Michigan AG sues Blue Cross Blue Shield of Michigan, accusing insurer of illegal monopoly

Michigan Attorney General Dana Nessel said she has filed a federal lawsuit against Blue Cross Blue Shield of Michigan, accusing the company of illegally operating a health insurance monopoly in the state.

The case was filed Thursday in U.S. District Court for the Eastern District of Michigan. It seeks civil penalties, restitution and other financial relief as the court considers appropriate, as well as findings that the company violated the Sherman Act and the Michigan Antitrust Reform Act.

Blue Cross Blue Shield of Michigan controls 65% of the market for health insurance products in Michigan, and 79% of PPO insurance plans, the attorney general said. Her office argues that this market dominance "was obtained by a series of illegal and anti-competitive agreements in conspiracy with the entire Blue Cross Blue Shield network to allocate customers and territories, to restrict product offerings, and to eliminate competition for health insurance services."

She said that has raised health care costs for both businesses and consumers.

She also said medical professionals have "been forced to reduce services, replace medical staff with administrative positions, or exit the Michigan market entirely." Her office cited the closure of Sturgis Hospital, in St. Joseph County near the Michigan-Indiana state line, as an example. Sturgis Hospital closed in June, citing inadequate reimbursement for rural health care services.

Information the attorney general's office provided to support its claims includes:

• More than 40% of Michigan small-business owners say rising health care costs are a financial burden.
• More than 68% of Michigan adults surveyed in 2025 reported at least one instance in which they were forced to skip or delay medical care due to potential costs.
• Michigan ranks 20th in the nation for the number of people with medical debt in collections.

With health insurance plans so closely linked to employment, Michigan families often don't have a choice of insurance provider, her office argued. Premiums for 2026 rose 23% to 24% for individual plan members and 11.2% for small group markets, the lawsuit said.

The litigation also references a contract dispute earlier this year between Michigan Medicine and Blue Cross Blue Shield of Michigan. A tentative agreement was reached in late May, only weeks before the end of the previous agreement on which care would be considered "in network" with lower out-of-pocket costs to customers.

In response to the lawsuit, Blue Cross Blue Shield of Michigan said in a statement, "We were blindsided by this announcement by the Attorney General." The company said it has not yet been served and can't comment on the case's merits, but it "fundamentally" disagrees with Nessel's description of an uncompetitive market.

"Competition exists everywhere in our state's insurance markets, with strong local and national insurers competing with us every day," the statement said. The company added that it has provided coverage in every county for nearly 90 years.