Congressional leaders continue to seek input from the U.S. Department of Justice (DOJ) on DOJ’s efforts to enforce the Competitive Health Insurance Reform Act (CHIRA), which partially repealed the McCarran Act’s antitrust exemption for insurers for the “business of insurance.” Ferguson and was signed into law by former President Trump in the final days of his term after receiving the bipartisan support of Congress.
On July 26, 2022, US Reps. Peter DeFazio (D-OR-04), Drew Ferguson (R-GA-03), Jerrold Nadler (D-NY-10), Ken Buck (R-CO-04) and David Cicilline (D-RI-01) sent a letter to the Department of Justice requesting an update on the agency’s efforts to crack down on anti-competitive behavior in the health and dental insurance industry after Congress passed CHIRA and repealed the so-called “insurance business” antitrust exemption for health and dental insurers in January 2021.
Among other things, CHIRA amended the McCarran-Ferguson Act to repeal the insurance activity exemption from antitrust rules for health and dental insurers, stating that “[n]anything else contained in this Act modifies, impairs, or supersedes the operation of any of the antitrust laws with respect to the business of health insurance (including the business of dental insurance and limited dental benefits).” Historically, the Supreme court has interpreted the insurance exemption’s operation narrowly and has not exempted insurers from most common types of antitrust claims. But courts had applied the McCarran-Ferguson Act to insulate certain coordinated insurance activities from antitrust challenges, including rate fixing, coinsurance, and risk spreading in reinsurance. After CHIRA, these types of previously protected joint activities may now pose antitrust risks to health and dental insurers.
Although the amended statute still exempts several categories of conduct from federal antitrust scrutiny (e.g, performing actuarial services and disseminating historical loss data), government officials and federal agencies expected an uptick in antitrust enforcement following the passage of CHIRA. For example, the Department of Justice issued a press release shortly after CHIRA’s enactment, emphasizing that “limiting the scope of conduct excluded by the antitrust laws will enhance [DOJ’s] ability to investigate and prosecute anticompetitive conduct.” And while President Biden’s July 2021 executive order to promote competition in the American economy did not specifically mention CHIRA, the order stated that “it is the policy of [the Biden administration] to enforce antitrust laws to combat excessive industry concentration, abuses of market power, and the harmful effects of monopoly. . . especially since these problems occur in . . . healthcare markets (including insurance… markets) . . . .”
In a recent letter to the Justice Department, the bipartisan group of U.S. representatives called the McCarran-Ferguson amendment “a monumental and positive step for competition and consumer protection” and suggested that business before the insurance exemption amendment allowed “health insurance companies are free to exercise market power and collude to raise premiums, raise prices for customers, restrict competition and deprive consumers of choice. To ensure that DOJ appropriately considers CHIRA’s goals and additional law enforcement resources, lawmakers asked DOJ to provide answers to several questions by August 30, 2022. These questions include the following:
- As of January 13, 2021, what actions, if any, has the Antitrust Division taken to enforce the antitrust laws against companies in the health insurance business that are no longer exempt from enforcement under the McCarran-Ferguson Act?
- Apart 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 filed amicus briefs, notices of supplemental authority, business advisory opinions, or other documents regarding the legal implications of the Health Insurance Competitive Reform Act in private litigation?
- Given the expanded authority since CHIRA went into effect, what steps has the Antitrust Division taken to review existing health care guidelines to determine if improvements or new guidelines are needed?
- Are there other laws or case law that impede or frustrate the DOJ’s efforts to enforce the antitrust laws in the health insurance marketplaces?
- Will increasing the Antitrust Division’s resources help enforce federal antitrust laws in the health insurance industry?
This is the second time members of Congress have asked antitrust enforcement agencies for updates on their enforcement efforts since the passage of CHIRA. 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 on the agencies’ actions to use their expanded CHIRA authority “to monitor, investigates and takes action against potentially anticompetitive practices in the health insurance industry.” The new letter from members of the U.S. House of Representatives suggests that at least some Democratic and Republican members of Congress are growing impatient with the Justice Department’s apparent lack of initiative to use the expanded its authority from Congress to crack down on alleged anticompetitive practices by health and dental insurers.
Antitrust laws are nuanced and complex, and their application depends on the unique facts and circumstances of each situation. Health and dental insurers who have questions about how the CHIRA amendment will affect their business are strongly encouraged to consult with antitrust counsel. In addition, the CHIRA amendment may have implications for insurers outside the scope of the antitrust laws, and companies should work with their attorneys to ensure that they continue to meet all of their legal obligations.