UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

HEALTH ALLIANCE PLAN OF

MICHIGAN, HAP PREFERRED, INC., and

ALLIANCE HEALTH AND LIFE INS. CO.,

Case No. 14-13788

Plaintiffs,

HON. DENISE PAGE HOOD

v.

BLUE CROSS BLUE SHIELD OF MICHIGAN

MUTUAL INSURANCE COMPANY,

Defendant.

________________________________________/

ORDER GRANTING IN PART AND DENYING IN PART

MOTION TO DISMISS

AND 

SETTING STATUS CONFERENCE

I. BACKGROUND

On October 1, 2014, Plaintiffs Health Alliance Plan of Michigan, HAP

Preferred, Incorporated, and Alliance Health and Life Insurance Company

(collectively, “HAP”) filed a Complaint against Defendant Blue Cross Blue Shield of

Michigan Mutual Insurance Company (“Blue Cross”), which was amended on

November 21, 2014 alleging five counts: Unlawful Agreement in violation of

Sherman Act § 1 (Count I); violation of M.C.L. § 445.772, Michigan Antitrust Reform

Act (“MARA”) (Count II); Monopolization under Section 2 of the Sherman Act, 15

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U.S.C. § 2 (Count III); Monopolization under M.C.L. § 445.773 (Count IV); and

Tortious Interference with Prospective Advantage (Count V). (Am. Comp., Doc. No.

24) 

HAP alleges that Blue Cross, the dominant provider of health insurance in

Michigan for decades, implemented a scheme to protect its dominant position and

thwart competition from HAP and other competitors. (Am. Comp., ¶ 1) Blue Cross

entered into “MFN-plus” contracts with hospitals under which hospitals were required

to increase the rates they charged to Blue Cross’ competitors, preventing Blue Cross’

competitors from purchasing hospital services at prices that were more competitive

with Blue Cross. (Am. Comp., ¶ 1) Some of Blue Cross’ exclusionary MFN-plus

contracts required hospitals to charge HAP (and others) substantially more than Blue

Cross–as much as 39 percent more, which reduced competition in the sale of health

insurance in the relevant market by inhibiting hospitals from negotiating competitive

contracts with Blue Cross’ competitors. (Am. Comp., ¶ 3) Blue Cross referred again

and again to its better discounts from providers in its sales communications to

customers, to agents, and to consultants. (Am. Comp., ¶ 4) 

In 2013, the State of Michigan prohibited the use of most favored nations

clauses as possible violations of the Michigan Insurance Code, but HAP alleges that

Blue Cross’ use of MFN-plus clauses in the 2007-2012 period caused substantial

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damages to HAP. (Am. Comp., ¶ 5) Even though the MFN-plus clauses no longer

exist, the damage to HAP and the harm to competition continue. (Am. Comp., ¶ 5)

HAP has suffered damages since at least 2008. (Am. Comp., ¶ 66) 

This matter is before the Court on Blue Cross’ Motion to Dismiss. Response

and Reply briefs have been filed and a hearing held on the matter. Supplemental

briefs were filed.

II. ANALYSIS

A. Standard of Review

Rule 12(b)(6) of the Rules of Civil Procedure provides for a motion to dismiss

based on failure to state a claim upon which relief can be granted. Fed. R. Civ. P.

12(b)(6). In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the Supreme Court

explained that “a plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[ment]

to relief’ requires more than labels and conclusions, and a formulaic recitation of the

elements of a cause of action will not do[.] Factual allegations must be enough to

raise a right to relief above the speculative level....” Id. at 555 (internal citations

omitted). Although not outright overruling the “notice pleading” requirement under

Rule 8(a)(2) entirely, Twombly concluded that the “no set of facts” standard “is best

forgotten as an incomplete negative gloss on an accepted pleading standard.” Id. at

563. To survive a motion to dismiss, a complaint must contain sufficient factual

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matter, accepted as true, to “state a claim to relief that is plausible on its face.” Id. at

570. A claim has facial plausibility when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged. Id. at 556. Such allegations are not to be discounted because they

are “unrealistic or nonsensical,” but rather because they do nothing more than state a

legal conclusion–even if that conclusion is cast in the form of a factual allegation. 

Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009). To survive a motion to dismiss, the nonconclusory “factual content” and the reasonable inferences from that content, must be

“plausibly suggestive” of a claim entitling a plaintiff to relief. Id. Where the wellpleaded facts do not permit the court to infer more than the mere possibility of

misconduct, the complaint has alleged, but it has not shown, that the pleader is entitled

to relief. Fed. R. Civ. P. 8(a)(2). The court primarily considers the allegations in the

complaint, although matters of public record, orders, items appearing in the record of

the case, and exhibits attached to the complaint may also be taken into account. Amini

v. Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001).

