Allied World Insurance Seeks Declaratory Judgment Over Coverage of BCBS MDL

Allied World Specialty Insurance Company filed a complaint Friday for declaratory judgment against Blue Cross Blue Shield of Arizona, Inc. (BCBS-AZ). This complaint comes after years of allegations filed against the larger Blue Cross Blue Shield (BCBS) federation for supposedly engaging in anticompetitive conduct through various BCBS entities, or Blues.

BCBS is a federation of various healthcare companies that provide service to individuals across the United States. Since 2012, the complaint said there have been a number of claims concerning BCBS’s violation of numerous federal antitrust laws. Claims have been filed by both healthcare providers and subscribers, resulting in a host of suits since 2012 about BCBS’s behavior, which have been consolidated into multidistrict litigation (MDL). The health insurance companies were reported to have “conspired to leverage their economic power and market dominance to under-compensate healthcare providers for their services and to increase healthcare costs to subscribers by coordinating their operations and limiting their activities through restrictions in their trademark licenses.”

The antitrust complaints also specified that BCBS entities were practicing operational uniformity. By agreeing to operate in distinct geographical areas, the Blues were not competing with one another, but rather had agreed to “cooperate and coordinate their activities on a nationwide basis in order to maximize their profits.” The BCBS entities allegedly legitimized the cooperation agreement in their trademark licenses. The plaintiffs in these various cases argued that this conspiracy was an effort by BCBS to strengthen their position in the healthcare market and “force healthcare providers to accept anti-competitive rates and terms.”

According to Allied, this MDL reached a settlement in November 2020. The complaint also recounted a prior class action, Love, which ended in a settlement that BCBS-AZ did not participate in. However, Allied cited that the court has found Love to be “related” to the present antitrust litigation.

Allied, Friday’s complaint said, is an insurer of BCBS-AZ, which holds an Excess Policy with Allied. The “bona fide present dispute” that Allied requested the court resolve is whether Allied’s Excess Policy provides coverage to BCBS-AZ for the MDL. Allied is seeking declaratory relief from the court on the basis that they “have no liability to BCBS for any claims, losses, or other damages or liabilities,” brought by plaintiffs in previous litigations under their Excess Policy. They further assert that they have “no obligation to pay any amounts under the Excess Policy,” since the plaintiffs in the multi-district litigation action sought relief that did not classify as a Loss, and therefore was “uninsurable as a matter of law” and not covered under the Excess Policy.

Allied is represented by Tyson & Mendes.