Memorandum in Support of Blue Cross objection

 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

 

IN RE: BLUE CROSS BLUE SHIELD 

ANTITRUST LITIGATION                                               Master File No. 2:13-cv-20000-RDP                

MDL 2406

 

MEMORANDUM REGARDING OBJECTION OF ROBERT SHATTUCK

In "Managing Class Action Litigation: A Pocket Guide for Judges, Barbara J. Rothstein & Thomas E. Willging Federal Judicial Center 2009, (which is at Managing Class Action Litigation: A Pocket Guide for Judges, Second Edition) (“Pocket Guide”), there is "III. Settlement Review: Risks and Issues." Under said III, there is "B. Obtaining information about the settlement", and under said B, there is "5. Information from objectors,", which starts out "Before and during the fairness hearing, you might receive written objections and testimony from objectors. Objectors might contribute to your review in various ways."

This Memorandum is submitted in the vein of providing information relative to my objection which may contribute to the Court's settlement review.

I. The Pocket Guide; Professor Sharkey

In trying to provide information in this Memorandum that may contribute to the Court's review, I am guided by a number of things said in the Pocket Guide, and also by Professor Catherine Sharkey in Sharkey, Catherine, "CAFA SETFTLEMENT NOTICE PROVISION: OPTIMAL REGULATORY POLICY?  156 U. PA. L. Rev. 1971 (2008) (“Sharkey”), set out Cafa Settlement Notice Provision: Optimal Regulatory Policy 

From the Pocket Guide, I cite the following statements: 

"Class actions may also help regulators control conduct that threatens to harm various markets." (p.1)

"Members of Congress and others who assert class actions’ general utility also point, however, to abuses that threaten to undermine their usefulness. Critics single out cases in which the benefits accruing to the class as a whole and to the public seem minimal" (p.1)

" Recent empirical research indicates that class action settlement administration has often not produced the transparent information that judges and policy makers need for reviewing class action settlements and setting clear standards for such reviews. " (p.2)

"Be aware that the adversarial clashes usually end with the settlement. Indeed, most settlements preclude the parties and attorneys from opposing the settlement’s provisions, especially the stipulations about attorney fees. Thus, you need to take independent steps to get the information you’ll undoubtedly need to review a settlement agreement." (p.10)

" . You may need to search elsewhere for information that will allow you to take an independent and hard look at the merits of the claims and defenses. " (p.11)

“Expert evaluations of the costs and present monetary value of all aspects of the settlement to the class may be avail information they used to satisfy their professional obligation to advise their clients about the value of the proposed settlement.” (pp.12-3)

", consider whether you need an expert’s appraisal of the value of nonmonetary (or deferred monetary) components of the settlement." (p.14)

"Before and during the fairness hearing, you might receive written objections and testimony from objectors. Objectors might contribute to your review in various ways."(p.15)

" Ask yourself—and perhaps the parties—the following questions: How much is the injunction worth to the class as a practical matter? What is the dollar value the relief might yield? What is the real cost to the defendant?" (p.19)

"The idea is to encourage government regulators to participate in reviewing settlements and lend their expertise (and perhaps an adversarial note) to the fairness hearing. You may want to consider extending an express invitation to any regulatory body you have found to be effective in dealing with the subject matter in question." (p.23)

"The Federal Trade Commission (FTC) has extensive statutory authority and expertise in dealing with antitrust, unfair competition, and consumer protection matters . . . You may also decide to exercise your discretion to invite the FTC to participate in settlement and fee reviews as a friend of the court if the subject matter of the case makes this appropriate, but you may need to take steps to avoid delaying the proceedings, such as setting a firm deadline for government responses. (pp.23-4)

"In pursuing public goals of advancing fair competition, protecting consumers, and policing the marketplace against false and misleading information, such agencies may invest substantial resources in investigating a defendant’s alleged malfeasance" (p.31)

"Special masters, court-appointed experts, and other judicial adjuncts with special expertise may be useful in a variety of contexts in class action litigation." (p.33)

From Sharkey, I quote the following:

Little is known about why this provision was added to CAFA, and the legislative history is scant. Nonetheless, it has been an enduring feature since the legislation was first proposed in 1997.12 At the most basic level, the provision ensures that "a responsible state and/or federal official receives information about proposed class action settlements and is in a position to react if the settlement appears unfair to some or all class members or inconsistent with applicable regulatory policies."' 3 Specialized state regulatory authorities (or the state AG in the absence of a state regulator) are likely to be familiar with the business practices at issue in the litigation, and they are well situated to "voice concerns if they believe that the class action settlement is not in the best interest of their citizens."'14 The overriding purpose seems to have been to prevent lawyers from crafting abusive settlements favoring themselves over consumers or other injured parties.' In this vein the provision provides "a check against inequitable settlements in these cases," which could arise from "collusion between class counsel and defendants to craft settlements that do not benefit the injured parties." 6

II. What in the Settlement needs review

The Court needs to apply what the Pocket Guide says about review of a settlement to the case at hand and decide what particularly needs its attention.

How the Settlement treats the different classes needs much attention by the Court. My objection does not concern directly how the different classes are treated.

In providing information in this Memorandum, I have keyed to things that Plaintiffs say or contend in their SUBSCRIBER PLAINTIFFS’ MEMORANDUM OF LAW IN SUPPORT OFMOTION FOR FINAL APPROVAL OF CLASS SETTLEMENT (“Plaintiffs’ Memorandum”). I have keyed on the below statements made in Plaintiffs’ Memorandum:

"The Settlement represents a monumental achievement. The Settlement secures “historic and substantial” structural changes that will reshape competition in the health insurance industry and offer increased choice in the market for health insurance to millions of Americans, along with one of the largest monetary recoveries ever achieved in an antitrust class action settlement." (p.1)

 "As a threshold observation, however, it is worth reminding the Court that many of the core features of the BCBS rules and practices challenged in this case were public knowledge for decades before this case was filed, yet neither the government agencies charged with enforcing the Sherman Act nor any of the objectors ever sought to challenge those rules and practices. One can find public statements by BCBS executives going all the way back to 1946 that describe a system in which “only one Blue Cross Plan is established in each enrollment area.” ECF No. 1353-94. In 1971, the Blue Cross president testified before a Senate antitrust subcommittee that the Blue Plans had “exclusive territorial arrangements.” ECF No. 1353-95 to -96. In 1979, a report by the Federal Trade Commission (“FTC”)—which is tasked with enforcing the nation’s antitrust laws— recognized that “Blue Shield plans generally do not compete with each other.” ECF No. 1353- 21 to -22. A number of courts also recognized the existence of the ESA restrictions.3 And despite knowing about the BCBS system for decades, the federal antitrust enforcement agencies chose never to challenge them. Even as this litigation has been pending for almost a decade, they never chose to bring any action or to submit anything in support in this case." (p.3)

"Recognizing this history is critical to understanding the achievements of this Settlement in their proper context. This was not a case in which government agencies uncovered a secret cartel, followed by the inevitable class action lawsuits. This was not even a case in which private actors uncovered some secret arrangement that was previously not public. Instead, this was a case in which a small group of class representatives and their counsel (which was initially a small group too) chose to challenge a well-known, decades-old, and overtly public system for arranging the activities of the entire BCBS system. It was an audacious challenge, and it is not surprising that it resulted in close to a decade of trench-warfare litigation, with hundreds of lawyers deployed by the parties. Since the cases’ inception, no government agencies saw fit to intervene or do anything else to support the private plaintiffs. Nor did any of the objectors, not even the handful of Fortune 500 companies that have now been signed up to object. General Motors, Home Depot, FedEx, Boeing, Dollar General—these are companies that have the resources to fight any injustice that harms them, yet they chose never to challenge the BCBS system, not even during the eight long years between when this case was first filed and when this Settlement was announced. Instead, they chose to remain on the sidelines, only to come to Court now to complain that the Settlement does not go far enough, leaves too many things in place, or fails to give them as much as their lawyers now say they deserve. The Court should not give credence to these objections for the reasons set forth below." (p.4)

"The Settlement creates substantial benefits and opens pathways to more competition, lower
costs, greater innovation, more consumer choice, and increased availability of products for
millions of Settlement Class Members. (p.5)