B. Statute of Limitations

Blue Cross’ first argument is that HAP’s claims for monopolization, tortious

interference, and lost profits are time barred and that those claims are not subject to

tolling based on the class action case, The Shane Group v. Blue Cross Blue Shield of

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Michigan (“Shane”) (Case No. 10-14360 (E.D. Mich.)). Blue Cross does not

challenge in this motion that HAP’s claims for hospital overcharges under Counts I

and II were tolled by Shane. HAP responds that its monopolization, tortious

interference, and lost profits claims were tolled by Shane and that its Complaint was

timely filed once it opted out of the class.

The Supreme Court has held that “the commencement of a class action

suspends the applicable statute of limitations as to all asserted members of the class

who would have been parties had the suit been permitted to continue as a class

action.” American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 554 (1974). In the

event that class certification is denied, individual actions by the putative class may file

individual actions within the time that remains on the limitations period. Crown, Cork

& Seal Co. v. Parker, 462 U.S. 345, 346-47 (1983). Without the tolling of the statute

of limitations, putative class members would have an incentive to file unnecessary

individual lawsuits to protect their rights in the event of a denial of class certification. 

Id. at 349-51. The tolling issue found in American Pipe “should not be read ... as

leaving a plaintiff free to raise different or peripheral claims following denial of class

status.” American Pipe, 462 U.S. at 354. “[T]he statute of limitations for putative

class members of the original class is tolled only for substantive claims that were

raised, or could have been raised, in the initial complaint.” Weston v. AmeriBank, 265

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F.3d 366, 368 (6th Cir. 2001). 

The anti-trust claims of monopolization and lost profit claims are governed by

a four-year statute of limitations. 15 U.S.C. § 15b; M.C.L. § 445.781(2). The statute

of limitations begins to run on antitrust claims when the plaintiff is allegedly injured. 

See Zenith Radio Corp. v. Hazeltime, Res., Inc., 401 U.S. 321, 338 (1971). The

tortious interference claim is governed by Michigan’s three-year statute of limitations. 

See M.C.L. § 500.5805(10). The limitation period in tort actions begins to run at the

time all elements, including damages, can be alleged in a proper complaint. M.C.L.

§ 600.5827.

Blue Cross argues that HAP’s monopolization claims were not tolled by Shane. 

In Shane, a monopolization claim was initially alleged in the October 29, 2010

Complaint. The monopolization claim was abandoned on June 12, 2012 when an

Amended Complaint was filed without the monopolization claim. (Case No. 10-

14360, Doc. No. 72) Blue Cross’ calculation is that from January 1, 2008, when

HAP’s monopolization claims accrued, until October 29, 2010, when the initial Shane

Complaint was filed, 34 months had passed. From the June 12, 2012 Amended

Complaint in Shane and the time HAP filed its Complaint on October 1, 2014, 27

months had passed, for a total of 61 months, more than five years. The time elapsed

when the monopolization claims were not tolled is beyond the four-year

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monopolization claim statute of limitations.

Blue Cross argues that the lost profits in the sale of commercial health insurance

are also time-barred since the Shane Complaint did not allege lost profits. The Shane

claims were for alleged overcharges by hospitals. Blue Cross asserts that the Named

Plaintiffs in Shane were not competitors of Blue Cross and would not have sought lost

profits. Blue Cross argues that the factual and legal nexus of the Shane Complaint

would not have given rise to HAP’s lost profits in the sale of commercial health

insurance claim.

As to the tortious interference claim, Blue Cross additionally argues that the

Shane Complaint did not allege a tortious interference claim. The Named Plaintiffs

in the Shane Complaint did not compete with Blue Cross and could not plausibly

allege harm to a business relationship. Blue Cross claims the factual and legal nexus

of the Shane Complaint would not have given rise to HAP’s tortious interference of

a business relationship claim.

HAP responds that like the Shane claims, HAP’s injury, in part, resulted from

being a purchaser of hospital services. HAP claims its Complaint’s additional theories

of lost profits, monopolization and tortious interference are based on allegations

shared with the Shane Group. It cites Lee v. Dell Products, L.P., 236 F.R.D. 358, 362

(M.D. Tenn. 2006) and Abner v. Saginaw County, 496 F. Supp. 2d 810, 822 (E.D.

