Florida Blue has won the first round of a lawsuit filed by a competitor seeking to stop the company from contracting exclusively with insurance agents.
The state’s largest insurer is now asking the court to dismiss the entire lawsuit, which was filed by Oscar last year.
Oscar began selling Affordable Care Act plans for 2019 in the Orlando market in November. But the company said it had a hard time because Florida Blue does not allow agents who sell its plans to also sell competitors’ plans.
Oscar filed suit, claiming the state's largest insurer was creating a monopoly. It then asked a judge to issue an immediate injunction order to stop the exclusivity contracts.
Federal District Court Judge Paul Byron ruled against the injunction Tuesday, saying that Oscar failed to meet the burden of proof that Florida Blue's agreements with agents hurt its competitors.
“The court is unpersuaded by Oscar’s argument that Florida Blue’s exclusivity policy is responsible for the market share obtained in Orlando in the first year of competition,” Byron wrote in his ruling.
Florida Blue issued a statement after the order was released: “We believe that we presented compelling evidence to the court, and are pleased that Judge Byron found in Florida Blue’s favor. “In fact, we have already filed a motion asking the Court to dismiss the lawsuit in its entirety.”
The two sides met in a six-hour evidentiary hearing on Jan. 23. Oscar had argued that it worked with brokers in the Orlando area to sell its plans, but a week before open enrollment began, those brokers got a letter from Florida Blue.
“You … will have 48 hours to terminate your Oscar appointment or we will terminate your Florida Blue appointment with no eligibility of reappointment with us,” the letter said, according to the judge’s order.
Florida Blue then required brokers to sign a contract that said they could be terminated for violating its exclusivity agreement, the order said.
“It was a real use of economic power to coerce the brokers not to be able to sell the products to their clients,” Joel Klein, chief strategy and policy officer for Oscar Health, told Health News Florida in November. “As a result the clients were getting only one product and didn’t even know about the alternative, which is a better cheaper product.”
Of the 19,275 brokers in the Orlando area, Florida Blue has exclusive relationships with 1,724 of them.
Nearly 200 brokers backed out of agreements to sell Oscar’s plans, Klein said at the time.
Oscar, which sells plans in eight other states, had not encountered the practice before, he said.
In its lawsuit, Oscar said it projected that it would insure 63,000 people in the Orlando market but actually enrolled about half of that, or 13 percent of the market share, compared to Florida Blue’s 70 percent.
The company compared that slow start to its entry into similar markets without exclusivity policies.
But Byron found that Oscar’s lower-than-expected performance in Orlando could be because it was offering fewer plans with fewer options than Florida Blue.
For example, Florida Blue offers 77 plans on the Obamacare marketplace, compared to Oscar’s eight, the order said. Florida Blue’s plans also have 998 in-network specialists compared to Oscar’s 492.
“Oscar’s lower-than-expected performance in Orlando may be due to the differences in available products as opposed to Florida Blue’s exclusivity policy,” Byron said in the order.
Florida Blue argued that other insurance companies that have entered the same market recruited a small number of people in the first year but grew over time.
Centene, for example, entered the market in 2014, enrolling 8,365 people in its first year. In 2018, it enrolled 371,243 people.
“These facts suggest that the opportunities for other insurers to enter into or remain in the market are not ‘significantly limited by the exclusive dealing arrangements,'" said Byron.