"In the accelerated Alabama actions, Subscriber Plaintiffs put forward a sophisticated damages model estimating, for purposes of their class certification motion, impact and damages based on entry by Blue and Green competitors into Alabama. The but-for world constructed by Subscriber Plaintiffs’ experts involved a complex modeling of factors estimating the impact of the entry of significant competition within the market, including estimated profitability of entry, timing of entry, type of entry, strength of entry, progression of entry, and competitive response to entry. Based upon these elements, Subscriber Plaintiffs’ expert then modeled an estimate of damages in Alabama. Defendants’ experts aggressively challenged Subscriber Plaintiffs’ damages model and vigorously attacked Subscriber Plaintiffs’ findings and experts’ calculations." (p. 35)

"Subscriber Plaintiffs developed a damages estimate only for the Alabama damages class due to the acceleration of the Alabama actions, and Subscriber Plaintiffs’ expert Ariel Pakes calculated an overcharge ranging from 3.4% to 5.5% for Alabama class members. ECF No. 2411-1 ¶ 10 (Executive Summary of Dr. Pakes’ Class Certification Expert Report). In support of Preliminary Approval, in extrapolating the Alabama damages model nationwide through 2019, Dr. Pakes estimated a potential maximum single damages recovery ranging from $18.6 billion to $36.1 billion. ECF No. 2610-11, Declaration of Dr. Ariel Pakes (“Pakes PA Decl.”) ¶ 10. A recovery of $2.67 billion represents 7.3% to 14.3% of that estimated maximum full recovery, which is a reasonable recovery and consistent with other approved settlement amounts. (pp 43-4)

“Despite the public knowledge over how the BCBS system is structured, the federal agencies tasked with enforcing our antitrust laws have chosen never to challenge the system. Even after this litigation was pending for almost a decade, no antitrust enforcement agency chose to bring any action or submit anything in support of the Subscriber Plaintiffs in this case. Now that the Class Representatives and Subscriber Class Counsel have spent close to another decade, and hundreds of millions of dollars in resources, challenging that system, certain entities have emerged (seemingly at the behest of a small number of law firms) to criticize a Settlement that provides a multi-billion dollar damages recovery and injunctive relief that will enable enormous amounts of new competition. Keeping the nature of this Settlement in historical perspective is warranted.” (p.63)

Also, below are paragraphs 364, 529 through 533 from the class action complaint.

364. While nominally still characterized as not-for-profit, a number of the Individual Blue Plans generate substantial earnings and surpluses, and pay their senior administrators and officials substantial salaries and bonuses – often in the multi-million dollar range.

529. The state insurance authorities in any of the Defendant Individual Blue Plans’ states do not regulate the division of markets and allocation of customers that are the subject of this Complaint.

530. No state insurance authority in any of the Defendant Individual Blue Plans’ states clearly articulates and affirmatively expresses as state policy the challenged restraints on trade that are the subject of this Complaint, i.e., division of markets and allocation of customers. Nor does any state insurance authority in any of the Individual Blue Plans’ states actively supervise the challenged restraints on trade that are the subject of this Complaint.

531. Prior to the Affordable Care Act, no Defendant Individual Blue Plan filed its insurance rate(s) with a federal regulatory agency.

 532. Even since the Affordable Care Act has been implemented, no federal regulatory agency has had the authority to prevent the Defendant Individual Blue Plans from increasing premiums.

533. No Defendant Individual Blue Plan has detailed the challenged restraints on trade that are the subject of this Complaint to any insurance authority

III   My steps to get information

My information comes in the form of things I have said and say herein relative to the Settlement and my own steps to get information relative to the settlement (which may inform the Court relative to the information the Court obtains about the settlement, as the Pocket Guide says the Court should do).

The steps I have taken to get information are the following:

In May, I initiated communication to Alabama Gov. Kay Ivey, United States Senator Richard Shelby, United States Senator Tommy Tuberville, U.S. Rep. Gary Palmer, Alabama Attorney General Steve Marshall, Alabama state Senator Dan Roberts, and Alabama state Rep. Jim Carns, such communication being the letter that is set out in Exhibit A.

In July I submitted my objection, which is set out in Exhibit B

On September 26 I directed to the Alabama Civil Justice Reform Committee the communication that is set out in Exhibit C. I directed this communication to ACJRC in care of directors Danne Howard and Robin Stone, because Ms. Howard is deputy director of the Alabama Hospital Association; Mr. Stone was Vice President of Governmental Affairs of Blue Cross Blue Shield of Alabama; those two organizations have special knowledge relative to the subject matter of the class action lawsuit; and Ms. Howard and Mr. Stone should be specially qualified to evaluate my objection to the class action settlement.

On October 5, I sent to Ms. Emily T. Marsal, Executive Director of the Alabama State Health Planning & Development Agency the email set out as Exhibit D. The Agency's mission is "To ensure that quality health care facilities, services, and equipment are available and accessible to the citizens of Alabama in a manner which assures continuity of care at a reasonable cost." My email solicited the Agency's views about whether the instant class action settlement is helpful to the Agency's mission, or whether it is unhelpful to the Agency's mission, or whether the settlement is of no material consequence for the Agency's mission.

Another person on the Alabama State Health Planning & Development Agency is Dr. Carol J. Ratcliffe, Professor and Chair of the School of Public Health, Department of Healthcare Administration and Informatics, at Samford University. I sent to Dr. Ratcliffe the email I had sent to Emily Marsal. I asked Dr. Ratcliffe whether, given her position in the Agency and her relevant professional qualifications, she would provide an affidavit for submitting to the Court that set forth her views about the effect on health care costs of the Blue Cross practices that are the subject of the class action against Blue Cross.

I also sent Emily Marsal's email to Dr. Nancy M. Borkowski, DBA, CPA, FACHE, FHFMA,
Distinguished Professor, Department of Health Services Administration, UAB
School of Health Professions because of her status as "UAB Site Co–Director, NSF I/UCRC Center for Health Organization Transformation."  

Further, I contacted one Gil Hanahan, who is the state Healthcare Liaison for Senator Tuberville's office.

I also sent to Reyn Norman, general counsel of the Alabama Department of Insurance the email I had sent to Emily T. Marsal.

I contacted Michael A. Morrisey PhD, Professor Emeritus of the UAB School of Public Health, who teaches a course "Health Insurance/Managed Care," by sending him the email I had sent to Emily T. Marsal,

I contacted Andrew Burnett, who was previously on Senator Shelby's staff for health policy.

Lindsey L. Lewis, Executive Legislative Assistant to Senator Dan Roberts and Clerk of Senate Healthcare Committee (Sen. McClendon-Chair) replied to me on behalf of Sen. Roberts, and I sent Ms. Lewis the email set out at Exhibit E.

J. Fairley McDonald, III, Chief Counsel – Legal Division, of the Alabama Department of Insurance advised me that he believed the CAFA notice was served on Attorney General Marshall, and not on the Commissioner of Insurance. He indicated the Commissioner does cause “licensing” of, and regulate, Blue Cross and Blue Shield of Alabama, Inc., and, in that sense, is a proper recipient of a CAFA notice for that entity but that the Commissioner, though, is not chief regulator nor licensing authority of other Blue Cross entities in this multi-district litigation or the Blue Cross Association. Mr. McDonald said that, as far as he knew, neither the Attorney General nor the Commissioner had filed anything in opposition to the proposed settlement and the Department of Insurance did not propose to appear at the upcoming “fairness” hearing.

I only recently learned about the CAFA notice requirement. I obtained from the class action attorneys a copy of the CAFA notice and a list of federal and state officials to whom the CAFA notice was sent. I was advised that there were no responses to the CAFA notice, except that the Department of Labor raised the matters discussed in Plaintiffs’ Memorandum.

IV. Court review; my review

The Court, of course, decides what should be the focus of its review, and how it should do its review. I offer the review I have done in making my objection, for whatever the same is worth to the Cout in its review.

As indicated above, how the Settlement treats the different classes needs much attention by the Court. My objection does not concern directly how the different classes are treated, and I have made no review of that.

