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Fees Capped at 25 Percent in $2.67B BCBS MDL Settlement

November 17, 2020 | Posted in : Contingency Fees / POF, Fee Cap / Fee Limits, Historic / Landmark Case, Practice Area: Class Action / Mass Tort / MDL, Settlement Amount / Data

A recent Law 360 story by Jeff Montgomery, “Ala. Judge Wary of Second-Guessing $2.67B BCBS Deal,” reports that a federal judge in Alabama cautioned an attorney for non-consenting class members about second-guessing "the tactical decisions of class counsel" in a proposed $2.67 billion multidistrict class settlement for alleged overpayments to Blue Cross-Blue Shield insurers.

U.S. District Judge R. David Proctor made the point during a video-conference preliminary approval hearing in the Northern District of Alabama for the settlement of a suit filed in January 2013, targeting allegations that the insurers divvied up the nation and conspired to restrain competition among themselves and from other insurers, causing damages estimated at between $19 billion and $38 billion.

The settlement, reached after more than eight years of battling, would provide proportional payouts to tens of millions of business and individual BCBS subscribers, while also establishing court-ordered reforms prohibiting anti-competitive conduct, including ending a Blues practice of requiring members to derive at least two-thirds of their revenues from "Blue branded" services.

Attorneys for the class hailed the deal as historic — potentially reshaping competition in the health insurance industry and increasing consumer choice.  But attorneys for three Blues customers told the judge their clients declined to support the deal based on a "lack of openness" in negotiations and requirement to release individual claims in order to participate in the settlement.

"I feel like I'm dealing with a college football team that has 70 players and the flag comes from the sideline and three of the players don't like the coach's call and want to see the playbook, which is all well and good," Judge Proctor said, "but I've got to make a decision here in the near future about whether to give preliminary approval."

Under the settlement, individual class members and their past costs for Blue Cross coverage, either through workplace or individual plans, will be developed from insurer records, with protection for sensitive information. Individuals will also have an opportunity to submit individual claims if they choose.

No more than 25% of the $2.67 billion will go toward attorney fees and expenses, with 93.5% of an estimated $1.9 billion in payouts expected to go to fully insured individuals or business premium-payers and the balance to self-insured individuals.