Oscar Ins. Co. Of Florida v. Blue Cross

360 F.Supp.3d 1278

OSCAR INSURANCE COMPANY OF FLORIDA, Plaintiff,

v.BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC., Florida Health Care Plan Inc. and Health Options Inc., Defendants.

Case No: 6:18-cv-1944-Orl-40TBS

United States District Court, M.D. Florida, Orlando Division.

Signed February 5, 2019

Matthew Lisagar, Michael H. Menitove, Paul M. Eckles, Skadden, Arps, Slate, Meagher & Flom, LLP, New York, NY, Steven C. Sunshine, Tara L. Reinhart, Skadden, Arps, Slate, Meagher & Flom, LLP, Washington, DC, Sarah Anne Long, Francis Morton McDonald, Jr., McDonald Toole Wiggins, PA, Orlando, FL, for Plaintiff.

Christine A. Varney, Evan R. Chesler, Karin A. DeMasi, Lauren Roberta Kennedy, Pro Hac Vice, Rebecca J. Schindel, Pro Hac Vice, Cravath, Swaine & Moore, LLP, New York, NY, Jerome W. Hoffman, Holland & Knight, LLP, Tallahassee, FL, Timothy J. Conner, Holland & Knight, LLP, Jacksonville, FL, for Defendants.

ORDER

PAUL G. BYRON, UNITED STATES DISTRICT JUDGE

This cause is before the Court with oral argument on the following:

1. Plaintiff's Motion for Preliminary Injunction (Doc. 11 (the "Motion ") ) and accompanying declarations, filed November 19, 2018;

2. Plaintiff's Supplemental Declaration of Nicholas Gossen (Doc. 56), filed December 21, 2018;

3. Plaintiff's Supplemental Declaration of Dr. Mark A. Israel, Ph.D. (Doc. 57), filed December 21, 2018; and

4. Defendants' Response in Opposition to Plaintiff's Motion for Preliminary Injunction (Doc. 62 (the "Response ") ) and accompanying declarations, filed January 18, 2019.

A six-hour evidentiary hearing, with opening and closing arguments by both sides, took place before the Court on January 23, 2019. Upon due consideration of the pleadings, and with the benefit of oral argument, Plaintiff's Motion is due to be denied.

I. BACKGROUND

The issue in this case deals with Defendants', Blue Cross and Blue Shield of Florida, Inc.'s, Health Options Inc.'s, and Florida Health Care Plan Inc.'s (collectively, "Florida Blue "), use of an exclusivity policy preventing their agents from selling individual health insurance plans from any provider other than Florida Blue. (Doc. 1, ¶ 14). Plaintiff, Oscar Insurance Company of Florida ("Oscar "), seeks to enjoin Florida Blue from enforcing the exclusivity policy, claiming it constitutes anticompetitive behavior. (Doc. 11, p. 3). Oscar asserts that Florida Blue has monopolized, or attempted to monopolize, the relevant markets for the sale of individual plans in the Orlando area, in violation of Sherman Act § 2, and has unlawfully restrained trade in these markets, in violation of Sherman Act § 1. (Id. ).

Oscar is a technology-driven health care company formed in the wake of the Affordable Care Act ("ACA "). (Doc. 1, ¶¶ 4, 25, 41–44). In 2018, Oscar entered the Orlando health insurance market, selling individual health insurance plans for the first time in Lake County, Orange County, Osceola County, and Seminole County. (Id. ¶¶ 4, 15). Oscar offered "Bronze," "Silver," and "Gold" plans—the most popular plan categories available to Florida residents on the ACA exchange. (Id. ¶ 48). Individuals in Orlando could purchase these plans from Oscar—or its competitors—during the open-enrollment period running from November 1, 2018, to December 15, 2018, with coverage starting January 1, 2019. (Id. ¶ 28).

As a new entrant of the Orlando health insurance market, Oscar engaged in substantial advance work to become a viable competitor in the offering of individual plans. (Id. ¶ 10). Oscar prepared financial analysis regarding entry into the market, negotiated rates with hospitals and physicians to build provider networks, gained approval from state regulators, and attracted local brokers to sell its plans. (Id.¶¶ 10, 49). This action arises from Oscar's efforts at appointing local brokers.

Brokers play an important role in the sale of health insurance plans as they provide individualized advice and information to consumers choosing from diverse options. (Id. ¶ 31). Brokers must be licensed by the state to sell health insurance, only qualifying for licensure after completing sixty hours of coursework and passing a written exam. (Id. ¶ 30). Health insurance companies then "appoint" these brokers, meaning they are legally permitted to sell policies for the insurer in exchange for a commission and/or a fee. (Id. ¶ 31).

In anticipation of the 2018 open-enrollment period, Oscar appointed many Orlando brokers to sell its individual plans, including some brokers who also sell individual plans for Florida Blue. (Doc. 56, ¶ 16). On October 24, one week before the open-enrollment period began, a Florida Blue representative sent an email to its brokers, writing: "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." (Doc. 11, p. 7; Doc. 11-3, ¶¶ 9–14). Florida Blue then updated its exclusivity policy, requiring brokers to sign an agreement acknowledging that "[a]ny agent or agency that violates the exclusivity arrangement with Florida Blue will be permanently terminated for cause." (Doc. 11, p. 7; Doc. 11-4, ¶ 8). Subsequently, 235 brokers rescinded their appointments with Oscar. (Doc. 56, ¶ 16).