As indicated above, I have focused on the things said in Plaintiffs’ Memorandum (and in the Complaint) that are set out in II above.

I divide those things into (i) those related to the Plaintiffs complex modeling of factors estimating the impact of the entry of significant competition within the market, including estimated profitability of entry, timing of entry, type of entry, strength of entry, progression of entry, and competitive response to entry, and (ii) those things that I will refer to as the “bigger picture” effect of the Injunctive Relief

A. Review of Plaintiffs’ modeling

Plaintiffs modeling is done for computing alleged damages during the 2008 to 2020 period, and it is implicitly offered as guidance for evaluating the Injunctive Relief going forward.

I have made no study of Plaintiffs' "sophisticated damages model" or of how "Defendants’ experts aggressively challenged Subscriber Plaintiffs’ damages model and vigorously attacked Subscriber Plaintiffs’ findings and experts’ calculations."

Even without studying the model, I can do rudimentary thinking about the real world that can be brought to bear on the credence to be given to Plaintiffs' modeling.

That real world includes the real world during the period of 2008 to 2020, and the real world going forward during which the Injunctive Relief is in effect.

In such real world, each Defendant is keenly attuned to its level of profits and maintaining (or increasing) its level of profit. In simplest terms, a Defendant's profitability is premiums received minus amounts paid under its insurance polices

Plaintiffs say that if the Injunctive Relief had been in place during 2008-2020, the Defendants' premiums would have been less, and their premiums  will be less going forward if the Injunctive Relief is put into effect now. 

Rudimentary thinking says, in the real world of 2008 to 2020, less premiums may or may not have happened if the Injunctive Relief had been in effect then, and, in the real world going forward, less premiums may or may not happen, and to judge what would or would not have happened hypothetically in the past, and whether it will or will not happen in the future requires great knowledge and lots of historical experience in the conduct of a health insurance company business. 

If “in fact” less premiums would have happened in the 2008 to 2020 period if the Injunctive Relief had been in effect then, and, if in fact, less premiums will happen if the Injunctive Relief goes into effect, a Defendant could have maintained the same level of profit in 2008 to 2020 period, or can maintain the same level of profit in the future, by finding ways to reduce payments it is required to make under its insurance policies.  

In the real world, insureds under health insurance policies have little sense of all the benefits, their costs, and who will provide the benefits, and do little monitoring of the same. This allows health insurance companies to reduce benefits and costs without insureds being aware of that. Currently, this can be done, for example, by insurance companies altering their “networks” from year to year and even during an insurance contract year, without insureds being aware. Such reduction of benefits and costs negates the value of premiums being less. 

Possibly a Defendant can get hospitals, doctors and other medical providers to accept being paid less for their services. If those parties agree to accept less, such parties may find ways to deliver less service to Defendant's insureds, which negates the benefit of the lesser premiums. 

Also a lot of cost shifting happens in the nation's health care system, such as government subsidies to less well off persons for paying their insurance premiums. This cost shifting can increase demand for health insurance, and such increased demand can allow a Defendant to increase premiums. 

Rudimentary thinking includes appreciation that the working of competition and competitive markets is significantly impaired in the health care system at the consumer level.

Competitive markets work on the basis of buyers spending their own money for what they purchase and making subjective comparisons of the value to them of what they purchase, compared to the value to them of alternative purchases. With health insurance, once the insurance is purchased, the insured is not required to pay the full price for an item of health care but only the applicable deductible and co-pay, and usually the item of health care is obtained automatically and without comparing the value of the item received to the full price, Frequently the item is obtained without the insured even knowing what the full price is.

Further rudimentary thinking informs one that the effect of the Injunctive Relief (whether hypothetically in place during 2008 to 2020 or actually in effect going forward) is affected by the laws as in effect at the time governing a Defendant's business. For example, the Affordable Care Act requires insurance companies to pay out certain percentages of its premiums for medical costs, i.e. a limitation on profits. With such a limitation, the Injunctive Relief may have less effect.

Another example is the Affordable Care Act’s provisions for standardizing insurance plans. That lessened the ability of insurance companies to reduce benefits and costs under its insurance policies without insureds being aware. Such is to be compared to when insurance companies sold “skinny insurance” that was more profitable.  .

With the elimination of the penalty under the Affordable Care Act for individuals not having qualified insurance, health insurance companies may return to selling “skinny insurance,” which is more profitable. 

In the real world, the individual Defendants have dedicated, and are dedicating, significant corporate resources to exploring the possible ways they can negate the financial and business effects on them of the Injunctive Relief (if it goes into effect), and are well along in having concrete business plans regarding the same. In the real world, the Defendants not voluntarily inform the Court about how they will go about endeavoring to  negate the financial and business effects on them of the Injunctive Relief (if it goes into effect). 

It is also likely in the real world that plaintiffs’ attorneys, in their decade long investigation of Defendants’ business practices, have gained a sense of possible things the Defendants can and will do to negate the financial and business effects on the Defendants of the Injunctive Relief. The plaintiffs’ attorneys as well may not be voluntarily forthcoming to the Court about such things the plaintiffs’ attorneys have learned.

I have not studied the different treatments of the different classes of plaintiffs, or objections related to same, but that matter may also tend to show how speculative are the past harms of Defendants’ business practices. 

The foregoing discussion is put forth for the Court’s consideration of whether it is so speculative what would have happened in the period 2008 to 2020 if the Injunctive Relief had been in effect, that a class action recovery is not warranted. At a minimum, the Court needs to consider the extent to which it should get independent expert evaluation of how speculative Plaintiffs’ sophisticated model is. This will be discussed more in B below regarding the bigger picture effect of the Injunctive Relief.

B. The bigger picture effect of the Injunctive Relief

Besides being presented with Plaintiffs sophisticated model, the Court is presented with Plaintiffs' Memorandum saying (quoted above as well):

"The Settlement represents a monumental achievement. The Settlement secures “historic and substantial” structural changes that will reshape competition in the health insurance industry and offer increased choice in the market for health insurance to millions of Americans, along with one of the largest monetary recoveries ever achieved in an antitrust class action settlement."
"The Settlement creates substantial benefits and opens pathways to more competition, lower
costs, greater innovation, more consumer choice, and increased availability of products for
millions of Settlement Class Members. p.5

Given that the Plaintiffs say the foregoing, the Court needs to decide whether, if it approves the settlement, the Court will be tagged with having a belief that the settlement it is approving will in fact cause  "historic and substantial structural changes that will reshape competition in the health insurance industry" and “create substantial benefits and opens pathways to more competition, lower costs, greater innovation, more consumer choice, and increased availability of products for millions of Settlement Class Members.”

If the Court approves the settlement, the Court will be exposed to possible criticism, including from members of Congress, such as that the Court was wrong in its belief about the settlement, the settlement in fact achieves no such result, and the settlement in fact is an impairment in the national effort to lessen health care costs and health insurance premiums and achieve other national health care goals. 

In extreme form, the Court may be criticized for having no defensible idea about the effects of the settlement and had no business relying on the plaintiffs and Defendants agreeing on the settlement. 

To protect against the foregoing, it would seem that the Court would want to have advice from independent experts. 

As part of this, it would seem that the Court would want to know why the federal antitrust regulators have known for decades about the Defendants' business practices and have done nothing about them. 

Even though state insurance departments may not have authority to regulate the Defendants' business practices at issue, the Court might want to know what state insurance departments think about the practices and what they think will be the effect of the Injunctive Relief, if it goes into effect. 

In considering the foregoing, the Court might further want to reflect on the national political contentiousness over health care laws that has been going on for 25 years, and the strenuously conflicting views about how to reduce health care costs, how to make health care accessible, and how to make health insurance affordable, and how those objectives interact. Some persons may contend the Injunctive Relief provides no help in achieving those objectives, or is even counterproductive. 

V. Conclusion 

I hope the information provided by this objector is helpful to the Court in making its decision to approve the Settlement or not. 

