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Antitrust
- Kansas City Urology Care v. Blue Cross and Blue Shield of Kansas City
- Medical Society of New Jersey v. Bakke
- United States v. United Health Group
Davis Transport v. Missoula Radiology (District of Montana)
Issue
The issue in this case was whether a radiology practice and imaging center properly could refuse to enter into Montana Blue’s participating provider agreement without violating provisions of federal antitrust statutes.
AMA interest
The AMA believes the antitrust laws were not intended to force a small group of physicians into doing business with a giant health insurance company, and this lawsuit represents an abuse of those laws.
Case summary
Blue Cross and Blue Shield of Montana, along with several employers and individuals, sued a radiology practice and imaging center in a putative class action, alleging breaches of Sherman Act §1 (prohibiting contracts and conspiracies in restraint of trade), Sherman Act §2 (prohibiting monopolies and attempts to monopolize), and Clayton Act §8 (prohibiting simultaneous service as officers or directors of competing corporations). Basically, the plaintiffs contended that the twelve radiologists in Missoula, Montana joined together to monopolize the market for radiology services.
Montana Blue alleged that, as an expression of their economic power, the radiologists refused to sign the Montana Blue participating provider agreement. Montana Blue averred that the radiologists’ conduct was inherently unreasonable, since 93% of all practicing physicians in Montana were on the Montana Blue provider panel.
In its answer to the complaint, Missoula Radiology admitted having had exclusive hospital contracts in the past, but stated that it did not have such contracts when the suit was filed or at any time since. Moreover, Missoula Radiology asserted that those contracts were standard for the industry and had pro-competitive effects.
The parties met with a mediator for two days as a result of which they reached a tentative settlement. The details of that settlement are confidential, but it is believed that the settlement provides that the physicians were not required to pay any money to the plaintiffs, and they would not be required to join the Montana Blue panel network. A consent decree ultimately was entered in the case.
Litigation Center involvement
The Litigation Center contributed to the physicians’ defense costs.
Higgins v. Baptist St. Anthony's (Potter Cty., Tex. Dist. Ct.)
Issue
The issue in this case was whether a parent health care organization, its managed care network and its hospital violated a Texas antitrust statute by attempting to terminate ("deselect") from the network two physicians who had invested in a competing surgical hospital.
AMA interest
The AMA opposes discrimination against physicians who have ownership interests in specialty hospitals.
Case summary
The case arose from the attempt by a managed care network to deselect the plaintiff physicians from the network's provider panel, in retaliation for the physicians' investment in a surgical hospital. The surgical hospital competed with a general hospital that was owned by the parent of the managed care network. Furthermore, the parent urged Blue Cross Blue Shield of Texas ("Texas Blue") to deselect the physicians and other investors in the surgical hospital from the Texas Blue provider network.
The two physicians sued the parent organization, its managed care network, and its hospital for violations of the federal and Texas anti-kickback statutes and the Texas antitrust statute. Before the case could be tried, it was settled and dismissed. As part of the settlement, the parent health care organization bought a majority interest in the specialty hospital and agreed that it would not discriminate against physicians who had also invested in the specialty hospital.
Litigation Center involvement
The Litigation Center and the Texas Medical Association contributed toward the physicians' litigation expenses.
Kansas City Urology Care v. Blue Cross and Blue Shield of Kansas City (Mo. Ct. App.)
Issue
The issue in this case is whether insurance companies can compel arbitration of physicians' claims that the insurers violated Missouri antitrust laws by conspiring to pay reduced fees to physicians and physician groups with whom they had entered into provider agreements.
AMA interest
Although the AMA supports arbitration clauses in certain contexts, it believes that the arbitration provisions at issue in this case are inapplicable and unenforceable. Among other things, the parties did not agree to arbitrate the antitrust dispute at issue.
Case summary
The plaintiff physician groups initiated a class action lawsuit against insurance companies alleging an antitrust conspiracy for their reducing payments to the physicians on their provider panels.
The insurance companies moved to compel arbitration, based on arbitration clauses in their provider agreements with plaintiffs. The trial court found the arbitration clauses unenforceable and denied the motions to compel arbitration. It found that the requested arbitration would effectively immunize the insurance companies from the type of claims brought by plaintiffs and prevent the enforcement of plaintiffs' antitrust claims. Defendants appealed.
