Ethics ruling bars law firm from taking hospital clients in Blue Cross case
Feb 27 (Reuters) - A judge in Alabama has barred a large U.S. law firm from representing plaintiffs in major litigation accusing Blue Cross Blue Shield of underpaying hospitals, physicians and other medical providers for years.
The decision, opens new tab on Wednesday was a rebuke for 1,100-lawyer law firm Polsinelli, which is known for representing healthcare companies and which had been advising clients on potentially opting out of a $2.8 billion class-action settlement in the Blue Cross case in order to sue the insurer on their own.
Chief U.S. District Judge R. David Proctor in Birmingham said in his ruling that attorneys who now work at Polsinelli had earlier represented Blue Cross Blue Shield of Alabama in the case, creating an ethical conflict.
'Lawyers who until recently did substantial work for (Blue Cross) in this litigation are now at a firm that is taking materially adverse positions against it — in that same litigation,' Proctor wrote in his order.
Polsinelli and lawyers for the firm did not immediately respond to requests for comment. The plaintiffs declined to comment.
Blue Cross had supported the plaintiffs' bid to disqualify Kansas City, Missouri-based Polsinelli from the case. Blue Cross declined to comment.
In the underlying litigation, hospitals and other health providers claimed Blue Cross and some of its affiliates violated antitrust law by dividing the country into exclusive areas where they agreed not to compete with each other.
The providers' class action, filed in 2012, said the alleged conspiracy increased the cost of insurance and drove down reimbursements. Blue Cross Blue Shield denied wrongdoing but agreed in October to settle with the plaintiffs for $2.8 billion.
Alabama-founded law firm Maynard Nexsen had been one of the firms defending a Blue Cross affiliate in the case, Blue Cross Blue Shield of Alabama, billing thousands of hours. In 2024, some of the Maynard Nexsen attorneys left the firm to join Polsinelli, the decision said.
Lawyers for the plaintiffs who negotiated the settlement complained earlier this month that a different Polsinelli lawyer was talking with clients about opting out of the deal and potentially filing their own lawsuits, violating ethics rules against conflicts of interest.
Attorneys for Polsinelli denied that Polsinelli's hiring of a handful of lawyers from Maynard Nexsen created a conflict. Polsinelli said clients that are weighing whether to accept the settlement did business with non-Alabama Blue Cross companies.
'The right to counsel of one's choosing is a bedrock principle of American jurisprudence,' Polsinelli told Proctor, opens new tab.
Proctor has preliminarily approved the $2.8 billion settlement in the case. Hospitals and other providers face a March deadline to decide whether to participate in the settlement.
The case is In re: Blue Cross Blue Shield Antitrust Litigation, U.S. District Court for the Northern District of Alabama, No. 2:13-cv-20000-RDP.
Plaintiffs in Blue Cross antitrust settlement drop bid to disqualify law firm
Law firms wrangle over fees from $2.7 bln Blue Cross Blue Shield settlement
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