Date: October 17, 2021 

Respectfully submitted 

/s/ Robert Shattuck

Robert Shattuck

 

EXHIBIT A

 

 

LETTER TO:

The Honorable Kay Ivey
The Honorable Richard Shelby

The Honorable Tommy Tuberville
The Honorable Gary Palmer
The Honorable Steve Marshall
The Honorable Dan Roberts
The Honorable Jim Carns

Re: BCBS antitrust class action settlement; reducing health care costs 

 

Dear Gov. Ivey, Sen. Shelby, Sen. Tuberville, Rep. Palmer, Attorney General Marshall, Sen. Roberts, and Rep. Carns,

 

America's and Alabama's health care systems are in a rolling crisis of high and ever increasing costs, coupled with inadequate health care services for large segments of their populations. Trying to fix the inadequacy problem entails adding large additional health care costs. Further, the Republicans and Democrats have been stalemated for years about what should be done to mitigate this rolling crisis of high health care costs and inadequate health care coverage for many.

 

In the middle of this rolling crisis, I have received a class action settlement notice.  The class action concerns Blue Cross allegedly restricting competition in health care insurance during years 2008 through 2020 and thereby increasing health care premiums and health care costs. The settlement amount is $2.67 billion, of which plaintiffs' attorneys will receive about $770 million in attorney fees.

The settlement notice says in part:

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION If you purchased or were enrolled in a Blue Cross or Blue Shield health insurance or administrative services plan between 2008 and 2020, a $2.67 billion Settlement may affect your rights A federal court authorized this Notice. This is not a solicitation from a lawyer. • Class Representatives (“Plaintiffs”) and the Blue Cross Blue Shield Association (“BCBSA”) and Settling Individual Blue Plans reached a Settlement in a class action antitrust lawsuit called In re: Blue Cross Blue Shield Antitrust Litigation MDL 2406, N.D. Ala. Master File No. 2:13-cv-20000-RDP (the “Settlement”). 1 BCBSA and Settling Individual Blue Plans are called “Settling Defendants.” • Plaintiffs allege that Settling Defendants violated antitrust laws by entering into an agreement not to compete with each other and to limit competition among themselves in selling health insurance and administrative services for health insurance. • Settling Defendants deny all allegations of wrongdoing and assert that their conduct results in lower healthcare costs and greater access to care for their customers. • The Court has not decided who is right or wrong. Instead, Plaintiffs and Settling Defendants have agreed to a Settlement to avoid the risk and cost of further litigation. The Court certified two Settlement Classes in this case―a Damages Class and an Injunctive Relief Class. These Classes are further defined in Question 5. • If approved by the Court, the Settlement will establish a $2.67 billion Settlement Fund. Settling Defendants will also agree to make changes in the way they do business that will increase the opportunities for competition in the market for health insurance.

I, as a possible member of the plaintiff class, may object to the settlement because I think the past harm to the plaintiff class is entirely speculative and should not be a basis for monetary damages and attorneys fees. Further, I think the benefits of the agreed changes in business practices should not get imposed via the class action settlement because the parties agreeing to the changes are not sufficiently motivated by the goal of achieving such benefits. Rather, such changes should come within the purview of governmental lawmakers and regulators who are more clearly charged with responsibility for imposing changes that achieve the benefits in question.

I request Governor Ivey, Attorney General Marshall, Senator Roberts and Rep. Faulkner to review Alabama's health care costs problems, make a determination of whether or not you support the settlement as furthering in a desirable way the objective of reducing health care costs in Alabama, and make a submission to the court regarding the same.

I request of Senators Shelby and Tuberville and Rep. Palmer that they, with the help of the Department of Justice, the Federal Trade Commission, and the Department of Health and Human Resources, to do a similar review of  America's health care costs problems, make a determination of whether or not they support the settlement as furthering in a desirable way their objective of reducing health care costs, and either themselves make a submission to the court regarding the same or seek to have the Department of Justice, the Federal Trade Commission and/or the Department of Health and Human Resources make a submission.

APPENDIX: 

A. Problems of high costs and inadequate coverage in United States health care

There is ongoing years long national political battles over the health care law that establishes and governs how health care is provided and how it is financed in the United States.

The main problems are too high cost, too many Americans being uninsured and not having access to adequate health care, and fractured delivery and financing systems under private insurance, Medicare, Medicaid and public health. 

In 2009 and 2010 there was the tumultuous enactment by Congress of The Affordable Care Act (the "ACA"), which was done on party lines of President Obama and the Democrats favoring the law and the Republicans adamantly opposed. 

Donald Trump and the Republicans spent 2016 to 2020 trying to repeal or dismantle the ACA. They were not successful in repealing it in Congress, but Trump and the Republicans succeeded in significantly dismantling the ACA, including by taking away a key financial underpinning of the ACA Affordable Care Act, to wit, the individual mandate.

The ACA reduced the uninsured problem and expanded health care coverage, but the high cost problem remained and, in fact, has been worsened under the ACA.

The Medicare trust fund is currently projected to run out in 2026.

The current stand off between Republicans and Democrats can be gleaned by reading ACHIEVING UNIVERSAL, AFFORDABLE, QUALITY HEALTH CARE on the Democratic National Committee website and Conservative Perspectives on Health Care Reform

The two sides agree there is and continues to be a major cost problem, which still needs addressing.

From ACHIEVING UNIVERSAL, AFFORDABLE, QUALITY HEALTH CARE "The United States spends more per capita on health care than any other advanced economy, and has less to show for it. Health care costs have been increasing for decades, with average premiums for an employer-provided family plan topping $20,000 in 2019." 

 

Both sides think more competition will lower health care costs, but they have different approaches, with the Democrats saying a public option is needed for obtaining effective competition, and the Republicans saying more private competition.

The Democrats say

 

Private insurers need real competition to ensure they have incentive to provide affordable, quality coverage to every American. To achieve that objective, we will give all Americans the choice to select a high-quality, affordable public option through the Affordable Care Act marketplace. The public option will provide at least one plan choice without deductibles; will be administered by CMS, not private companies; and will cover all primary care without any co-payments and control costs for other treatments by negotiating prices with doctors and hospitals, just like Medicare does on behalf of older people. [quoted from ACHIEVING UNIVERSAL, AFFORDABLE, QUALITY HEALTH CARE]

Conservative Perspectives on Health Care Reform indicates the Republican side in this way:

 

Many conservatives believe families, individuals and businesses should be able to purchase health insurance nationwide to heighten competition for their business and provide a variety of choices.

Further, individuals should be permitted to obtain insurance privately or through organizations of their choice: employers, churches, professional associations or others. Such policies would automatically bridge the gap between retirement and Medicare eligibility and cover multiple years.

More choices in coverage is just one aspect of a free-market health care system. Another is allowing consumers to shop for treatment options. This would promote competition between conventional and alternative providers and make patients the center of care. Permitting providers to practice nationwide also would build genuine national markets and give consumers greater responsibility in their own health care decisions.

Competition ensures the public is better educated about preventive health care and treatment options. It forces providers to be more transparent regarding medical outcomes, quality of care and the costs of treatment.

It also means more competitive pricing. Lesser quality providers get weeded out, because—like elsewhere in the free-market economy—they get priced out of malpractice insurance and have no way to raise their prices. Developing national standards of care to measure and record treatments and outcomes ensures only top-quality providers remain in business.

Dramatic reforms in Medicare would have to supplement a free-market health care system. Under this scenario, the Medicare payment system, which compensates providers for prevention, diagnosis and care, would have to be overhauled into a tiered system, with providers not bein 

 

Also, the two sides agree that too high drug prices are a significant component of the health care cost problem.

 

The Republicans further add a need for tort reform to reduce health care costs. Conservative Perspectives on Health Care Reform expresses this:

 

The main culprit in the battle over health care costs is the extensive damage awards doled out by activist judges every day across the country. Thanks to these inflated awards, defendants hoping to avoid a court appearance are left with no other option than inflated settlements.

Special mention needs to be made of Medicaid. An important element of the ACA was an option for states to expanding Medicaid. About ten states, including Alabama have not taken up that option. In those that have refused to expand Medicaid, Republicans in power have maintained that their states cannot afford to pursue the measure. Biden's Covid-19 relief bill has made an offer of  of increased federal dollars over two years to states that adopt expansion for the first time.

