Florida Blue Gets Legal Win Against Oscar Health In Exclusive Broker Dispute

A U.S. District Court judge has thrown a wrench into insuretech upstart Oscar Health’s Florida expansion plans by ruling that insurer Florida Blue can continue to use its exclusive brokers to sell its health plans.

Last year, the New York-based company sued insurer Florida Blue, a licensee of the Blue Cross Blue Shield Association over its exclusive broker policy, which it claimed was anti-competitive and reduces customer choice.

The exclusive broker policy refers to the practice of pressuring local brokers from selling plans other than those of Florida Blue. As part of the lawsuit, Oscar Health sought a preliminary injunction to stop Florida Blue from using these exclusive brokers to sell their plans until a final court decision was reached.

Judge Paul Byron decided against awarding the company’s request for an injunction citing Oscar’s failure to establish “irreparable harm” and “substantial likelihood of success on the merits.”

The initial argument made by Oscar was that Florida Blue’s policy hampered its growth plans in the Orlando market and its ability to build provider networks and sign broker agreements. It compared its 13 percent market share in Orlando to the 38 percent market share it earned in Austin, Texas, which doesn’t have exclusivity policies.

Jacksonville-based Florida Blue is one of the largest insurers in the state, serving around 75 percent of the individual market plans across Florida, with a particularly high preponderance in the Orlando metropolitan area.

However, the judge was largely unconvinced by the argument, citing Oscar’s lower number of plan offerings and providers when compared to Florida Blue and highlighting examples in other markets without exclusivity policies where Oscar failed to capture significant market share such as Dallas-Fort Worth and New Jersey.

The judge also wrote in his decision that when looking at the totality of the Florida and Orlando broker population, Florida Blue has exclusivity agreements with a small percentage and insurers like Centene have successfully entered the market.

In response to the judge’s decision, Florida Blue filed a motion asking the Court to dismiss the lawsuit in its entirety.

Oscar Health was started in 2012 and is one of a crop of heavy capitalized insurance startups looking to disrupt the traditional payer industry. The company has raised $1.3 billion in funding, including a $375 million cash infusion from Google parent company Alphabet last year.

The company is active in Ohio, Texas, New Jersey, Tennessee, California, Arizona, Michigan and Florida and New York where it offers mainly individual plans on the ACA exchanges.

“We’re disappointed the court denied a preliminary injunction. We look forward to further pursuing our claims on the merits,” Oscar’s general counsel Bruce Gottleib said in a statement.

Photo: Chris Ryan, Getty Images

Florida Blue Gets Legal Win Against Oscar Health In Exclusive Broker Dispute curated from Above the Law