Oscar Health sues Florida Blue, alleging monopoly
Oscar Health, the new player in Florida’s ACA marketplace, has filed a federal lawsuit against Florida Blue, alleging that the insurer is using improper tactics to stifle competition in the state and monopolize the individual plan market.
In an antitrust lawsuit filed on Tuesday morning in the federal court’s Middle District of Florida, Oscar alleges that Florida Blue, the largest provider of ACA plans in Florida, has launched a “targeted campaign” to prevent Oscar from entering Orlando by “coercing” brokers into “anticompetitive exclusive agreements” and preventing them from selling Oscar’s plans.
More than 190 brokers have backed out of agreements to sell Oscar’s individual plans, resulting in loss of sales for Oscar, it said.
“When we go to a new city, one of the first things we do is to introduce ourselves to local brokers,” said Bruce Gottlieb, general counsel and executive vice president of strategic partnerships at Oscar. “In every city we’ve gone to, we’ve been able to sign up most of the largest brokers in the city. … Except for Orlando. Florida Blue is preventing brokers telling clients about the lowest-priced plans in the region.”
On Tuesday morning, before the lawsuit was filed, Florida Blue officials said, “from what we know of the New York company’s grievances, there is no merit to them at all.”
“When you see that the Florida Department of Financial Services website shows that the New York company has 1,600 appointed agents in Florida, you can’t help but wonder why that is
not enough and they have chosen to resort to a Plan C, for Courts, now that Open Enrollment is underway,” wrote Christie Hyde DeNave, a spokeswoman for Florida Blue, in an email.
Oscar alleges that in the weeks leading to the start of open enrollment on Nov. 1, Florida Blue began contacting brokers who sold its plan and threatened to terminate their contracts if they signed on with Oscar.
Florida Blue’s policy is that brokers who sign up to sell Florida Blue plans in the marketplace can’t sell any other insurance plans. The company meaning also doesn’t contract with outof-state agents to sell individual plans.
“They’re doing it because they can get away with it. It’s a classic exercise of monopoly power,” said Joel Klein, chief policy and strategy officer at Oscar, who served as the United States Assistant Attorney General in charge of the Antitrust Division in the late 1990s.
DeNave of Florida Blue said, “Exclusive arrangements in the insurance business have been used for many years by such insurance companies as State Farm, Nationwide, Farmers, Florida Blue and others.”
Oscar is among the growing number of startups that are aiming to disrupt the traditional model of health insurance in the United States. The company uses technology and personalized services, including free, unlimited telemedicine, to help members access care.
Since 2014, the company has entered the ACA marketplace in 14 cities in nine states. It entered Florida for the first time this year, selling plans in Orange, Osceola, Seminole and Lake counties and has plans to sell its products in Miami, Jacksonville and Tampa as early as next fall. In Central Florida, Oscar is offering the lowest-priced bronze plans in the marketplace this year.
According to Oscar, brokers play a crucial role in driving plan sales in Florida. More than 70 percent of its sales in the Orlando area already come through brokers, compared with 40 percent in other states.
In its lawsuit, Oscar says that Florida Blue holds about 75 percent share of individual ACA plans in Florida and “a significantly higher share in portions of the state, including the Orlando metro area.” Because of the company’s large presence in Florida, many brokers can’t afford to refuse Florida Blue, Oscar alleges. And because of limiting outof-state brokers, Florida Blue is limiting the overall number of brokers competing to sell individual plans in Florida, Oscar alleges.
Oscar says it’s been able to sign contracts with about a quarter of brokers in the Orlando metro area, which falls short of its 60 percent contract rate in other states.
According to the lawsuit, an area manager for Florida Blue emailed brokers on Oct. 24, saying, “You and the other agents will have 48 hours to terminate your Oscar appointment or we will terminate your Florida Blue appointment with no eligibility of reappointment with us.”
In another instance, Florida Blue terminated a broker’s contract because the broker participated in a radio advertisement promoting Oscar, the company alleges.
The lawsuit quotes several Florida brokers backing out of working with Oscar, including one saying, “Unfortunately I need to rescind my request, as Florida Blue has informed me that they will cancel my contract if they see new appointments for any products in any area of Florida. This would be highly detrimental as they would be keeping most of my book of business.”
Oscar is seeking a jury trial and an unspecified amount in damages and other costs.
“What we’re really here to do is to make sure to get [all the] offerings in front of the consumers,” said Gottlieb.