According to the U.S. Department of Justice (DOJ), beginning no later than 2007, Blue Cross Blue Shield of Michigan (BCBS-MI) used its “extraordinary” market power to reach “most favored nation” agreements with Michigan hospitals. Under these agreements, BCBS-MI agreed to raise its own reimbursement rates for hospital services as long as the hospital agreed to charge other insurers rates at least as high as the hospital charged BCBS-MI. Several putative class actions were filed, adopting many of the government’s allegations. Once consolidated, these cases sought more than $40 billion in damages, plus fees and expenses. In March 2013, Michigan banned the use of agreements like those BCBS-MI negotiated. With the relief it sought, the DOJ voluntarily dismissed its case. Plaintiffs’ expert report estimated that the “most favored nation” agreements caused damages of $118 million. In June 2014, BCBS-MI agreed to settle the case for $30 million – leaving $14.6 million for class members after deducting attorney’s fees and other expenses.
The U.S. Court of Appeals for the Sixth Circuit vacated the U.S. District Court for the Eastern District of Michigan’s approval of the settlement primarily because of the extensive sealing of filings the appellate court said should have been available to the public. The sealed documents included class certification briefing and the expert report that purported to detail the scope of antitrust damage. In a strongly worded opinion, the appellate court pointed out that despite the “stark difference” between the standard for Federal Rule of Civil Procedure 26 protective orders applicable to documents exchanged during discovery and the standard for sealing documents filed with courts, parties routinely conflate the two. “One can only conclude that everyone in the district court was mistaken as to which standard to apply,” the court said. “But one point is unmistakable: on the showings set forth in this record, every document that was sealed in the district court was sealed improperly.” Unlike information exchanged during discovery, the “public has a strong interest in obtaining the information contained in the court record.”
The appellate court went on to explain that in an antitrust case involving insurance rates Michigan residents paid, the public has an interest in understanding the conduct that gave rise to the case. Thus, documents should only be sealed if “a party can show a compelling reason” to do so, and the district court “set[s] forth specific findings and conclusions which justify nondisclosure to the public.” The court explained that even if neither party objects, a court that seals something must explain precisely exactly why it did so.
The Sixth Circuit sent the case back to the district court ordering the district court to “begin the Rule 23(e) process anew.”