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Florida BlueThe U.S. Department of Justice has filed a statement of interest in an antitrust lawsuit brought by Oscar Insurance Co. of Florida, co-founded by Jared Kushner’s brother Joshua Kushner, against Blue Cross and Blue Shield of Florida Inc., Health Options Inc. and Florida Health Care Plan Inc., collectively Florida Blue.

In its statement, the DOJ asserted the McCarran-Ferguson Act did not provide a basis for dismissing Oscar’s Sherman Act claims against Florida Blue.

The Case

In its complaint, the subsidiary of New York-based Oscar Insurance Corp. challenged Florida Blue’s exclusivity policy, which prohibits a broker selling certain Blue Cross plans from selling plans offered by competing insurers. According to Oscar’s allegations, given Florida Blue’s dominant market share, its exclusivity policy foreclosed competitors such as Oscar from working with brokers responsible for selling the vast majority of individual health plans in the Orlando area.

Oscar alleged, among other things, that Florida Blue’s conduct caused consumers to pay more for health insurance, limited consumer choice, and impeded innovation.  Oscar claimed that Florida Blue violated Sections 1 and 2 of the Sherman Act.

Oscar also alleged Florida Blue enforced its exclusivity policy through “coercion and intimidation.”  Oscar asserted Florida Blue threatened to terminate permanently any broker appointed by Oscar, meaning “brokers face losing the right to sell Florida Blue plans in all product lines throughout the entire State of Florida if they decide to sell Oscar plans in a single county in the state.”

After Oscar entered the Orlando market, Oscar maintained Florida Blue updated its exclusivity policy, directing its brokers to sign new exclusivity forms. According to Oscar, Florida Blue threatened to withhold commission payments from brokers who violated the exclusivity policy.

Florida Blue asserted the exclusivity policy came within the exemption from federal antitrust law created by the McCarran-Ferguson Act. The McCarran-Ferguson Act exempts from the Sherman Act activities that constitute “the business of insurance,” are “regulated by state law” and do not amount to “boycott, coercion or intimidation.”

In its statement of interest, the DOJ explained the federal government was principally responsible for enforcing the federal antitrust laws and it sought to ensure antitrust exemptions, including the McCarran-Ferguson Act, were “not interpreted any more broadly than necessary to carry out their purposes.”

The DOJ asserted McCarran-Ferguson did not apply in this case for two reasons.

First, the DOJ said, as alleged by Oscar, Florida Blue’s exclusivity policy was not the business of insurance because it did not transfer risk or figure as an integral part of the policy relationship between the insurer and the insured. The DOJ asserted Florida Blue’s contention that its exclusivity policy spread risk because it “affected its “ability to attract customers” was “overly broad.”

Moreover, the DOJ continued, as alleged by Oscar, Florida Blue’s exclusivity policy was not an “integral part of the policy relationship,” the exclusivity policy was not integral to Florida Blue’s relationships with its policyholders, and the “threat to withhold commissions” had “nothing to do with the relationship between the insurer and the insured.”

Second, the DOJ asserted McCarran-Ferguson did not apply because, as alleged by Oscar, Florida Blue’s exclusivity policy involved coercion, and the Sherman Act applied if a policy involved an “act of boycott, coercion, or intimidation.”

Accordingly, the DOJ asserted the district court should not dismiss Oscar’s Sherman Act claims on the basis of Florida Blue’s “flawed interpretation of the McCarran-Ferguson Act’s antitrust exemption.”

The case assigned to U.S. Magistrate Judge Thomas Smith in Orlando is Oscar Insurance of Florida v. Blue Cross and Blue Shield of Florida, No. 6:18-cv-1944-PGB-TBS (M.D. Fla.).

This story is reprinted with permission from the Insurance Coverage Law Center, the industry’s only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.

Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. Meyerowitz is the Director of the Insurance Coverage Law Center and editor-in-chief of journals on insurance law, banking law, bankruptcy law, energy law, government contracting law, and privacy and cybersecurity law, among other subjects. Contact him at smeyerowitz@meyerowitzcommunications.com.


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