S.C. Blue Cross target of federal investigation

Blue Cross Blue Shield of South Carolina is the target of a U.S. Justice Department investigation into alleged anti-competitive practices used in several states.

The practice in question involves so-called "most-favored nation" clauses in contracts with hospitals. The clauses usually say that competing insurers must pay equal or higher rates for medical services, industry observers said. Such clauses could violate antitrust laws, they said.

Blue Cross Blue Shield of South Carolina denies any wrongdoing.

The company "is confident its use of these clauses is lawful and appropriate," spokeswoman Elizabeth Hammond said in a statement last week.

She said the Department of Justice conducted a similar investigation of the company in 2005, closing it "a few weeks after receiving the S.C. Blue Cross response."

Blue Cross Blue Shield of South Carolina is not the only target in the inquiry.

Federal investigators and some state attorneys general have sent civil subpoenas to Blue Cross Blue Shield health plans in Missouri, Ohio, Kansas, West Virginia, North Carolina and the District of Columbia, The Wall Street Journal reported in March.

A Department of Justice spokeswoman declined to elaborate.

South Carolina Department of Insurance Director David Black said last week that Blue Cross Blue Shield has alerted his agency to the inquiry.