B. Complaint's allegations about Blue Cross limiting competition 

Competition is central in the class action lawsuit, with the essence being that Blue Cross has business practices that limits competition, that this enables Blue Cross to charge higher premiums  than would obtain were the competition not limited, and the higher premiums mean higher health care costs.

Plaintiffs allege that Settling Defendants violated antitrust laws by entering into an agreement not to compete with each other and to limit competition among themselves in selling health insurance and administrative services for health insurance. • Settling Defendants deny all allegations of wrongdoing and assert that their conduct results in lower healthcare costs and greater access to care for their customers. • The Court has not decided who is right or wrong. Instead, Plaintiffs and Settling Defendants have agreed to a Settlement to avoid the risk and cost of further litigation. 

From the complaint

The Individual Blue Plans often have substantial market power within their respective Service Areas throughout the United States. The restraints summarized above enabled the Plans to entrench and perpetuate those respective market positions, thereby insulating them from competition by other Blue licensees. This was the direct result of the illegal conspiracy to unlawfully divide and allocate the geographic markets and limit competition for commercial health benefit products in the United States. 11. The Individual Blue Plans’ anticompetitive agreement and implementing conduct and foreclosure of competition have prevented subscribers and enrollees from being offered competitive premium prices and self-funded accounts from being offered competitive ASO fees. 12. These inflated premiums and ASO fees would not be possible if the market for commercial health benefit products in these Individual Blue Plans’ Service Areas were competitively unrestrained. Competition is not possible so long as the Individual Blue Plans and BCBSA are permitted to enter into agreements that have the actual and intended effect of restricting their ability to compete with each other, either as a Blue or a non-Blue Plan.

Pages 69 through 124 of the complaint detail extensively the history and business practices of Blue Cross. that are alleged to limit competition and result in higher premiums and higher health care costs. 

527. The Blue Plans wield collective nationwide economic power. BCBSA’s own factsheet admits this.44 528. The 36 Individual Blue Plans serve 106 million people—one out of every three Americans. The various Plans service 88 of the Fortune 100 companies, including major firms like Wal-Mart, Microsoft, General Motors, and UPS. They also service over seven million people who work for small employers. They are the number one choice for organized labor, serving 17 million organized workers, retirees, and their families. They offer coverage through Affordable Care Act insurance exchanges and service millions of Americans through government-supported healthcare programs. The BCBS provider network includes more than 90% of doctors and hospitals 44  Page 124 of 142 120 nationwide. More than 62 million BCBS members across all 50 states have access to care from more than 342,000 providers. As described above, the market shares of Individual Blue Plans in various states are indicative of market power.  

Further the complaint alleges the non-regulation by Federal and state authorities of divisions of markets and allocation of customers and non-regulation of premiums. 

529. The state insurance authorities in any of the Defendant Individual Blue Plans’ states do not regulate the division of markets and allocation of customers that are the subject of this Complaint. 530. No state insurance authority in any of the Defendant Individual Blue Plans’ states clearly articulates and affirmatively expresses as state policy the challenged restraints on trade that are the subject of this Complaint, i.e., division of markets and allocation of customers. Nor does any state insurance authority in any of the Individual Blue Plans’ states actively supervise the challenged restraints on trade that are the subject of this Complaint. 531. Prior to the Affordable Care Act, no Defendant Individual Blue Plan filed its insurance rate(s) with a federal regulatory agency. 532. Even since the Affordable Care Act has been implemented, no federal regulatory agency has had the authority to prevent the Defendant Individual Blue Plans from increasing premiums. 533. No Defendant Individual Blue Plan has detailed the challenged restraints on trade that are the subject of this Complaint to any insurance authority

.  .  .  .  .

These damages consist of having paid artificially inflated, unreasonable, and/or supra-competitive premiums and Case 2:13-cv-20000-RDP Document 2616 Filed 11/02/20 Page 128 of 142 124 ASO fees to the Individual Blue Plans; these premiums and ASO fees were higher than Plaintiffs and Members of the Nationwide Damages Class and the Self-Funded Subclass would have paid but for the Sherman Act violations. These damages further consist of being deprived of the opportunity to purchase health benefit products from one or more of the other Individual Blue Plans and/or their non-Blue affiliates at a lower premium or contractual rate and/or at a price set by a market free from the non-price restraints imposed by Defendants’ anti-competitive agreements. As described above, Plaintiffs and other Members of the Nationwide Damages Class and the Self-Funded Subclass have also been deprived of consumer choice and increased innovation

 

C. Settlement agreement

The settlement agreement provides for a settlement amount of $3.67 billion to compensate for, from which the attorneys will receive approximately $770 million.

WHEREAS, Class Representatives have contended that they and the Settlement Classes are entitled to actual damages, treble damages, and injunctive relief for loss or damage, and threatened loss or damage, as a result of violations of the laws as alleged in the Subscriber Actions, arising from Settling Defendants’ conduct; WHEREAS, Settling Defendants deny any and all purported wrongdoing in connection with the facts and claims that have been or could have been alleged against them in the Subscriber Actions, and have asserted a number of defenses to Class Representatives’ claims; 

WHEREAS, Settlement Class Counsel and Self-Funded Sub-Class Settlement Counsel consider the settlement herein to be fair, reasonable, and adequate, and in the best interests of the Settlement Classes because of the substantial uncertainties of litigation, payment of the Settlement Amount, and the value of the Injunctive Relief that Settling Defendants have agreed to provide pursuant to this Agreement; WHEREAS, Settling Defendants, despite their beliefs that the claims asserted lack merit and that they have valid defenses to such claims, have nevertheless agreed to enter into this Agreement to avoid further expense, inconvenience, and distraction to their business of burdensome and protracted litigation, and to obtain the releases, orders, and judgment contemplated by this Agreement, and to put to rest with finality this controversy, including releases of all claims that have been or could be asserted against Settling Defendants based on the allegations in the Subscriber Actions; 

The actual damages of higher premiums in the past resulting from the business practices, compared to if the business practices had not been effect, is grossly speculative, and the settlement amount is correspondingly arbitrary. This speculativeness is reflected how minuscule the settlement amount is in the context of actual health care costs involved.

To get a sense of this, consider that Blue Cross says it serves 106,000,000 people. The settlement covers 12 years from 2008 to 2020, The settlement amount of $3.67 billion is approximately $25 per person, which is somewhere in the range of .25% to .5% or less of the premiums the person paid during the 12 years.

The value of the Injunctive Relief in reducing premiums compared to what they would be if the Injunctive Relief was not in place, is equally or more speculative.

Evaluating the settlement agreement needs to take account the extent of the motivation of the plaintiffs' attorneys to receive their $770 million in attorneys fees and and their likely indifference to the arbitrariness of the settlement and indifference to the frossly speculative nature of the benefits to be provided by the Injunctive Relief 

The Defendants are equally aware of the speculative nature of the damages from their business practices and the speculative nature of how adversely their businesses will be impacted by the Injunctive Relief if at all. The settlement amount is minuscule compared to the total premiums received during the years 2008 to 2021.

The officers and directors of the Defendants are congnizant, as the complaint points out  that and the speculative side, the complaintd364. While nominally still characterized as not-for-profit, a number of the Individual Blue Plans generate substantial earnings and surpluses, and pay their senior administrators and officials substantial salaries and bonuses – often in the multi-million dollar range. The officers and directors have a motivation to keep up their compensation in the future, and there is probably little motivation to resist the settlement agreement because they will have their compensation signifivantly affected in future.

D. Court should have views of other governmental parties

There are governmental parties who have or should have a greater genuine interest in reducing health care costs for individuals who are served by Blue Cross and also for all other Americans. At the state level, these include state insurance departments, state health departments, and state governors and legislatures. At the Federal level, these include the antitrust division of the Department of Justice, the Health and Human Resources Department, and Congress and the President.

I think, in passing on the fairness of the settlement, the court should hear from these other governmental parties their views about how the Blue Cross business practices have limited competition and resulted in increased premiums and health care costs in the past and their views about how the Injunctive Relief will benefit in the future individuals who are served by Blue Cross. 

