On February 23, the 6th Circuit denied Blue Cross of Michigan’s attempt to gain immediate appeal review of an adverse ruling from the District Court in United States v. Blue Cross of Michigan, the DOJ’s high-profile antitrust challenge to Blue Cross’s use of “most favored nation” clauses in its provider contracts. The court’s unwillingness to reconsider the District Court’s denial of Blue Cross’s “state action doctrine” defense at this time – a defense that would have potentially ended the case if the court ruled in favor of Blue Cross – virtually ensures that the issue will not be revisited prior to the completion of discovery and trial. Accordingly, the court’s ruling constitutes a significant lost opportunity for Blue Cross. More importantly (at least for everyone other than Blue Cross), the court’s decision not to hear the matter constitutes a lost opportunity for further guidance on the most favored nation clause issue generally, at a time where such guidance would have been incredibly beneficial, given the DOJ’s acknowledgement that it is currently investigating the use of such clauses by other health insurers as well. In short, had the court ruled that Blue Cross’s conduct was protected state action, such guidance could, conceivably, have led to the termination of the investigations, or at a minimum provided some additional clarification on the issue. As such, the 6th Circuit’s decision not to hear the matter is quite unfortunate, but, as the 6th Circuit’s decision makes clear, jurisdictional principles precluded them from hearing the appeal at this time.
In reaching its decision to dismiss Blue Cross’s appeal, the 6th Circuit noted that it was faced with an interlocutory appeal, which the court typically has no jurisdiction to decide. The court further noted that the “collateral order doctrine” – on which Blue Cross had pinned its hopes - permits only a “small class” of prejudgment orders to be immediately appealed. Citing the Supreme Court’s 2006 decision in Will v. Hallock, the Court reaffirmed that, for jurisdiction to exist under the collateral order doctrine, the order a party seeks to appeal must (1) conclusively determine the disputed question; (2) resolve an “important issue completely separate from the merits” of the case; and (3) be “effectively unreviewable on appeal from a final judgment.”
Blue Cross’s appeal, the 6th Circuit held, did not meet this standard. As the court noted, its 1986 decision in Huron Valley Hospital v. City of Pontiac held that a district court’s denial of a state action doctrine defense was not immediately appealable under the collateral order doctrine, and “unless an inconsistent decision of the United States Supreme Court requires modification of the decision or this Court sitting en banc overrules the prior decision,” the panel remained bound by Huron Valley. Accordingly, Blue Cross’s contention that subsequent case law in other circuits that have decided the issue differently warranted a different result was simply irrelevant.
Whether Blue Cross will seek en banc review is, at this point, unclear. What is not unclear, however, is that the case appears to be headed towards a protracted, and costly (both in time and money), discovery battle. In addition, as noted above, an opportunity for the courts to bring some clarity to this unclear, but extremely important, issue has been lost. Stay tuned.