Eleventh Circuit Holds ERISA Does Not Impede Multi-District Antitrust Class Settlement Between Blue Cross and Member Plans

In re Blue Cross Blue Shield Antitrust Litig. MDL 2406, No. 22-13051, __F.4th__, 2023 WL 7012247 (11th Cir. Oct. 25, 2023), is a case involving multi-district litigation (MDL) of consolidated actions brought by health insurance subscribers against Blue Cross under the Sherman Antitrust Act as well as antitrust claims brought by healthcare providers against Blue Cross. There were several objections to the settlement of this MDL, one of which raised the argument that the plan of distribution failed to address the employers’ disbursement obligations under ERISA.

As part of the settlement, the parties negotiated a common fund of $2.67 billion to pay damages, costs of administration, attorneys’ fees, and costs. An experienced mediator assisted in setting up an allocation of the settlement fund between the fully insured claimants and the self-funded claimants based on several factors. As the court explained:

“For fully insured claimants, the actual premiums paid by individual members and insured groups will be used to determine the pro-rata share of the fully insured claimants’ net settlement fund for each member and group. Individuals collect all their pro-rata share. The damages for fully insured groups, which include employers and employees, require further calculations. For fully insured groups in which the employer makes a claim and no employees do so, the employer will receive that group’s entire pro-rata distribution. If any employee makes a claim, the group’s pro-rata share must be allocated between the employer and any claiming employees. The settlement agreement does not relieve employers of any ERISA obligations, including any fiduciary obligation to distribute claims proceeds to their employees.”

The DOL filed a statement of interest in the proposed settlement, expressing concern that the settlement agreement might affect employers’ and plan fiduciaries’ obligations under ERISA and did not account for ERISA at all. The district court rejected this concern, overruled all objections, and approved the settlement. The Eleventh Circuit agreed with the district court. The settlement agreement did not change any ERISA rights or remedies and the order approving the settlement states that “all ERISA duties still apply” and that “all ERISA fiduciaries must comply with those duties.”