Such views may be that the Injunctive Relief is not strict enough, or that the Injunctive Relief will not have a beneficial effect unless it is part of a more comprehensive regulation that encompasses insurance companies other than Blue Cross, or that the Injunctive Relief is inconsistent with other things that are needed to reduce costs.

These parties have not been unaware of the Blue Cross business practices. Taking as an example the most favored nation clause, paragraph 519 fo the complaint says this

519. Use of MFNs and related techniques is widespread and pervasive among Blue plans. The member plans of BCBSA have discussed the legality and usefulness of MFNs at BCBSA gatherings, such as the BCBSA 41st Annual Lawyers Conference, held May 3, 2007 in Miami, Florida. There, a presenter informed representatives of the member plans that “DOJ and FTC have focused on potential anticompetitive character of MFN clauses, particularly on exclusionary impact” and that “[w]here [an] MFN has overall exclusionary effect on competition and entrenches market power, it could be actionable.”

As indicated above, the Democrats and Republicans are deeply divided about how to reduce health care costs.

E. Request of addressees

I request those of the addresses who are my state officials and/or my representatives in the Alabama legislature review the big picture of reducing health care costs, make a determination of whether or not they support the settlement as furthering in a desirable way their objective of reducing health care costs, and make a submission to the court regarding the same.

I request of Senators Shelby and Tuberville and Rep. Palmer that they solicit the Department of Justice and Department of Health and Human Resources to do a similar review of the settlement agreement, make a determination of whether or not they support the settlement as furthering in a desirable way their objective of reducing health care costs, and make a submission to the court regarding the same.

 

EXHIBIT B

 

 

Robert D. Shattuck, Jr

3812 Spring Valley Circle

Birmingham, AL 35223

(205) 967-5586

rdshatt@aol.com

 

July 12, 2021

 

BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED

Blue Cross Blue Shield Settlement 

c/o JND Legal Administration
PO Box 91393
Seattle, WA 98111

 

copies to

BLUE CROSS BLUE SHIELD SETTLEMENT

C/O MICHAEL D. HAUSFELD HAUSFELD LLP 

888 16th Street NW, Suite 300 

Washington, DC 20006 

 

BLUE CROSS BLUE SHIELD SETTLEMENT 

C/O DAVID BOIES

BOIES SCHILLER FLEXNER LLP 

333 Main Street 

Armonk, NY 10504  

 

DAN LAYTIN 

KIRKLAND & ELLIS LLP 

300 N. LaSalle St. 

Chicago, IL 60657 

 

Dear Sirs:
I object to the settlement in In re: Blue Cross Blue Shield Antitrust Litigation.

 

A. Description of my objections

 

I believe that the effect that Defendants' business practices had on health insurance premiums and health care costs during the years 2008 through 2020, and the effect of the Injunctive Relief in the future, are grossly speculative. 

 

With said effects being grossly speculative, Plaintiffs' attorneys are in a position to agree to any settlement, practically no matter how small, and thereby receive very large attorneys' fees.

 

Defendants' officers and directors can go along with a small settlement that will not have a material adverse effect on Defendants' business, and the stakeholders in the Defendants will not be bothered to complain about the settlement being excessive (since the settlement is small). 

 

In the foregoing situation there is potential for Plaintiffs' attorneys abusing the judicial branch of government to get large attorneys' fees on grounds that are grossly speculative, so grossly speculative that there was no detriment from the business practices for 2008 through 2020, and, in the future, the Injunctive Relief will in fact be detrimental, and not beneficial, to class members and to other consumers of health insurance.

 

To appreciate how grossly speculative the effect of the Defendants' business practices was, and of the Injunctive Relief in the future, requires extensive knowledge about health care markets and health insurance markets. These markets are extremely complex in their workings, and there are many different business practices by many different actors in the said markets that are interrelated and have interrelated effects. For example, if a business practice of an actor is precluded, it is speculative about what other practices will be adopted or modified, and what the net effect will be on health insurance premiums and health care costs 

 

With things being so grossly speculative, Plaintiffs' attorneys will not lose sleep over whether Defendants' business practices in 2008 to 2020 were, and Injunctive Relief will be, beneficial, neutral or detrimental to health insurance markets and consumers of health insurance.

 

There are, however, governmental officials and entities who are charged by law to be concerned about how health insurance markets work for consumers and what changes will improve or not improve their operation for consumers. 

 

Even these knowledgeable and experienced governmental officials and entities may be beset by great uncertainty in judging the detriment, if any, of Defendant's business practices in 2008 through 2020, and the benefit, if any, that will come from the Injunctive Relief, in the complex and interrelated markets for health insurance and health care.

 

To protect the judicial branch from being abused by Plaintiffs' attorneys, the Court should hear from one or more of these governmental officials and entities about what their opinion is concerning the detriment of Defendants' business practices in 2008 to 2020, and net benefit the Injunctive Relief will provide to class members and other consumers in the health insurance market.

 

To that end, I have solicited governmental officials to review the settlement agreement and to give the court the benefit of their views, as aforesaid.

 

I have been doing this in the form of a letter I have disseminated to them by various means in the form set out at https://al6thcongdist-ihaveuntiljan13.blogspot.com/2021/05/bcbs-settlement-reducing-health-care.html 

 

The named addressees of said letter are my state and Federal officials consisting of Alabama Gov. Kay Ivey, United States Senator Richard Shelby, United States Senator Tommy Tuberville, U.S. Rep. Gary Palmer, Alabama Attorney General Steve Marshall, Alabama state Senator Dan Roberts, and Alabama state Rep. Jim Carns. Said officials may forward my solicitation to appropriate other governmental officials and governmental departments and agencies having the needed expertise to review the settlement.

 

I have not received any responses as of this time. 

 

I will continue my solicitation of them and of possibly other appropriate Federal and state governmental officials. In my further solicitation, I may revise the foregoing form of letter and also include a copy of this letter of mine making my objection.

 

I will supplement this objection by providing to the addressee and copied parties on this letter such written responses as I receive from governmental officials and entities in response to my foregoing solicitation.

 

I am uncertain at this time whether I will attend the Fairness Hearing on October 20, 2021. A main factor affecting whether I will attend is whether any governmental official or officials will attend with me and speak to the Court or whether I have been provided with a written submission or submissions to the Court that I want to present in person to the court. 

 

B. Information related to me 

 

My full name, address, email address, telephone number are set out above.

 

I turned 65 in 2012. To the best of my knowledge and belief, from 2008 until 2012 I was insured under the Blue Cross Blue Shield of Alabama Individual Plan that Blue Cross Blue Shield of Alabama provided from 2008 to 2012. I contacted toll-free (888) 681-1142 to try to obtain confirmation of my Blue Cross Blue Shield of Alabama dates of coverage and was told that the Administrator did not have such information at this time, but that information would be obtained when needed. An automated message on (888) 681-1142 said I should not contact Blue Cross Blue Shield for the information because it was not set up to respond to inquiries from members of the class related to the class action.

 

My objection applies to both Settlement Classes.  I have no counsel representing me in this objection, and there are no former or current counsel who may be entitled to compensation for any reason related to my objection There is no agreement trelating to my objection or the process of my objecting between me and any other person or entity:

 

Signed

 

 

_______________________________

Robert D. Shattuck, Jr.

 

 

I declare under penalty of perjury that the information provided in my above objection is true and correct.

 

_________________________________________

 

EXHIBIT C

 

To: Alabama Civil Justice Reform Committee, c/o directors Danne Howard and Robin Stone, 

Re: $2.7 billion Blue Cross Blue Shield class action settlement

I believe the organizational purposes of the Alabama Civil Justice Reform Committee should give the Committee an interest in the above class action settlement and in the objection to the settlement that I have filed, which objection is set out at https://al6thcongdist-ihaveuntiljan13.blogspot.com/2021/08/my-objection-in-bcbs-class-action.html.

I am directing this communication to ACJRC in care of directors Danne Howard and Robin Stone, because Ms. Howard is deputy director of the Alabama Hospital Association; Mr. Stone was Vice President of Governmental Affairs of Blue Cross Blue Shield of Alabama; those two organizations have special knowledge relative to the subject matter of the class action lawsuit; and Ms. Howard and Mr. Stone should be specially qualified to evaluate my objection to the class action settlement.

