
other than their owners, here, Plaintiffs rely on the instrumentality theory to argue that NASCO
and CHP are proper parties to the conspiracy claims. (See Doc. # 689 at 29 (“NASCO and CHP
are instrumentalities of the Blues’ unlawful conspiracies.”). Thus, for the reasons explained
above, Plaintiffs have failed to present a genuine dispute of material fact to support their claim
that NASCO and CHP operate as instrumentalities of the alleged Section 1 conspiracies.
NASCO and CHP are entitled to summary judgment on the Section 1 Sherman Act conspiracy
D. Alternatively, NASCO and CHP Have Not Consciously Committed to the
Alleged Section 1 Conspiracies
As an alternative ground for summary judgment, NASCO and CHP argue that they have
not consciously committed to the Section 1 conspiracies alleged by Plaintiffs. In particular,
NASCO contends that it does not know of any anticompetitive purpose for the alleged conduct
and that it merely performs a service that facilitates possible restraints of trade. Likewise, CHP
argues that it provides normal business services to Blue Plans, its services are not directed to
excluding competitors, and it has no involvement in negotiating contracts or reimbursement for
medical providers. Although this issue presents a closer question than those addressed above,
the court agrees with NASCO and CHP that the evidence before it is insufficient to raise a
genuine question of NASCO’s or CHP’s conscious commitment to the Sherman Act conspiracies
raised in the operative Provider Complaint.
Even if Plaintiffs had presented sufficient evidence that would permit a reasonable jury to
conclude that NASCO and CHP are instrumentalities of the Sherman Act conspiracies (and, to
be clear, they have not), they have not presented evidence that excludes the possibility that
NASCO and CHP acted independently from its codefendants and did not commit to the
anticompetitive schemes at issue in this case. Dunnivant, 851 F.2d at 1580. To support its claim
that NASCO and CHP are consciously committed to the Sherman Act conspiracies, Plaintiffs
rely on (1) NASCO’s endorsement of certain goals of the anticompetitive conspiracies, (2)
CHP’s advertisements pertaining to provider reimbursements, and (3) a statement from CHP’s
CEO that it would not assist a Blue Plan who intended to bid for business outside of its exclusive
service area. (See Doc. # 689 at 29). But none of these actions or statements are inconsistent
with a competitor seeking business from a Blue Plan by acquiescing to its rules of business.
Even though NASCO and CHP undoubtedly have acquiesced to the Blue Plans’ territorial
restrictions and provider reimbursement rates, there is no Rule 56 evidence that NASCO or CHP
were involved in or influenced the Blue Plans’ territorial allocations or geographic restrictions on
contracting with medical providers.
See Toscano, 258 F.3d at 984 (“[W]here real estate
developers and mortgage lenders acquiesced to an investor's ‘restrictive commitment letters’
prohibiting them from hiring nonunion labor, and where there was ‘no evidence that these
individuals influenced or were at all involved in the establishment of the union-only investment
policy,’ there was no section 1 Sherman Act conspiracy, and summary judgment was
appropriate.” (quoting Beutler Sheetmetal Works v. McMorgan & Co., 616 F. Supp. 453, 456
(N.D. Cal. 1985))). Indeed, the evidence demonstrates that the Blue Plans and BCBSA agreed to
the territorial restrictions and the Control Plan’s authority over contracting with medical
providers within its territory before NASCO or CHP were formed. (See, e.g., Doc. # 689-6 at 54
(proposing in 1982 that one Blue Plan should operate in each state)). Ultimately, NASCO’s and
CHP’s actions, even when taken in the light most favorable to Plaintiffs, are consistent with an
independent competitor accepting the Blue Plans’ pre-existing conditions for services. Thus,
Plaintiffs have failed to exclude the possibility that NASCO and CHP acted independently from
the Blue Plans and BCBSA by providing discrete ancillary services without agreeing to the
anticompetitive aims of the alleged Sherman Act conspiracies. See Dunnivant, 851 F.2d at 1580.
Finally, Plaintiffs contend that NASCO and CHP are distinguishable from vendors who
provide services in furtherance of another party’s anticompetitive aims without consciously
committing to the conspiracy because they are founded, owned, and controlled by the Blue Plans
and exclusively work for the Blue Plans. (Doc. # 689 at 29). However, while these facts
indicate that NASCO and CHP do not operate independently from their owners, they simply do
not demonstrate that NASCO and CHP were committed to conspiracies established by their
owners. Indeed, if the court relied on the relationship between NASCO, CHP, and their Blue
Plan owners to exclude the possibility that NASCO and CHP acted independently, then it
follows (and this would be an illogical result) that any subsidiary of a corporation would be able
to consciously commit to a conspiracy if it followed the corporation’s policy that was established
for an anticompetitive purpose through concerted conduct, even if the subsidiary played no role
in the formation or enforcement of the anticompetitive policy. The court agrees with the Ninth
Circuit’s holding in Toscano that mere acquiescence to service policies created by an alleged
coconspirator does not demonstrate conscious commitment to the anticompetitive scheme when
an antitrust plaintiff fails to present some evidence that a party influenced or was involved in the
service policies at issue. Toscano, 258 F.3d at 984. Therefore, NASCO and CHP are entitled to
summary judgment because Plaintiffs have failed to present evidence demonstrating a genuine
factual issue concerning their conscious commitment to the alleged anticompetitive schemes.
For all these reasons, Defendants’ NASCO and CHP Motion for Summary Judgment is
due to be granted. The court will enter a separate order.
DONE and ORDERED this October 20, 2016.
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE
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