As the deadline looms for hospitals and healthcare providers to decide whether to accept or reject a massive $2.8 billion antitrust settlement with Blue Cross Blue Shield, a fierce legal battle is unfolding. Competing law firms are scrambling for control over potential clients, with millions of dollars in legal fees at stake.
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The dispute pits Whatley Kallas, the firm that negotiated the settlement in Alabama federal court, against rival firms Zuckerman Spaeder and Polsinelli, which are encouraging healthcare providers to opt out and pursue independent lawsuits against Blue Cross.
The Core of the Dispute: Ethics, Strategy, and Financial Stakes
Whatley Kallas Fights to Protect the Settlement
Whatley Kallas has taken an aggressive stance, asking Chief U.S. District Judge R. David Proctor to bar Zuckerman Spaeder and Polsinelli from representing hospitals opting out of the settlement. The firm argues that:
- Conflicts of interest exist due to the firms’ prior work on related Blue Cross litigation.
- Hospitals and providers must make fully informed decisions, free from improper legal influence.
- The firms may be using confidential information from a prior $2.7 billion settlement with Blue Cross in 2020.
Zuckerman and Polsinelli Push Back
Zuckerman Spaeder strongly denies any conflict of interest, warning that disqualifying their firm could set a dangerous precedent, potentially blocking dozens of law firms from representing hospitals in future cases.
Meanwhile, Polsinelli has yet to publicly comment but faces similar allegations of conflicts due to past legal work with Blue Cross.
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A History of High-Value Settlements and Legal Fees
This latest settlement is part of a long-running legal battle over Blue Cross Blue Shield’s alleged anti-competitive practices.
- In 2020, Blue Cross settled similar claims from insurance subscribers for $2.7 billion.
- The U.S. Supreme Court upheld that settlement last year.
- Law firms in the subscriber case earned a staggering $667 million in legal fees—raising the stakes for firms now eyeing opt-out cases.
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Opt-Out Deadline and the Risks Ahead
Hospitals and healthcare providers must decide by March 4 whether to:
- Accept the $2.8 billion class action settlement and receive a guaranteed payout.
- Opt out and pursue their own lawsuits against Blue Cross—potentially securing larger damages but at greater risk.
A critical unknown factor is whether too many opt-outs could jeopardize the settlement. While the threshold is not publicly disclosed, a high number of defections could theoretically allow Blue Cross to withdraw from the agreement.
Boies Schiller Joins the Fray
Adding another twist, powerhouse law firm Boies Schiller Flexner has stepped in, defending its right to continue representing a Michigan anesthesia practice suing Blue Cross. The firm argues there is no ethical conflict despite its prior work in the subscriber settlement.
Interestingly, Whatley Kallas has not challenged Boies Schiller, focusing its fight instead on Zuckerman Spaeder and Polsinelli.
The Bigger Picture: Legal and Industry Implications
This legal battle extends beyond Blue Cross, reflecting the broader war over class-action settlements and the massive fees tied to them.
- The outcome could reshape legal strategies in major antitrust settlements.
- The decision by Judge Proctor could set a precedent on attorney disqualification in similar high-profile cases.
For hospitals and healthcare providers, the choice is critical: take the sure payout or gamble on a bigger win in court—while law firms fight for their slice of a billion-dollar pie.
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