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Court tosses Michigan Blue Cross Blue Shield price-fixing settlement

(Reuters) – A U.S. appeals court has rejected a $30 million settlement in a class action lawsuit accusing health insurer Blue Cross Blue Shield of Michigan of price-fixing, saying patients, employers and insurers did not get a fair chance to review the deal.

The Ohio-based 6th U.S. Circuit Court of Appeals said on Tuesday that much of the court record was improperly sealed even though “the public has a keen and legitimate interest” in the case.

“Class members who sought to object to the proposed settlement thus had no ability to examine the bases of what they were objecting to,” Circuit Judge Raymond Kethledge wrote for the court, ordering the records unsealed.

The class could include 3 million to 7 million members, according to the opinion.

The case involves “most favored nation” agreements in which Blue Cross raised the rates it would pay hospitals if they agreed not to charge any other insurers lower rates.

In 2010, the U.S. Department of Justice sued the company over the practice, saying it violated federal antitrust laws. Patients, employers and other insurers, saying Blue Cross forced them to pay more for hospital services, then filed a series of class actions that were eventually consolidated in federal court in Detroit.

Michigan passed a law banning most favored nation clauses in March 2013, and the government dropped its lawsuit, while the private class action continued.

In June 2014, Blue Cross agreed to pay $30 million, about half of which was set aside for legal fees and expenses.

An expert for the plaintiffs had earlier filed a report estimating the most favored nation deals caused damages of $118 million.

Several potential class members objected to the settlement, saying they could not decide whether it was fair because some documents, including the expert’s report, were filed under seal.

U.S. District Judge Denise Hood in Detroit nonetheless approved the settlement in March 2015.

Kethledge wrote on Tuesday that there was no basis for sealing so much of the court record.

Blue Cross is “reviewing the court’s decision, will abide by the orders, and are hopeful we can bring this to resolution once again,” spokeswoman Helen Stojic said in an email.

A lawyer for the plaintiffs could not immediately be reached for comment.

The case is Shane Group Inc et al v. Blue Cross Blue Shield of Michigan, U.S. Court of Appeals, 6th Circuit, No. 15-1544. (Reporting by Brendan Pierson in New York; Editing by Alexia Garamfalvi and Lisa Von Ahn)

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