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US Law Firm Faces Ethical Allegations Over Blue Cross Antitrust Case

By  |  January 14, 2025
Blue Cross Blue Shield insurers

A prominent U.S. law firm is facing allegations of ethical misconduct for allegedly misusing confidential information obtained during antitrust litigation involving insurance giant Blue Cross Blue Shield (BCBS). According to a court filing in Alabama on Friday, Washington, D.C.-based law firm Zuckerman Spaeder is accused of leveraging privileged details from the case to attract new clients interested in suing BCBS.

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    Per Reuters, the accusations were brought forward by attorneys representing hospitals and other providers involved in a proposed $2.8 billion settlement with BCBS. The providers’ lawyers claim that Zuckerman Spaeder was actively disparaging the settlement agreement while encouraging hospitals to file their own lawsuits against the insurer. In response, the attorneys have asked the court to prohibit the firm from representing these providers, arguing that the firm’s conduct violates ethical standards.

    “This motion is completely without basis,” Zuckerman Spaeder partner Cyril Smith said in a statement. “Neither I nor my firm has violated any ethical rule or standard.”

    The dispute stems from longstanding litigation over BCBS’s alleged anti-competitive practices. Zuckerman Spaeder was one of many firms involved in pursuing claims that BCBS conspired to limit competition and overcharged both commercial and individual subscribers. The litigation led to a $2.7 billion settlement for subscribers in 2020, which the U.S. Supreme Court upheld last year. In a separate settlement reached in October, BCBS agreed to pay an additional $2.8 billion and implement reforms to resolve claims from healthcare providers regarding underpayments for reimbursements.

    Read more: Blue Cross Blue Shield Agrees to Pay $2.8 Billion to Settle Antitrust Claims

    The latest controversy focuses on Smith’s role in the litigation. According to Reuters, Smith served on a five-person plaintiffs’ steering committee that helped direct the case in federal court in Alabama. Lawyers representing the providers now argue that Smith used his inside knowledge from this role to promote his firm’s services to potential clients — a move they say breaches his obligations as a former class counsel for the subscriber settlement.

    “Mr. Smith has already been well paid for his work for the subscribers; he should not be allowed to monetize his violations of his ethical obligations,” the providers’ attorneys wrote in their filing to Chief U.S. District Judge R. David Proctor in Birmingham.

    BCBS has consistently denied any wrongdoing in the antitrust litigation. The company did not immediately respond to a request for comment on the latest allegations. Meanwhile, Edith Kallas and Joe Whatley, the lead attorneys for the accusing healthcare providers, also declined to comment.

    Hospitals and other providers have until March 4 to decide whether to remain part of the settlement class or to opt out and pursue individual claims against BCBS.

    The case is being heard in the U.S. District Court for the Northern District of Alabama under the title In re: Blue Cross Blue Shield Antitrust Litigation, Case No. 2:13-cv-20000-RDP.

    Source: Reuters