Panel Rejects Blue Cross and Blue Shield’s Gambit To Drag California Hospitals’ Antitrust Claims to Multidistrict Litigation

SAN FRANCISCO, Dec. 13, 2021 /PRNewswire/ — On December 8, 2021, the Judicial Panel on Multidistrict Litigation (“JPML”) granted VHS Liquidating Trust’s (“VHS”) Motion to Vacate the Panel’s Conditional Transfer Order to the District Court for the Northern District of Alabama, which is hearing the multidistrict litigation entitled In Re: Blue Cross Blue Shield Antitrust Litigation, MDL No. 2406 (“MDL”). This order follows on the heels of the Bankruptcy Court for the Northern District of California’s November 22, 2021 order granting VHS’s Motion to Remand and denying Blue Cross Blue Shield Association’s (“BCBSA”) Motion to Stay. After remand, the case is now proceeding once again in California Superior Court in Alameda County’s complex department.

VHS and other Plaintiffs filed a complaint in Alameda Superior Court under California’s antitrust laws and other states’ laws. Shortly after being served, however, BCBSA and the other defendant Blues filed a notice of removal, automatically removing the entire lawsuit to Bankruptcy Court as an adversary proceeding. Simultaneously, BCBSA filed a Notice of Potential Tag-Along Action with the JPML, in an attempt to transfer the underlying action to the MDL. This simultaneous procedural gambit made clear that the bankruptcy removal was solely and cynically designed to drag a state court action into the MDL even though there was no diversity or federal subject matter jurisdictional basis for the case to be in federal court. The JPML issued a routine Conditional Transfer Order, to which VHS objected, and filed a Motion to Vacate. VHS filed a motion to remand the underlying case back to Alameda County Superior Court, and BCBS filed a motion to stay ruling on the motion to remand until the JPML ruled on the motion to vacate.

The Motion to Remand and the Motion to Stay were heard simultaneously on November 12, 2021. Sean McTigue of Bartko Zankel Bunzel & Miller, P.C. (“Barkto”) argued on behalf of VHS and the other plaintiffs, and Zachary Holmstead of Kirkland & Ellis (“Kirkland”) argued on behalf of BCBSA. Chief Judge Novack of the Northern District of California Bankruptcy Court took the motions under submission. On November 22, 2021 Judge Novack ruled regarding the Motion to Stay that “[s]imply, some court must resolve the question of subject matter jurisdiction, and this court is in as good a position to decide the remand motion as the United States District Court for the Northern District of Alabama. … Notwithstanding the results of a preliminary scrutiny of the subject matter jurisdiction question, there is no evidence that the MDL Court has addressed or will address an identical or similar jurisdiction scenario. Accordingly, deferring to the MDL process will not avoid possibly inconsistent or contradictory subject matter jurisdiction analyses.”

The Court went on to hold with regard to the Motion to Remand: “Absent some cogent analysis regarding how these other asset categories create a bonafide dispute that requires this court to ‘interpret’ the Plan, Blue Shield/Blue Cross’s argument leaves this court wanting. The court should not find ‘related-to jurisdiction’ on a speculative assessment regarding how state law litigation may unwind. Accordingly, Plaintiffs’ motion to remand is granted.”

*VHS Liquidating Trust et al v. Blue Cross Blue Shield Association et al,
Alameda County Superior Court Case Number RG21106600

Plaintiffs VHS Liquidating Trust, Prime Healthcare Services, Inc., Prime Healthcare Foundation, Inc. and Prime Healthcare Management, Inc. are represented by the law firm Bartko Zankel Bunzel & Miller, P.C. and the team led by Patrick M. Ryan, Sean R. McTigue, John “Jack” McLean, Chad E. DeVeaux, Marisa C. Livesay, and Brittany N. DeJong. Defendant Blue Cross Blue Shield Association was represented by the law firm Kirkland & Ellis, LLP. Following the order granting the motion to remand, however, Cravath, Swaine & Moore LLP and Mayer Brown LLP, are now representing Defendant Blue Cross Blue Shield Association. The other Blue defendants were represented by, in no particular order, Axinn Veltrop & Harkrider, LLP, Phillips Lytle LLP, Keller Benvenutti Kim LLP, Crowell & Moring LLP, Shearman & Sterling LLP, Hogan Lovells US LLP, Cravath Swaine & Moore LLP, Kilpatrick Townsend & Stockton LLP, Mayer Brown LLP, McNutt Law Group LLP, and Chan Punzalan, LLP.

Contact: Patrick M. Ryan
[email protected]
(414) 291-4540

SOURCE Bartko, Zankel, Bunzel & Miller

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