Key Takeaways

• Class attorneys behind the $2.8 billion Blue Cross Blue Shield antitrust settlement want 12.5% set aside from future recoveries obtained by healthcare providers that opted out.
• Lawyers for the opt-out providers call the proposal “litigation piracy” and argue their clients should not be forced to finance attorneys they chose not to retain.
• The dispute raises a significant question over how far common-benefit fee principles can reach when sophisticated plaintiffs leave a class settlement and pursue separate litigation.

By Samuel López | USA Herald

A $2.8 billion antitrust settlement involving Blue Cross Blue Shield has produced a new legal battle — this time not between healthcare providers and insurers, but among the lawyers themselves.

Attorneys who led the massive provider class action are asking a federal judge in Alabama to require a 12.5% set-aside from settlements or judgments obtained by healthcare providers that opted out of the class settlement and elected to pursue their own cases.

Class counsel, led by Whatley Kallas, argues those opt-out plaintiffs are benefiting from more than a decade of work performed in the multidistrict litigation, including extensive discovery, legal theories and case development.

The attorneys say they have devoted approximately 375,000 hours to the litigation and contend that some opt-out complaints reveal little independent work by the firms now representing those providers. Class counsel colorfully accused their rivals of effectively “copying the providers’ homework.”

The lawyers representing the opt-outs see things very differently.

Opt-Out Lawyers Call Proposed Fee a Tax on Their Clients

Attorneys from firms including Quinn Emanuel, Paul Hastings, K&L Gates and Clifford Chance have opposed the proposed set-aside, characterizing it as “litigation piracy.”

They argue that providers possessed a lawful right to exclude themselves from the settlement and pursue their own antitrust claims — and that exercising that right should not trigger what amounts to an additional court-imposed fee payable to lawyers who no longer represent them.

The opposition has also warned that imposing such a system could generate extensive satellite litigation over what work actually benefited individual opt-out plaintiffs and how much money class counsel should ultimately receive.

That argument carries additional financial weight because class counsel have already received a substantial award from the underlying settlement.

The federal court approved approximately $657.1 million in attorneys’ fees, representing 23.47% of the $2.8 billion settlement fund, along with at least $102 million in expenses.

The $2.8 Billion Settlement

The provider litigation dates back more than a decade and accused Blue Cross Blue Shield Association and affiliated Blue plans of violating federal antitrust law by dividing markets into exclusive geographic service areas and limiting competition.

Providers alleged the arrangement contributed to lower reimbursements and broader anticompetitive effects.

Blue Cross denied wrongdoing.

The settlement provides a $2.8 billion fund as well as significant changes to Blue Cross business practices and infrastructure. The federal court granted final approval on August 19, 2025, and the settlement became effective on September 19, 2025.

Major healthcare organizations that opted out and pursued separate litigation have included systems associated with Mayo Clinic, AdventHealth, CommonSpirit Health, Massachusetts General and Sutter Health.

Why the Fee Fight Matters Beyond Blue Cross

The legal concept behind class counsel’s request is not unprecedented.

Federal courts overseeing multidistrict litigation have sometimes ordered plaintiffs who benefit from work performed for the common benefit to contribute a portion of recoveries toward attorneys’ fees.

In one antitrust MDL involving the drug Xyrem, for example, class counsel sought a 12.5% set-aside from certain opt-out recoveries. The court agreed that a common-benefit set-aside was permissible but reduced the figure to 10% and said the set-aside had to come from the attorney-fee portion of a recovery.

But the Blue Cross dispute presents the issue on an enormous scale.

For U.S. District Judge Anna M. Manasco, who now oversees the settlement proceedings, the question is not merely whether class counsel performed valuable work. The harder question is who should be required to pay for that work after consciously leaving the class.

The answer could have consequences far beyond this case, particularly when large corporate or institutional plaintiffs must decide whether accepting a class settlement or pursuing their own potentially larger recovery makes better economic sense.

About the Author

Samuel López is an independent news reporter for USA Herald and has reported for the publication since 2022. López is a seasoned legal professional with more than two decades of experience in the legal and insurance sectors, including analyzing complex litigation and high-stakes legal matters.

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