Congressional leaders continue to seek information from the U.S. Department of Justice (DOJ) concerning the DOJ’s efforts to enforce the Competitive Health Insurance Reform Act (CHIRA), which partially repealed the McCarran-Ferguson Act’s “business of insurance” antitrust exemption for insurers and was signed into law by former President Trump in the final days of his term after receiving bipartisan Congressional support.
On July 26, 2022, U.S. Representatives Peter DeFazio (Democrat, OR-04), Drew Ferguson (Republican, GA-03), Jerrold Nadler (Democrat, NY-10), Ken Buck (Republican, CO-04) and David Cicilline (Democrat, RI-01) sent a letter to the DOJ requesting an update regarding the agency’s efforts to crack down on anticompetitive conduct in the health and dental insurance industries since Congress passed CHIRA and repealed the so-called “business of insurance” antitrust exemption for health and dental insurers in January 2021.
Among other things, CHIRA amended the McCarran-Ferguson Act to repeal the business of insurance antitrust exemption for health and dental insurers, stating that “[n]othing contained in this Act shall modify, impair, or supersede the operation of any of the antitrust laws with respect to the business of health insurance (including the business of dental insurance and limited-scope dental benefits).” Historically, the Supreme Court had construed the business of insurance exemption narrowly and did not exempt insurers from most common types of antitrust claims. But courts had applied the McCarran-Ferguson Act to insulate certain coordinated insurer activities from antitrust challenge, including ratemaking, joint underwriting and reinsurance risk spreading. Post-CHIRA, these types of previously protected joint activities may now pose antitrust risks for health and dental insurers.
Though the amended statute still exempts several categories of conduct from federal antitrust scrutiny (e.g., performance of actuarial services and dissemination of historical loss data), government representatives and federal agencies anticipated an uptick in antitrust enforcement in the wake of CHIRA’s passage. For example, the DOJ issued a press release shortly following CHIRA’s enactment, emphasizing that “limiting the scope of conduct exempt from the antitrust laws will strengthen the [DOJ’s] ability to investigate and prosecute anticompetitive conduct.” And while President Biden’s July 2021 Executive Order on Promoting Competition in the American Economy does not reference CHIRA explicitly, the Order does state that “it is the policy of [the Biden administration] to enforce the antitrust laws to combat excessive concentration in industry, the abuses of market power, and the harmful effects of monopoly . . . especially as these issues arise in . . . healthcare markets (including insurance . . . markets) . . . .”
In their recent letter to the DOJ, the bipartisan group of U.S. Representatives called the amendment to the McCarran-Ferguson Act “a monumental and positive step for competition and consumer protection,” and intimated that the pre-amendment business of insurance exemption had allowed “health-insurance companies free rein to exert market power and collude to drive up premiums, price-gouge customers, restrict competition, and deny consumers choice.” To ensure the DOJ is appropriately taking into account CHIRA’s goals and additional enforcement resources, the legislators have asked the DOJ to provide answers to several questions by August 30, 2022. Those questions include the following:
- Since January 13, 2021, what actions, if any, has the Antitrust Division taken to enforce the antitrust laws against companies in the business of health insurance that are no longer exempt from enforcement under the McCarran-Ferguson Act?
- Aside from the case highlighted in this letter [LifeWatch Servs. v. Highmark, Inc., 509 F. Supp. 3d 356 (E.D. Pa. Dec. 28, 2020), aff’d, LifeWatch Servs., Inc. v. Highmark, Inc., No. 21-1142, 2021 WL 5492811 (3d Cir. Nov. 17, 2021)], has the Antitrust Division submitted any amicus briefs, notices of supplemental authority, business advisory opinions, or other filings regarding the legal consequences of the Competitive Health Insurance Reform Act in any private litigation?
- Given the expanded authorities following CHIRA’s enactment, what steps has the Antitrust Division taken to review existing healthcare guidelines in order to determine whether refinements or new guidelines are needed?
- Are there other statutes or case law that prevent or frustrate efforts by the DOJ to enforce the antitrust laws in health insurance markets?
- Would an increase in resources help the Antitrust Division enforce federal antitrust laws in the health insurance industry?
This is the second time members of Congress have requested an update from the antitrust enforcement agencies regarding their enforcement efforts following CHIRA’s enactment. In July 2021, Senators Patrick Leahy (Democrat, VT) and Steve Daines (Republican, MT) sent a letter to the DOJ and the Federal Trade Commission (FTC) seeking clarity concerning the agencies’ actions to use their expanded authority from CHIRA “to oversee, examine, and take action against potentially anticompetitive practices within the health insurance industry.” The new letter from U.S. House members suggests that at least some Democratic and Republican Congressional delegates are becoming impatient with the DOJ’s apparent lack of initiative in using their expanded authority from Congress to take on alleged anticompetitive practices by health and dental insurance carriers.
The antitrust laws are nuanced and complex, and their application depends on the unique facts and circumstances at play in each situation. Health and dental insurers that have questions about how the CHIRA amendment will impact their businesses are strongly encouraged to consult with antitrust counsel. In addition, the CHIRA amendment may have implications for insurers beyond the scope of the antitrust laws, and companies should work with their attorneys to ensure they continue to meet all their legal obligations.