Currently, there are 146,114 brokers and agents¹ licensed to sell health insurance plans within the state of Florida, and 19,275 of those work in the Orlando area. (Doc. 62-3, p. 132). Florida Blue has exclusive relationships with 9,360 of the brokers in Florida and 1,724 of the brokers in Orlando. (Id. ).² After accounting for the termination of the Florida Blue appointments, Oscar successfully appointed 1,887 brokers in Florida—with less than forty percent actually selling Oscar plans during the 2018 open-enrollment period. (Doc. 56, ¶ 16).

Oscar claims that due to the exclusivity policy, it was unable to enroll the projected number of individuals despite having "high-quality provider networks, but with lower premium rates, compared to Florida Blue." (Doc. 11, p. 5). The week before open enrollment, Oscar projected that it would obtain 63,000 lives in Orlando. (Doc. 56, ¶ 10).³ However, by the close of open enrollment, Oscar enrolled only 33,251 individuals, with an estimated enrollment effectuation of 29,648 individuals. (Id. ¶ 3). This accounts for a 13 percent share of individual ACA enrollments in the Orlando area. (Id. ).⁴

Conversely, in 2018, Florida Blue accounted for a 70 percent market share of on-exchange individual insurance lives in Florida and a 91 percent market share in Orlando. (Doc. 62-3, p. 131; Doc. 11-2, p. 12). Citing this data, Oscar claims that Florida Blue has monopolized, or attempted to monopolize, the relevant markets for the sale of individual plans in the Orlando area and has unlawfully restrained trade in these markets. (Doc. 11, p. 2). Oscar asserts six Counts against Florida Blue: (1) Sherman Act § 2 Claim for Monopolization; (2) Sherman Act § 2 Claim for Attempted Monopolization; (3) Sherman Act § 1 Claim; (4) Florida Antitrust Act Restraint of Trade § 542.18 Claim for Monopolization and Attempted Monopolization; (5) Florida Antitrust Act Restraint of Trade § 542.18 Claim Based on Florida Blue's Exclusive Agreements with Brokers; and (6) Tortious Interference with a Business Relationship. (Doc. 1, ¶¶ 95–135).

On November 19, 2018, Oscar filed the Motion for a preliminary injunction against Florida Blue. (Doc. 11).^{5 ,6} Oscar seeks to enjoin Florida Blue from enforcing its exclusivity policy, arguing that the policy has substantially foreclosed Oscar from accessing brokers, and therefore from competing in the Orlando individual-plan market. (Doc. 11, p. 14). Absent injunctive relief, Oscar claims it will continue to suffer irreparable harm in the form of lost market share and goodwill. (Id. at p. 3). Furthermore, Oscar contends that an injunction will serve the public interest through added competition to the health insurance industry, which will lead to lower costs, higher-quality options, and more information for consumers. (Id. at p. 24).

On December 6, 2018, the Court held a hearing on Oscar's Motion for Expedited Briefing and Discovery (Doc. 13), at which point the Court denied the request for expedited discovery. (Doc. 48). On December 21, 2018, Oscar filed supplemental declarations to account for its performance during the 2018 open-enrollment season. (Docs. 56, 57).⁷ On January 18, 2019, Florida Blue filed its Response to the Motion. (Doc. 62).⁸

On January 23, 2019, the Court held a six-hour evidentiary hearing on the Motion. Dr. Mark A. Israel, Ph.D., and Dr. Laurence Baker, Ph.D., testified as expert witnesses for Oscar and Florida Blue, respectively. Oscar and Florida Blue each presented opening and closing arguments.

II. STANDARD OF REVIEW

To obtain a preliminary injunction, Oscar must establish: (1) a substantial likelihood of success on the merits of the underlying case; (2) irreparable harm in the absence of an injunction; (3) that the harm suffered by Oscar in the absence of an injunction would exceed the harm suffered by Florida Blue if the injunction was issued; and (4) that an injunction would not disserve the public interest. Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc. , 299 F.3d 1242, 1246–47 (11th Cir. 2002). "[A] preliminary injunction is an extraordinary and drastic remedy not to be granted unless the movant clearly establishe[s] the ‘burden of persuasion’ as to each of the four prerequisites." Siegel v. LePore , 234 F.3d 1163, 1176 (11th Cir. 2000) (quoting McDonald's Corp. v. Robertson , 147 F.3d 1301, 1306 (11th Cir. 1998) ) ("Because a preliminary injunction is ‘an extraordinary and drastic remedy,’ its grant is the exception rather than the rule, and plaintiff must clearly carry the burden of persuasion.").

Furthermore, the Court notes that Oscar seeks a mandatory injunction, because if granted, the injunction would affirmatively alter the status quo with regard to Florida Blue's relationship with its...