My above objection describes my objection as follows: 

Reducing health care costs is an important national objective. The class action purports to recover past health costs that were allegedly excessive because of anti-competitive practices that Blue Cross Blue Shield had in the conduct of their  health insurance business, and to end those practices to prevent those excessive health care costs going forward.

I believe that the effect that Defendants' business practices had on health insurance premiums and health care costs during the years 2008 through 2020, and the effect of the Injunctive Relief in the future, are grossly speculative. 

With said effects being grossly speculative, Plaintiffs' attorneys are in a position to agree to any settlement, practically no matter how small, and thereby receive very large attorneys' fees. 

Defendants' officers and directors can go along with a small settlement that will not have a material adverse effect on Defendants' business, and the stakeholders in the Defendants will not be bothered to complain about the settlement being excessive (since the settlement is small). 

In the foregoing situation there is potential for Plaintiffs' attorneys abusing the judicial branch of government to get large attorneys' fees on grounds that are grossly speculative, so grossly speculative that there was no detriment from the business practices for 2008 through 2020, and, in the future, the Injunctive Relief will in fact be detrimental, and not beneficial, to class members and to other consumers of health insurance. 

To appreciate how grossly speculative the effect of the Defendants' business practices was, and of the Injunctive Relief in the future, requires extensive knowledge about health care markets and health insurance markets. These markets are extremely complex in their workings, and there are many different business practices by many different actors in the said markets that are interrelated and have interrelated effects. For example, if a business practice of an actor is precluded, it is speculative about what other practices will be adopted or modified, and what the net effect will be on health insurance premiums and health care costs  

With things being so grossly speculative, Plaintiffs' attorneys will not lose sleep over whether Defendants' business practices in 2008 to 2020 were, and Injunctive Relief will be, beneficial, neutral or detrimental to health insurance markets and consumers of health insurance. 

There are, however, governmental officials and entities who are charged by law to be concerned about how health insurance markets work for consumers and what changes will improve or not improve their operation for consumers. 

Even these knowledgeable and experienced governmental officials and entities may be beset by great uncertainty in judging the detriment, if any, of Defendant's business practices in 2008 through 2020, and the benefit, if any, that will come from the Injunctive Relief, in the complex and interrelated markets for health insurance and health care. 

To protect the judicial branch from being abused by Plaintiffs' attorneys, the Court should hear from one or more of these governmental officials and entities about what their opinion is concerning the detriment of Defendants' business practices in 2008 to 2020, and net benefit the Injunctive Relief will provide to class members and other consumers in the health insurance market. 

To that end, I have solicited governmental officials to review the settlement agreement and to give the court the benefit of their views, as aforesaid. 

I have been doing this in the form of a letter I have disseminated to them by various means in the form set out at https://al6thcongdist-ihaveuntiljan13.blogspot.com/2021/05/bcbs-settlement-reducing-health-care.html  

The named addressees of said letter are my state and Federal officials consisting of Alabama Gov. Kay Ivey, United States Senator Richard Shelby, United States Senator Tommy Tuberville, U.S. Rep. Gary Palmer, Alabama Attorney General Steve Marshall, Alabama state Senator Dan Roberts, and Alabama state Rep. Jim Carns. Said officials may forward my solicitation to appropriate other governmental officials and governmental departments and agencies having the needed expertise to review the settlement. 

I solicit the Alabama Civil Justice Reform Committee to support me in what I am doing relative to my objection.

 

EXHIBIT D

 

 

From: Rob Shattuck <rdshatt@aol.com>
To: karen.mcguire@shpda.alabama.gov <karen.mcguire@shpda.alabama.gov>
Cc: dan.roberts@alsenate.gov <dan.roberts@alsenate.gov>; jwcarns@gmail.com <jwcarns@gmail.com>
Sent: Tue, Oct 5, 2021 4:28 pm
Subject: BCBS antitrust class action settlement; reducing health care costs

Ms. Emily T. Marsal, Executive Director (c/o karen.mcguire@shpda.alabama.gov)

Alabama State Health Planning & Development Agency

 

Dear Ms. Marsal

 

The Agency's mission is "To ensure that quality health care facilities, services, and equipment are available and accessible to the citizens of Alabama in a manner which assures continuity of care at a reasonable cost."

 

The purpose of this letter is to solicit the Agency's views about whether the above referenced $2.7 billion Blue Cross Blue Shield class action settlement is helpful to the Agency's mission, or whether it is unhelpful to the Agency's mission, or whether the settlement is of no material consequence for the Agency's mission. 

 

A. The class action

The class action concerns Blue Cross allegedly restricting competition in health care insurance during years 2008 through 2020 and thereby increasing health care premiums and health care costs. The settlement amount is $2.67 billion, of which plaintiffs' attorneys will receive about $667,500,000 in attorney fees.

 

I have objected to the settlement. 

 

I have sent to Gov. Kay Ivey, Senator Shelby, Senator Tuberville, Rep. Gary Palmer, Attorney General Marshall, Senator Dan Roberts, and Rep. Jim Carns, a letter soliciting them to review the settlement and express to the Court whether they think the Court should approve the settlement. This letter I sent to them can be found at https://al6thcongdist-ihaveuntiljan13.blogspot.com/2021/05/bcbs-settlement-reducing-health-care.html. My objection to the class action settlement can be found at https://al6thcongdist-ihaveuntiljan13.blogspot.com/2021/08/my-objection-in-bcbs-class-action.html

 

The "fairness" hearing for the Court to consider objections to the class action settlement will be at 10 am on October 20, 2021 at the United States District Court for the Northern District of Alabama, Hugo L. Black United States Courthouse, 1729 5th Avenue North, Birmingham, Alabama 35203

 

The crux of my objection to the settlement is that I think it is grossly speculative that, had the practices in question been prohibited during years 2008 through 2020, how much, if at all, health care premiums and health care costs, would have been reduced during that period, and it is grossly speculative how much, if at all, they will reduced going forward.

 

In judging whether the settlement is   "fair, reasonable, and adequate," the Court should endeavor a comparison of the $667,500,000 in attorneys fees to the amount that that there were higher health care premiums and costs in the past and there will be lesser health care premiums and costs going forward.

 

To do that judging, the Court needs to evaluate how speculative those higher health care premiums and costs were and how much less those premiums and costs will be going forward. If the Court evaluates that such is entirely speculative, the Court should not approve the settlement on the grounds of it not being fair and reasonable.

 

In doing the foregoing, there are several things the Court should take into account. 

 

The reality is that health care and the health care industry and markets are extremely large and complex, there are numerous actors (doctors, hospitals, governments, patients, insurance companies, etc.), and these actors make and receive payments and provide and receive health care services in myriad of non-transparent interconnections, and alternative choices, transactions and relationships. All of these make it extremely difficult to know how a change of one set of practices of one actor will or will not be accompanied by offsetting changes in that actor's business or in its counterparty's business or elsewhere in the health care industry, so that the result is a net zero change in health care costs

 

Also, the class action needs to be viewed in the context that America's and Alabama's health care systems have for many years been in a rolling crisis of high and ever increasing costs, coupled with inadequate health care services for large segments of their populations. Trying to fix the inadequacy problem entails adding large additional health care costs. Further, the Republicans and Democrats have been stalemated for years about what should be done to mitigate this rolling crisis of high health care costs and inadequate health care coverage for many, and there there is not consensus about what laws and/or regulation should be enacted or promulgated to reduce health care costs, or even consensus about whether they should be reduced. In other words, there may be little support for the idea that prohibiting the defendants' practices is a worthwhile or effective mode for reducing health care costs.

 

The Court should also consider that those in charge of making the settlement likely have a personal interest and preference for settling the litigation, and that the speculativeness of the effect on health care costs gives them cover and protection from attack that the agreement they signed is not fair and reasonable.

 

While the settlement amount of $2.7 billion is a lot of money, it is minuscule compared to the total amount of health premiums and health care costs that are involved, and that minuscule amount tends to manifest how speculative the effects on health care costs of the presence or absence of the defendant's practices in question are.  

