Blue Shield of Virginia v. McCready

PETITIONER: Blue Shield of Virginia
LOCATION: Furnace Woods School

DOCKET NO.: 81-225
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Fourth Circuit

CITATION: 457 US 465 (1982)
ARGUED: Mar 24, 1982
DECIDED: Jun 21, 1982

Griffin B. Bell - on behalf of the Petitioners
Warwick R. Furr, II - on behalf of the Respondent

Facts of the case


Media for Blue Shield of Virginia v. McCready

Audio Transcription for Oral Argument - March 24, 1982 in Blue Shield of Virginia v. McCready

Warren E. Burger:

We will hear arguments next in Blue Shield of Virginia against McCready.

Mr. Bell.

Griffin B. Bell:

May it please the Court, this case presents two questions.

The first question is, was there an antitrust injury alleged so as to withstand a motion to dismiss under Rule 12(b)(6), and I use antitrust injury in the same vein as this Court used it in Brunswick versus Pueblo Bowl-O-Mat.

The second question, was Blue Shield exempt from antitrust laws as being in the business of insurance under the McCarren-Ferguson Act.

This was a class action with one plaintiff purporting to represent the class.

The class she claims to represent are the patients, are they not?

Griffin B. Bell:


Well, the patients, all patients who went to a clinical psychologist and who at the same time were entitled to benefits under Blue Shield contracts.

This plaintiff was an employee of Prince William County.

Prince William County had a contract for medical services which they purchased from Blue Shield of Virginia.

Plaintiff was treated by a clinical psychologist, and sought reimbursement from Blue Shield of Virginia.

That is the gist of the complaint.

She wishes to be reimbursed.

Her request for reimbursal was refused on the grounds that the plan only covered physician's services and other allied health services which are supervised by and billed through a physician.

The case is complicated by the fact that there was another case filed at the same time.

They started out being heard together, and one was decided last year by the Fourth Circuit.

It is called the VACP case.

In that case, the district court ruled for the Blue Shield plans and psychiatrists, but the Fourth Circuit said that there was a restraint.

The restraint was in the sector or area of restraining clinical psychologists by not covering them under these contract.

It was a plan that was devised, so the court held, by the two plans, two plans in Virginia, both of whom are in this case, along with the doctors and particularly the psychiatrists, to block out the clinical psychologist from being covered.

Now, that is the antitrust allegation that is the base for this case brought by this patient of a psychologist.

I am going to spend a little time arguing the McCarren-Ferguson point, because this Court granted certiorari on a Second Circuit case called Pireno, and it is pending here now.

It is very much on our case, and if we are exempt from antitrust coverage by McCarren-Ferguson, then you wouldn't necessarily reach the other point which is antitrust injury.

Unfortunately, though, the questions tie together because it has been held at one point in the case, in the district court, that there was a boycott, so if there was a boycott, then we have to get back to the same issue, target area, was Mrs. McCready in the sector or the area where the antitrust violation took place.

There are three elements that must appear to have an exemption under the McCarren-Ferguson Act.

First, there must be the business of insurance.

Second, there has to be state regulation of the activity in question.

And third, it must appear that there is no boycott.

There can't be a boycott and still have coverage.