Top Florida Health Insurer Pushes Back on Antitrust Claims

The Elbert P. Tuttle U.S. Courthouse in Atlanta, home of the 11th Circuit Court of Appeals. (Photo via Eoghanacht/Wikipedia Commons)

ATLANTA (CN) — An attorney for Florida Blue, the state’s largest health insurer, asked an 11th Circuit panel Friday to uphold a ruling finding the company did not violate antitrust laws by preventing insurance brokers from selling policies for a competitor. 

Oscar Insurance Company of Florida brought the case to the Atlanta-based appeals court after a federal judge ruled last year that Florida Blue, also known as Blue Cross and Blue Shield of Florida, had not illegally blocked Oscar’s entrance into the Orlando health insurance policy market by coercing brokers not to sell Oscar’s policies. 

An attorney representing Oscar argued that Florida Blue had brokers sign an exclusivity agreement that they enforced “with a vengeance” to keep Oscar out of the market and to “preserve [Florida Blue’s] monopoly position.” 

Oscar claims that the combined forces of Florida Blue’s dominant market share and the exclusivity policy effectively cuts competitors off from brokers who are responsible for selling the majority of individual health plans in Orlando.  

Seth Waxman of WilmerHale told a three-judge panel of the 11th Circuit on Friday that Florida Blue enforced the agreements by threatening to withhold earned commission payments from brokers who sell Oscar’s policies. 

Arguing on behalf of Florida Blue, attorney Evan Chesler of Cravath Swaine & Moore strongly denied that the broker agreements are coercive. 

Chesler said the agreements merely represent “the terms for which they’re working for us.” 

“The terms of the agreement are, you will either work for us as an exclusive agent or you will not work for us,” Chesler said. 

“We make a deal with the agent and say…we will hire you but only if you sell these policies exclusively for us. If you sell them for anybody else, you’re out,” he added. “People don’t have to work for us. They could say, I don’t want to be exclusive so I’m not taking your deal.” 

But Waxman told the panel that Florida Blue “leveraged its monopoly power to coerce brokers to cut ties with Oscar by threatening to terminate those who signed up with Oscar and to permanently bar disobedient brokers from selling Florida Blue insurance of any type, anywhere.” 

“That is prototypical coercion,” Waxman said. 

Assistant Attorney General Makan Delrahim, chief of the U.S. Department of Justice’s Antitrust Division, also appeared before the panel Friday. 

Delrahim, a Donald Trump appointee, told the panel that the government is “concerned that the district court has misinterpreted the laws as to what conduct or transactions should be subject to the antitrust laws.” 

U.S. District Judge Paul Byron in Orland had ruled that the McCarren-Ferguson Act, which immunizes insurers from federal lawsuits involving the business of insurance, exempted Florida Blue’s exclusivity policy from federal and Florida antitrust law. 

Byron, a Barack Obama appointee, found that Florida Blue’s “use of exclusive brokers is part of the relationship between the policyholder and the insurer” and ruled that the challenged broker agreements do not involve coercion. 

“The brokers agreed to work exclusively for Florida Blue in exchange for access to all of Florida Blue’s product lines. The consequences of violating the agreement is the broker’s inability to sell insurance for Florida Blue. There is nothing coercive about enforcing the contractual relationship,” Byron wrote. 

The federal government filed an amicus brief in the case supporting Oscar, arguing that Byron incorrectly concluded that Florida Blue’s conduct to enforce broker exclusivity is not “coercion” and requesting that the 11th Circuit reverse the decision. 

“The district court’s sweeping interpretation of the McCarran-Ferguson exemption disregards Supreme Court precedent and would deny Floridians purchasing health insurance the protections of federal antitrust law,” the brief states.

The 11th Circuit panel was comprised of U.S. Circuit Judge Beverly Martin, an Obama appointee, and U.S. Circuit Judges Robert Luck and Andrew Brasher, both Trump appointees. The judges did not indicate when they will issue a ruling in the case. 

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