Latest Case This Week: Ben-E-Lect v. Anthem Blue Cross Life and Health Insurance Co. (Cal. Ct. App.)

Reflections on the Movement in California to Repeal the State’s Ban on Affirmative Action

VIKRAM DAVID AMAR

Illinois law dean and professor Vikram David Amar offers three observations on a measure recently approved by the California legislature that would, if approved by the voters, repeal Proposition 209, the voter initiative that has prohibited affirmative action by the state and its subdivisions since its passage in 1996. Amar praises the California legislature for seeking to repeal Prop 209 and for seeking to do so using the proper procedures, and he suggests that if Prop 209 is repealed, legal rationales for the use of race should be based not only on the value of diversity (as they have been for some time now), but also on the need to remedy past wrongs against Black Americans.

Read More

Ben-E-Lect v. Anthem Blue Cross Life and Health Insurance Co.

Court: California Courts of Appeal

Docket: A152080(First Appellate District)

Opinion Date: July 2, 2020

Judge: Peter J. Siggins

Areas of Law: Antitrust & Trade Regulation, Business Law, Insurance Law

Ben-E-Lect, a third-party insurance claim administrator, developed a medical expense reimbursement plan; employers could buy a group policy of medical insurance with a high deductible and self-fund to pay for the healthcare expenses employees incurred within the annual deductible or any copay requirement. The practice of employers’ using such plans in conjunction with a high-deductible health plan is called “wrapping.” Ben-E-Lect was the state’s largest third-party administrator for small group employers who wrapped their employee medical policies. Anthem provides fully insured health plans to the California small group employer market. Beginning in 2006, Anthem announced a series of policies that limited wrapping. In 2014, Anthem prohibited wrapping all Anthem plans. Employer groups who used Anthem plans certified they would not wrap Anthem policies, and agents certified they would not advise employers to enter into any employer-sponsored wrapping plan. Ben-E-Lect sued Anthem. The court of appeal affirmed that Anthem’s policy to prohibit wrapping its health insurance products violated the Cartwright Act (Bus. & Prof. Code, 16700); interfered with Ben-E-Lect’s prospective business relationships; and was an illegal, coercive, vertical group boycott under the antitrust rule of reason (Bus. & Prof. Code, 17200), because Anthem told its insurance agents that if they wrapped any Anthem policies they would be subject to termination loss of sales commissions. The court affirmed an award of $7.38 million and an injunction. The trial court considered sufficient evidence of market power and market injury.