LANSING, Mich. — Michigan Attorney General Dana Nessel filed a federal antitrust lawsuit on Wednesday against Blue Cross Blue Shield of Michigan Mutual Insurance Company, alleging the state's largest health insurer operates an illegal monopoly that has driven up premiums and cut provider reimbursement rates to levels that are degrading care across the state.
The suit was filed in the United States District Court for the Eastern District of Michigan. Nessel argues the monopoly was built through a series of anticompetitive agreements with the broader Blue Cross Blue Shield network to allocate customers and territories, restrict product offerings, and eliminate competition. The complaint brings two claims under the federal Sherman Act, four claims under the Michigan Antitrust Reform Act, one claim of public nuisance, and one claim of unjust enrichment. It seeks a permanent injunction against the alleged conduct and all available damages, disgorgement, and civil monetary penalties.
BCBSM controls roughly 65 percent of the market for health insurance products in the state and 79 percent of the PPO market, according to the complaint. Nessel says the company used that power to inflate premiums and out-of-pocket costs for consumers and businesses while pushing down the rates paid to healthcare providers to among the lowest in the nation, sometimes below providers' own cost of care.
"Blue Cross Blue Shield of Michigan, as a member of the Blue Conspiracy, has built and operated an illegal monopoly on health insurance coverage in Michigan, and today we brought this lawsuit for the millions of Michigan households, patients, parents, providers, doctors, small business owners, large employers and taxpayers, and consumers everywhere that are paying the price for Blue Cross's unchecked market power," Nessel said in a statement.
The office pointed to a string of data points to frame the impact, including that more than 40 percent of Michigan small business owners say rising health care costs are pushing them to a breaking point, and that over 68 percent of adults surveyed in 2025 reported at least one affordability problem that forced them to skip or delay care. Michigan ranks 20th in the nation for people with medical debt in collections and 35th for premature deaths from treatable causes.
The state also cited Sturgis Hospital, which closed completely in June over inadequate reimbursement, eliminating all hospital departments and outpatient services in the community, including the emergency room, surgery, laboratory, imaging, physical therapy, cardiac rehabilitation, and clinics. A highly publicized 2026 dispute between BCBSM and Michigan Medicine arose when the insurer proposed an 30 percent reduction in reimbursement rates, a move that threatened to force nearly 300,000 Michigan residents to find a new provider before the two sides eventually reached a deal.
Brian Gilbert, president of the APTA of Michigan, said reimbursement cuts totaling nearly 20 percent per visit over the past year have pushed many physical therapy clinics to the brink, resulting in closures, workforce reductions, and hiring freezes despite growing patient demand.
In response, a BCBSM spokesperson told Local 4 that the company had not yet been served and could not comment on the specific merits, while saying it "fundamentally disagrees with the Attorney General's characterization of an uncompetitive insurance market in Michigan."
"We were blindsided," the spokesperson said. "Competition exists everywhere in our state's insurance markets, with strong local and national insurers competing with us every day. For nearly 90 years, Blue Cross has provided coverage for citizens across Michigan, in every county, without exception."
The company serves about 4.5 million customers in Michigan. The lawsuit is expected to become a central issue in the 2026 gubernatorial race, where several candidates have pitched health care affordability as a priority.