The Supreme Court has been petitioned to strike down $667 million in legal fees and costs that plaintiffs’ lawyers won in a $2.7 billion class-action settlement with Blue Cross Blue Shield, accusing it of nationwide insurance overcharges.
A member of the class filed the petition, arguing in the lower court that the fee amount was too high. Last year, a U.S. appeals court upheld the settlement, rejecting challenges over legal fees and other provisions that were part of the insurer’s landmark 2020 accord.
In the long-running litigation in Alabama federal court, health subscribers accused Blue Cross Blue Shield Association and related entities of unlawfully agreeing not to compete with each other, in violation of U.S. antitrust law.
Millions of class members allegedly paid higher insurance costs as part of the alleged conspiracy. Attorneys for the subscriber plaintiffs did not immediately respond to a request for comment. Blue Cross denied the claims in agreeing to settle.
Blue Cross Blue Shield Association and a lawyer for objector David Behenna, who filed the Supreme Court challenge, declined to comment.
The petition
Behenna’s petition argued that the fee should be no more than $194 million, which was the “lodestar” amount, or the number of hours the lawyers said they worked multiplied by a prevailing hourly rate.
The award instead was based on a “percentage of the fund” calculation.
The fee was 23.47% of the settlement fund, and it fell within a “range of reasonableness” of 20% to 25%, the 11th U.S. Circuit Court of Appeals found.
Behenna’s petition said U.S. appeals courts are divided over whether trial judges are allowed to use the lodestar approach to determine fees in cases where a lawyer or litigant secures a “common fund” to be shared.
“Federal courts are entirely failing to seriously scrutinize fee applications in common-fund cases,” Behenna’s petition said. Behenna’s challenge to the fee award is related to another pending case at the Supreme Court over the terms of the Blue Cross settlement.
In March, Home Depot filed a challenge to the deal, telling the justices that the terms are too sweeping and will harm the ability of future private parties to sue Blue Cross Blue Shield over alleged violations of competition law. The plaintiffs’ lawyers and Blue Cross have not yet responded to Home Depot’s petition.
The case is David G. Behenna v. Blue Cross Blue Shield Association et al, U.S. Supreme Court, unassigned.
