Three large health care companies who contract with the state to administer the state’s employee health care plan have filed lawsuits to prevent the Department of Finance and Administration from releasing payment information.

They claim the release would reveal confidential price information that they have negotiated with health care providers for certain medical and health procedures — information that they say is proprietary though the state pays the bills through its self-funded plan.

Releasing healthcare price information violates Sherman Act, companies claim

Laurie Lee is executive director of Benefits Administration in the state Department of Finance and Administration. Her office was preparing to release information about the state’s health plan price information under the Tennessee Public Records Act and notified the companies that administer the plan. Those companies then filed reverse public records lawsuits to oppose release of negotiated price information. The state did not oppose their requests for temporary restraining orders to prevent the release.

BlueCross BlueShield of Tennessee and Cigna filed separate actions in federal court on Friday (BlueCross Blue Shield of Tennessee, Inc. v. Lee et al, Cigna Health and Life Insurance Co. v. Lee et al), claiming that the release of state payment information would violate federal antitrust laws (the Sherman Act) and the 5th Amendment to the U.S. Constitution.

Optum, which provides an employee assistance program and behavioral health organization services for the state’s health care plan, filed a lawsuit in state court, claiming violation of the state trade secret laws, among other claims.

The suits are known in public records circles as “reverse public records” lawsuits because they are suits by third parties against a governmental entity to preemptively prevent the release of government information to public records requesters. In some cases, the third party also files suit against the requester. They can be particularly pernicious because oftentimes there is no one representing the public’s interest in protecting access to public records and open government in these actions.

State does not oppose and judges grant temporary restraining orders

The state attorney general’s office, represented by Deputy Attorney General Janet Kleinfelter, did not oppose the companies’ requests for temporary restraining orders to prevent information release. Two TROs were issued by judges on Friday, the same day the suits were filed.

District Judge Eli Richardson granted a temporary restraining order in the BCBST case. Chancellor Ellen Hobbs Lyle granted a temporary restraining order on Friday in the case filed by Optum in state court.

Rep. Martin Daniel sought payment information in state health plan

State Rep. Martin Daniel, R-Knoxville, requested de-identified information about state payments under the health care plan.

The public records request that set off the lawsuits was made by state Rep. Martin Daniel, R-Knoxville, a member of the Joint Fiscal Review Committee. Daniel requested payment information — minus any personally identifiable information — for health care services. Such information would show the prices that BCBST, Cigna and Optum agreed to for certain services, sometimes referred to as the “allowable amount” under their contracts with health care providers.

According to court filings, the state was preparing to release the information after implementing exceptions to the Tennessee Public Records Act and applying the HIPAA de-identification standards. They notified the companies that they intended to provide information to Daniel at 1 p.m. today (Monday, Dec. 16.) The notification allowed or prompted the companies to file for the temporary restraining orders.

The Nashville Post reported that Daniel made the request on behalf of the fiscal review committee after the state’s finance department sought to extend the five-year contract of BlueCross BlueShield and Cigna by an additional year without going through a formal bidding process.

While a national debate is shaping up over transparency over health care plan prices for services, Daniel told the Nashville Post that he just wants to figure out what’s going on with the taxpayer-funded state health plan for employees. “Someone is trying to hide something here, and we are going to get to the bottom of it,” he told the Post.

Companies: Knowledge of negotiated prices would promote anti-competitive behavior

The antitrust claim by BlueCross BlueShield and Cigna argues that the data is “extremely competitively sensitive, valuable, confidential, proprietary, and trade secret information.”

BCBST claims, for example, that knowledge of such information would “(ii) promote anticompetitive coordination amongst BCBST’s actual and potential competitors, (iii) facilitate anticompetitive coordination by health care vendors and providers, and (iv) otherwise destroy efficiencies in the markets for health care products and services to the detriment of third-party payors, including the State, other employer-sponsored group health plans, and consumers.”

The companies also claim that Daniel asked for the information at the behest of companies trying to interfere with their business.

Daniel told TCOG that he was seeking the information as part of his work on the fiscal review committee, and said he was concerned about potentially unreasonably high payments that could be costing taxpayers in the millions of dollars. He said he had initial information showing a wide variation of costs for the same procedure but needed more detail to analyze.

Companies claim Sherman Act trumps state open records law

BCBST in its filing said the Sherman Act and the Fifth Amendment “trump any claim of obligation under a state open records law” and cited a 6th U.S. Circuit Court of Appeals decision, United States v. Napier (2000) ruling that said “any state law that conflicts with federal law is without effect.”

BCBST also attached to its filing a 2015 letter from the Federal Trade Commission to the Minnesota House of Representatives who at the time was involved in proposed legislation that would have required public health plans in that state to disclose information related to price and cost.

In that letter, the FTC said sharing information such as fees, discounts and other pricing terms could lead to sharing information among competitors and health care providers and “facilitate their ability to coordinate or fix prices, allocate markets, or engage in other conduct that harms competition.”

In that letter, the FTC argues that providing consumers price information as proposed by the legislation would not necessarily be helpful to consumers in making informed decisions. But even if there was greater transparency, there was significant risk of anticompetitive behavior where health care providers could know whether their prices were above or below others and give them more leverage in negotiating with the health plans.

The temporary restraining order in the BCBST case was granted without a hearing, although an undocketed court hearing was held Monday morning in federal court.

Although Chancellor Lyles granted a temporary restraining order in the Optum case, a hearing was scheduled for noon Tuesday because in that case, Optum also sued Rep. Daniel in an individual capacity and it was unclear if he was notified when the TRO was being considered.

BCBST is represented by Robert Boston of Waller Lansden Dortch & Davis. (See BCBST memo in support of motion for TRO).

Cigna is represented by Erin Polly and Gibeault C. Creson of Butler Snow LLP. (See Cigna memo in support of motion for TRO).

Optum is represented by Todd Presnell, Junaid Odubeko and Edmund Sauer of Bradley Arant Boult Cummings LLP. (See Optum memo in support of motion for TRO.)

The state is represented by Janet Kleinfelter, the state’s deputy attorney general.

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