The American Lawyer, part of ALM, is running a series of articles about what the legal services climate is like in many different economic sectors. One recent article covered what attorneys are thinking about the health insurance sector. Some attorneys talked about litigation. Others talked about how the new Trump administration might affect regulation and compliance. For a taste about what other people are saying about your universe, read on.
As Congress grapples with whether it will ever be able to replace the Affordable Care Act, law firms have a real opportunity to help a broad array of clients in limbo: Insurers are looking to innovate, state health care exchanges face an uncertain future, and health care systems continue to eye consolidation. As they await clarity, clients are weighing whether to put new initiatives on hold. And they want a voice in the ultimate outcome—which means that law firm lobbying practices have big role to play, too.
Here, we look at the health insurance industry from the perspectives of law firms, regulators and corporate counsel.
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Firms are likely to see increased work across practice areas, including health care, lobbying, antitrust, bankruptcy, and mergers and acquisitions. Much of the work is already under way, while litigation promises to grow as the regulatory framework is adjusted.
Recent months have seen high billings by antitrust lawyers in particular. That work is expected to continue as insurers say they will appeal court rulings rejecting several large-scale mergers. Jones Day and Crowell & Moring represented Aetna Inc. and Humana Inc., respectively, in their unsuccessful merger attempt. White & Case represented Anthem Inc. in its bid to merge with Cigna Corp., which tapped Charles “Rick” Rule of Cadwalader, Wickersham & Taft. Midway through the matter, Rule switched to Paul, Weiss, Rifkind, Wharton & Garrison. Neither deal has passed muster in the courts’ eyes. Aetna abandoned its planned purchase of Humana. Anthem is appealing its case, while Cigna announced plans to sue Anthem for alleged breaches of the merger agreement.
Meanwhile, Drinker Biddle & Reath and Hogan Lovells represented Advocate Health Care in its failed bid to merge with NorthShore University HealthSystem in Chicago, which, in turn, was represented by Winston & Strawn. The companies decided in March to end their efforts to push the merger forward.
Boies Schiller Flexner and Hausfeld continue to lead a fight by a group of health insurers in antitrust litigation against Blue Cross Blue Shield Association and dozens of member health plans in multidistrict litigation in Alabama. Kirkland & Ellis is representing the defendants in the litigation, which claims subscribers paid more because of the defendants’ alleged anti-competitive conduct.
Insurance companies continue to face lawsuits over pricing. Matthew Cantor of Constantine Cannon is representing the plan-member plaintiffs in an antitrust suit against Sutter Health, defended by Jones Day. That putative class action was revived by the U.S. Court of Appeals for the Ninth Circuit last year.
Cantor says he expects consolidation in the health insurance industry to continue despite the high-profile failure of the Aetna-Humana and Cigna-Anthem deals, and consolidation among providers will lead to more litigation with insurers, he predicts. “There will be continued fights between providers and health insurers,” he says. “Providers are, in many areas of the country, getting very, very big, and insurers are trying to push back on those providers.”
David Deaton, co-chair of O’Melveny & Myers’ broad-based health care and life sciences practice, says he has seen a shift in health care-related government investigations, with qui tam cases moving away from pharmaceutical companies and hospitals toward the managed care industry.
The nonprofit, state-chartered CO-OPs created by the ACA have faced significant troubles, with more than half of the 23 filing for bankruptcy. Douglas Schmidt of Husch Blackwell in Kansas City, Missouri, represented the liquidator in the first bankruptcy of an ACA-formed health insurance CO-OP. He has worked alongside lawyers at Faegre Baker Daniels, which represents the National Organization of Life and Health Insurance Guaranty Associations, to handle many more since.
Schmidt says the “three Rs” of the ACA—risk adjustment, reinsurance and risk corridors—have kept insurance lawyers busy. While reinsurance and risk corridors sunset after three years, risk adjustment continues to provide reimbursements to insurers who take on high-risk subscribers. Schmidt said the industry is likely to see litigation over how any potential repeal of the ACA could impact payments insurers will say they are owed.
McDermott Will & Emery has doubled down on the health insurance industry, says chair Ira Coleman, and expects it to be a big driver of work in the coming few years. While some firms handle a specific facet of health care-related work, McDermott takes an industrywide approach, handling litigation, government investigations, M&A and related matters.