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October 2, 1990

GAROT ANDERSON MARKETING, INC., a Wisconsin corporation, RICHARD ZUPAN, M.H.B. INC., an Illinois Corporation, and SAM SMAIL, Plaintiffs,
BLUE CROSS AND BLUE SHIELD UNITED OF WISCONSIN, a Wisconsin service insurance corporation, and HEALTH CARE SERVICE CORPORATION, an Illinois mutual reserve insurance company, Defendants

The opinion of the court was delivered by: ROSZKOWSKI



 On August 16, 1988, Plaintiffs Garot Anderson Marketing, Inc., Richard Zupan, M.H.B., Inc., and Sam Smail (hereinafter "Plaintiffs") filed suit in this court against Defendants Blue Cross & Blue Shield United of Wisconsin (hereinafter "Blue Cross-WI") and Health Care Services Corporation (hereinafter "HCSC"). Plaintiffs alleged in their complaint that Defendants violated Section 1 of the Sherman Act. On May 26, 1989, this court granted Plaintiffs' motion to amend complaint. Plaintiffs thereby amended their complaint to add the allegation that Defendants violated Section 2 of the Sherman Act; to add to the allegation that Defendants' conduct was a group boycott the alternative allegation that it was a unilateral boycott; and to add the allegations that Defendants' conduct was a unilateral or concerted refusal to deal, and a horizontal division of markets.

 Plaintiff Garot Anderson Marketing, Inc. (hereinafter "GAMI") and its predecessor corporation, Burlington Garot Christman Agency (hereinafter "BGCA"), were independent insurance agencies. Beginning in the 1970s, GAMI and BGCA acted as agents for Defendant Blue Cross-WI and other companies in selling insurance for these companies.

 In 1981, Blue Cross-WI began underwriting the Midwest Farm Program (hereinafter "MFP" an insurance plan for farmers other than those engaged in dairy farming. Blue Cross-WI entered into a contract with Blue Cross Blue Shield of Rockford (which has since merged into Defendant HCSC) which provided that Blue Cross Blue Shield of Rockford would administer the MFP. Blue Cross-WI and BGCA *fn1" entered into an "Agent Agreement" on October 1, 1985, wherein they agreed that BGCA would act as Blue Cross-WI's agent for soliciting subscribers for the MFP. The other plaintiffs, Richard Zupan, Sam Smail, and M.H.B., Inc., claim an interest in this case because each purchased rights to monthly renewal commissions earned from the premium payments made by MFP subscribers. Plaintiff Zupan purchased rights to renewal commissions from GAMI, and Smail and M.H.B., Inc., in turn, each purchased from Zupan the right to receive 15% of the commissions that Zupan received.

 The termination of the MFP is the central event around which Plaintiffs' allegations revolve. On May 30, 1986, representatives of Defendants Blue Cross-WI and HCSC met at Lake Geneva, Wisconsin, and discussed problems with the MFP. A letter dated May 30, 1986, from a representative of Blue Cross-WI to a representative of HCSC refers to "the transfer" of the MFP from Blue Cross-WI to HCSC. That letter states further:

As you previously indicated, there has been some concern by your marketing staff that the Midwest Farm Program originally developed with Rockford Blue Cross & Blue Shield is competing with other Illinois Blue Cross programs in the Northern Illinois area.
In an attempt to eliminate the competitive nature of this program, we would propose to transfer the existing 831 subscribers now enrolled to Illinois Blue Cross & Blue Shield.

 Another document, entitled "Memorandum of Understanding" and dated June 17, 1986, begins: "The following constitutes an understanding reached between Blue Cross & Blue Shield of Wisconsin and Blue Cross & Blue Shield of Illinois regarding termination of the Midwest Farm Program. Illinois Blue Cross & Blue Shield will notify all Midwest Farm Program members that said program will terminate coverage." Plaintiffs' brief in support of motion for partial summary judgment, Exhibit 3.

 A letter dated June 26, 1986 from HCSC notified MFP subscribers that the MFP would be canceled, and advised them of the opportunity to apply for coverage through the Health Improvement Association (HIA), a health insurance policy offered by HCSC. That letter included the following language:

Dear Blue Cross/Blue Shield Member:
The Midwest Farmers Co-pay Blue Cross/Blue Shield group, of which you are a member, is being canceled effective August 1, 1986.
If you would like to apply for Blue Cross/Blue Shield coverage through the Illinois Health Improvement Association, please complete the application and evidence of insurability form enclosed.
. . . .
Please complete and return the forms in the enclosed envelope by July 10, 1986, to give us time to review your ...

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