WASHINGTON (AP) -- The Justice Department is moving to dismiss its lawsuit against Blue Cross Blue Shield of Michigan now that a new state law prohibits the anti-competitive practice at issue in the case.
In 2010, the Justice Department and Michigan sued to stop Michigan Blue Cross Blue Shield from entering business arrangements with health care providers which, according to the lawsuit, essentially guaranteed that no competing health care plan could obtain a better rate. Michigan and Blue Cross joined the motion to dismiss.
According to the lawsuit in federal court in Detroit, contract provisions called "most favored nation clauses" raised hospital prices charged to other insurers, prevented insurers from entering local markets and discouraged discounts.
A week ago, the state enacted a law barring health insurers from using such contract clauses.