 

In the settlement, the parties make no agreement about whether defendants' practices increased costs in the past or will continue to increase costs in the future if the practices are not prohibited. The defendants in fact maintain their practices reduce costs and increase access of their customers.

 

In connection with the settlement agreement, the Court expresses no view to the class action plaintiffs about which of the parties the Court thinks are right or wrong in their contentions about  the effect on health care premiums and costs of defendants' practices in the past and about the effect going forward of defendants ceasing the practices.

 

While, under class action procedure, the Court refrains from having and expressing to the class action plaintiffs the Court's views about which side is right or wrong in their contentions about the effects on health care costs of defendants' practices, it is submitted that the Court needs to have a reasonable belief with some degree of certainty that there are material effects on health care costs as plaintiffs allege (i.e.,  such effects are not entirely speculative). Perhaps there is something in the record that the Court is relying on in this regard. I think the Court should get the benefit of the views of knowledgeable experts about the effect on health care costs of the presence or absence of defendants' practices. Such is what I am attempting to do in pursuing my objection. 

 

B. Views of Alabama State Health Planning & Development Agency 

As stated at the outset of this letter, the Agency's mission is "To ensure that quality health care facilities, services, and equipment are available and accessible to the citizens of Alabama in a manner which assures continuity of care at a reasonable cost."

 

The purpose of this letter is to solicit the Agency's views about whether the subject $2.7 billion Blue Cross Blue Shield class action settlement is helpful to the Agency's mission, or whether it is unhelpful to the Agency's mission, or whether the settlement is of no material consequence for the Agency's mission.

 

I think the Agency can aid the Court in judging whether the settlement agreement is "fair and reasonable" if the Agency says any of the three things of (i) the settlement agreement is helpful to the Agency's mission and the Agency is therefore in favor of the settlement agreement being approved, (ii) the settlement agreement is unhelpful to the Agency's mission and the Agency is not in favor of the settlement agreement being approved , or (iii) the settlement is of no material consequence for the Agency's mission and the Agency is indifferent to the settlement agreement being approved. Any statement of reasons that the Agency gives for whichever of the three things it chooses to say would, I think, also aid the Court in deciding whether the settlement agreement is "fair and reasonable."

 

Please refer this letter to the Governor's office, or to Attorney General Marshall's office, or to another agency or department in the Executive Branch as you deem appropriate.

 

Thank you very much for your attention to this letter. Any response that is given to me before October 20 will be most appreciated.

 

Sincerely,

Robert Shattuck

3812 Spring Valley Circle

Mountain Brook, AL 35223

(205) 967-5586

 

EXHIBIT E

 

 

From: Rob Shattuck <rdshatt@aol.com>
To: lindsey.lewis@alsenate.gov <lindsey.lewis@alsenate.gov>
Sent: Thu, Oct 14, 2021 1:48 pm
Subject: Re: BCBS antitrust class action settlement; reducing health care costs

Thank you very much for replying to me, Lindsey.

 

It is propitious to see that you are Clerk of the Senate Healthcare Committee.

 

Where this matter stands at the moment is that I am seeking to obtain from the class action lawyers the so-called CAFA notice that is required to be sent to "appropriate" federal and state officials and copies of any responses that were received back from such federal and state officials. 

 

For a law review article about CAFA notices and their purpose, see Cafa Settlement Notice Provision: Optimal Regulatory Policy (upenn.edu).

 

See particularly the below discussion appearing on  pages 1173-4 of the article.

 

Little is known about why this provision was added to CAFA, and the legislative history is scant. Nonetheless, it has been an enduring feature since the legislation was first proposed in 1997.12 At the most basic level, the provision ensures that "a responsible state and/or federal official receives information about proposed class action settlements and is in a position to react if the settlement appears unfair to some or all class members or inconsistent with applicable regulatory policies."' 3 Specialized state regulatory authorities (or the state AG in the absence of a state regulator) are likely to be familiar with the business practices at issue in the litigation, and they are well situated to "voice concerns if they believe that the class action settlement is not in the best interest of their citizens."'14 The overriding purpose seems to have been to prevent lawyers from crafting abusive settlements favoring themselves over consumers or other injured parties.' In this vein the provision provides "a check against inequitable settlements in these cases," which could arise from "collusion between class counsel and defendants to craft settlements that do not benefit the injured parties."

 

I think the settlement is not in the best interest of Alabamia citizens, and I am preparing a Memorandum in support of my objection to the settlement, which will include a discussion of why I think the settlement is not in the best interest of Alabamia citizens.

 

I don't know how much standing I will have in the eyes of the Court to argue that the settlement is not in the best interest of Alabamia citizens, and the Court will want to hear that from federal and state officials, and not from me.

 

I am trying to track down the receipt of the CAFA notice by AG Marshall's office (or other "appropriate" Alabama official), and whether a response was made to the CAFA notice. If no response to the notice has been given, I would like to urge that a response be given.

 

One of my points of focus is that plaintiffs allege that individual states don't regulate the Blue Cross Blue Shield practices that are the subject of the class action lawsuit, and that there has been a failure of federal regulators to regulate the practices, and that plaintiffs are acting to remedy this failure of the federal regulators.

 

Paragraphs 529  to 530 of the class action complaint allege as follows:

 

529. The state insurance authorities in any of the Defendant Individual Blue Plans’ states do not regulate the division of markets and allocation of customers that are the subject of this Complaint. 530. No state insurance authority in any of the Defendant Individual Blue Plans’ states clearly articulates and affirmatively expresses as state policy the challenged restraints on trade that are the subject of this Complaint, i.e., division of markets and allocation of customers. Nor does any state insurance authority in any of the Individual Blue Plans’ states actively supervise the challenged restraints on trade that are the subject of this Complaint. 531. Prior to the Affordable Care Act, no Defendant Individual Blue Plan filed its insurance rate(s) with a federal regulatory agency. 532. Even since the Affordable Care Act has been implemented, no federal regulatory agency has had the authority to prevent the Defendant Individual Blue Plans from increasing premiums. 533. No Defendant Individual Blue Plan has detailed the challenged restraints on trade that are the subject of this Complaint to any insurance authority

 

On page 63 of SUBSCRIBER PLAINTIFFS’ MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR FINAL APPROVAL OF CLASS SETTLEMENT, the plaintiffs say

 

Despite the public knowledge over how the BCBS system is structured, the federal agencies tasked with enforcing our antitrust laws have chosen never to challenge the system. Even after this litigation was pending for almost a decade, no antitrust enforcement agency chose to bring any action or submit anything in support of the Subscriber Plaintiffs in this case. Now that the Class Representatives and Subscriber Class Counsel have spent close to another decade, and hundreds of millions of dollars in resources, challenging that system, certain entities have emerged (seemingly at the behest of a small number of law firms) to criticize a Settlement that provides a multi-billion dollar damages recovery and injunctive relief that will enable enormous amounts of new competition. Keeping the nature of this Settlement in historical perspective is warranted.

 

Insofar as plaintiffs are arguing that the Court should approve the settlement on the grounds that federal regulators fell down in doing their job and plaintiffs class action was needed to remedy this failure, I think both federal and state regulators should have something to say to the Court about this, including federal regulators explaining why they did not act as plaintiffs are complaining, and state regulators saying whether or not they were aware of the Blue Cross Blue Shield practices, whether they thought the practices had the detrimental effects that plaintiffs allege, and whether they made any effort to get federal regulators to act.

 

I am trying to get Senators Shelby and Tuberville and Rep. Gary Palmer (my representative in Congress) to review the class action settlement, with a view to getting appropriate federal regulators to explain why they have not acted as plaintiffs are complaining. Thus far, I have gotten little attention from the offices of 
Senators Shelby and Tuberville and Rep. Gary Palmer.

 

This is a long email in response to your question of what I am asking of Senator Roberts.

 

My answer at this juncture to your question is that I only want Senator Roberts to be informed about what I am doing, and for Senator Roberts to take such interest in the CAFA notice given to Alabama officials, and the response thereto, as Senator Roberts thinks is in the interest of his constituents, and to the extent Senator Roberts thinks spending his time on the matter is warranted.

 

Thank yo for your attention to this long email.

Rob Shattuck