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Mich. 2007) for the proposition that the claim is tolled until the entire class action is

abandoned, not when a class plaintiff abandons a specific claim. HAP argues that

even though the Named Plaintiffs in Shane amended the initial Complaint to remove

the monopolization claim, the claim could have been raised at a later point in time.

Blue Cross replies HAP’s lost profits claims are distinct from the Shane

overcharge claims for tolling purposes because HAP will need to rely on different

facts. Blue Cross argues that HAP’s business plans, sales and marketing activities,

provider contracting and competitive strategy will be central to HAP’s case, whereas

in Shane, the claims for overcharges by hospitals do not involve these facts. For the

same reason, Blue Cross argues that HAP’s tortious interference claim requires more

facts than the Shane overcharge claims. Blue Cross asserts that HAP’s injuries as

alleged in its Complaint occurred when a hospital raised its rates because of an MFN

and that its injury began in 2008. (Am. Comp., ¶¶ 13, 40-43, 66) Any lost profit

claims are time-barred according to Blue Cross. Because HAP did not allege in its

Complaint that there were new MFN rates from those occurring before 2008 which

were raised between October 2010 to October 2014 in its Complaint, Blue Cross

argues that HAP’s lost profit claims are time-barred.

It is noted that HAP does not dispute Blue Cross’ calculations of the applicable

statute of limitations. The issue then is whether the Shane action tolled HAP’s claims,

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other than its overcharge claims in Counts I and II. In Weston, the Sixth Circuit noted

that the state law claims were separate and distinct from the federal claims and since

the district court in the class action claim had dismissed the federal claim, the class

action plaintiff could not have asserted the federal claim and neither could the

individual plaintiff in Weston since the limitations period had run. Weston, 265 F.3d

at 368-69. The cases cited by HAP, Lee and Abner, do not stand for the proposition

that the statute of limitations does not begin to run until the entire case is dismissed. 

Tolling ends when the named-plaintiffs cease or are unable to pursue the claims.

The Shane Complaint alleges that “Plaintiffs seek to represent a Class of all

individuals and entities (the “Class”) that directly paid a hospital in Michigan, that had

an MFN Agreement with BCBSM, at a rate contracted for by BCBSM or one of its

competitors from January 1, 2007 to the present.” (Case No. 10-14360, Doc. No. 72,

¶ 10) Nothing in the Shane Complaint alleges that the class included entities which

were injured because of competition with Blue Cross. HAP’s claims regarding

monopolization related to competition, tortious interference or lost profits are not

alleged in the Shane Complaint. These are separate and distinct claims from Shane’s

overcharge claim. The statute of limitations as to these claims was not tolled by

Shane. HAP’s claims of monopolization related to competition, tortious interference

or lost profits must be dismissed.

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C. One-County Market

Blue Cross claims that HAP’s one-county market allegation as to geographic

market is implausible and the anti-trust claims must be dismissed. HAP responds that

Blue Cross’ argument is too narrow and that market definition is a highly fact-based

analysis that requires discovery.

The plaintiff bears the burden of defining “the relevant market within which the

alleged anticompetitive effects” of the defendant’s actions occur. Kentucky Speedway,

LLC v. National Ass’n of Stock Car Auto Racing, Inc., 588 F.3d 908, 916 (6th Cir.

2009). The relevant geographic market is “the area of effective competition.” Tampa

Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961). This means “the market

area in which the seller operates, and to which the purchaser can practicably turn for

supplies.” Id. Market definition is a highly fact-based inquiry which generally

requires discovery. Foundation For Interior Design Educ. Research v. Savannah

Coll. of Art & Design, 244 F.3d 521, 531 (6th Cir. 2001). Courts have rejected overly

narrow geographic markets that ignore the “commercial realities” facing buyers and

sellers or that unduly limit the “relevant area of effective competition.” Nilavar v.

Mercy Health Sys., 244 F. App’x 690, 698 (6th Cir. 2007). The Sixth Circuit has held

that “when the evidence indicates that a large proportion of consumers within the

proposed area in fact turn to alternative sources of supply outside the proposed area,

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the market boundaries posited by the plaintiff must be rejected.” Re/Max Int’l, Inc.

v. Realty One, Inc., 173 F.3d 995, 1017 (6th Cir. 1999).

Because no discovery has been taken in this case, HAP’s limitation of the

relevant geographic market in this case to one county may support its claim that no

such direct adverse conflict exists since market definition is a highly fact-based

inquiry. The issue of relevant geographic market was highly contested in the Shane

case. HAP’s definition of the relevant geographic market in its Amended Complaint

does not necessarily control in this case, because the definition is dependent on the

facts revealed during discovery. The Court denies without prejudice pending

discovery Blue Cross’ Motion to Dismiss HAP’s claim based on a narrow geographic

one-county market.

D. Weyerhaeuser Co. v. Ross-Simmons Supreme Court Case

Blue Cross moves to dismiss all of HAP’s anti-trust claims because the

Complaint does not meet the two-prong test set forth by the United States Supreme

Court in Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., 549 U.S. 312

(2007). Specifically, Blue Cross argues that HAP must allege facts that Blue Cross

recouped from its short-term losses which is required under the second prong of the

test. HAP responds that Weyerhaeuser is not applicable since this is not a “predatory

bidding” case as alleged in Weyerhaeuser.

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The Supreme Court held in Weyerhaeuser that the two-prong test it applied to

claims of predatory “pricing” under § 2 of the Sherman Act in Brooke Group Ltd. v.

Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993), also applies to claims of

predatory “bidding” under § 2 of the Sherman Act. Weyerhaeuser, 549 U.S. at 314. 

The first prong of the test is that a plaintiff must prove that the alleged predatory

bidding must have caused the cost of the relevant output to rise above the revenues

generated in the sale of those outputs. Id. at 325. The second prong is that a plaintiff

must prove that the defendant has a dangerous probability of recouping the losses

incurred in bidding up input prices through the exercise of monopsony power. Id.

Absent proof of likely recoupment, a strategy of predatory bidding makes no

economic sense because it would involve short-term losses with no likelihood of

offsetting long-term gains. Id. A recent Sixth Circuit case held that both anti-trust

claims alleged in § 1 and § 2 of the Sherman Act require “both below-cost pricing and

the likelihood of recoupment to impact, if not fully determine, the plausibility of a

predatory pricing conspiracy.” Superior Prod. P’Ship v. Gordon Auto Body Parts

Co., 784 F.3d 311, 320 (6th Cir. 2015); see also, Energy Conversion Devices

Liquidation Trust v. Trinal Solar Ltd., 833 F.3d 680, 685 (6th Cir. 2016). 

This Court in the case brought by the Department of Justice, noted that

predatory bidding “is not the claim in this case ...” United States v. Blue Cross, 809

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F. Supp. 2d 665, 675 (E.D. Mich. 2011). HAP’s claim is that the MFN-plus clauses

with the hospitals expressly require that higher prices be charged to Blue Cross’

competitors. This is different from the “predatory bidder” claim where the dominant

bidder outbids the competition in order to drive the competition away knowing that

the dominant bidder will suffer short term losses, but intends to recoup the losses.

The way the claim in this case is phrased by HAP, like the DOJ case, is not the

same as a “predatory bidding” case because “the competitive problem here does not

arise from Blue Cross’ own bid – it arises from this additional requirement regarding

the prices to be charged competitors.” (Resp. Br., Doc. No. 48, Pg ID 968) HAP

notes Blue Cross correctly stated that HAP did not allege that Blue Cross incurred

short term losses. The Weyerhaeuser and Sixth Circuit Superior case noted above, are

inapplicable since HAP’s claim, similar to that of the DOJ case, is that “Blue Cross

was able to impose higher costs on its rivals, and harm competition, without

undergoing any short term losses, and not simply by virtue of its own competitive

bidding.” Id. at 969. As alleged by HAP, Blue Cross did not have to “recoup”

anything in order to achieve economic gains. The Court finds that based on its

previous ruling in the DOJ case, the allegations by HAP do not constitute a 

“predatory bidding” case which requires an allegation in the Complaint for

recoupment. Weyerhaeuser is inapplicable to HAP’s anti-trust claims.

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III. CONCLUSION

For the reasons set forth above,

IT IS ORDERED that Defendant Blue Cross Blue Shield of Michigan Mutual

Insurance Company’s Motion to Dismiss (Doc. No. 43) is GRANTED IN PART and

DENIED IN PART as more fully set forth above. The claims for monopolization,

tortious interference of a business relationship, and lost profits only are DISMISSED.

IT IS FURTHER ORDERED that a Status Conference to set dates is scheduled

for May 25, 2017, 2:30 p.m. Any updated Joint Report and Discovery Plan must be

submitted by May 19, 2017.

S/DENISE PAGE HOOD 

DENISE PAGE HOOD

Chief Judge

DATED: March 31, 2017

CERTIFICATE OF SERVICE

I certify that a copy of this document was served on March 31, 2017, by electronic

or ordinary mail to all parties in interest.

S/La Shawn Saulsberry 

Case Manager

(313) 234-5165

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