Litigation Center involvement
The Litigation Center along with the Missouri State Medical Association filed a motion in the Missouri Court of Appeals to submit an amicus curiae brief to support the plaintiffs. The brief argued that the arbitration clauses are unconscionable because they were created and imposed on a take-it-or-leave-it basis, and contain impermissible limitation of damages provisions. The Court of Appeals denied leave to file the amicus brief.
Medical Society of New Jersey v. Bakke
892 A.2d 728 (Mercer Cty., N.J. Super. Ct. App. Div. 2006)
Issue
The underlying issue here was whether United Healthcare’s acquisition of Oxford Health Plans was anti-competitive.
AMA interest
The AMA supports healthy competition among companies in the health insurance industry.
Case summary
This lawsuit sought to undo the already consummated acquisition of Oxford Health Plans ("Oxford") by United Healthcare ("United"). United is one of the largest health insurance companies in the United States, and until the acquisition Oxford was a medium sized health insurance company doing business primarily in the New York area. The acquisition price was just under $5 billion. The purchase was quickly and routinely approved by the United States Department of Justice, applying federal antitrust guidelines. The acquisition was also routinely approved by several states, other than New Jersey, in which Oxford did business.
In New Jersey, regulatory oversight for HMOs rests in part with the New Jersey Department of Banking and Insurance ("DOBI"). United therefore asked DOBI to approve the merger, too. The Medical Society of New Jersey (“MSNJ”) objected to the merger and presented an expert witness report opposing it as being anticompetitive. Following an evidentiary hearing, the DOBI hearing officer recommended approval, and the DOBI Commissioner then endorsed that recommendation. On the same day the DOBI Commissioner approved it, United completed the acquisition. Oxford no longer exists as a separate entity.
MSNJ sued DOBI and United, seeking review by the New Jersey courts of the DOBI Commissioner's order. MSNJ premised its case on the New Jersey Insurance Holding Company Act, a highly unusual statute which has never been interpreted in a reported decision.
United moved to dismiss the complaint. It contended that MSNJ should have sued in the Appellate Division (which generally does not hear new evidence), rather than the Law Division of the Superior Court (i.e., the trial court) and that MSNJ lacked standing under the New Jersey Insurance Holding Company Act to challenge the approval order.
The Law Division judge, while holding that dismissal of the case would be inappropriate, ordered the case transferred to the Appellate Division. She relied on a New Jersey procedural rule, on the constitutional doctrine of Separation of Powers, and on the apparent completeness of the evidentiary record presented to DOBI. She acknowledged, though, that her holding would be “despite the specific language set forth in the statute.” Accordingly, the MSNJ suit was transferred to the Appellate Division.
MSNJ then asked the Appellate Division to overturn the decision of the Law Division judge and remand the case to the Law Division so it could present further evidence. For its part, United asked the Appellate Division to dismiss the case for lack of standing.
The Appellate Division held that, although MSNJ had constitutional standing to bring its lawsuit, it did not have the right to sue under the New Jersey Insurance Holding Company Act. Consequently, it affirmed the trial court’s transfer of the case, and affirmed the DOBI order approving the merger.
AMA involvement
The AMA, in a letter to DOBI, endorsed the MSNJ concerns.
United States v. United Health Group (D.D.C.)
United Health Group, the largest or second largest health insurance company in the United States, is in the process of acquiring Sierra Health Systems, the largest health insurance company in Nevada. The Nevada Insurance Commissioner approved the merger and, subject to certain conditions, so did the United States Department of Justice (“DOJ”) and the Nevada Attorney General. However, before the merger can become final it must also be approved by a court.
Pursuant to the Tunney Act, 15 U.S.C. § 16, members of the public may file comments regarding the merger with the DOJ. The DOJ can then respond to these comments. The public comments and the DOJ responses are then submitted to the presiding judge and published in the Federal Register. If, after consideration of the public comments and the DOJ responses, the court determines that the merger is in the public interest, it is to be approved. The court can also order discovery or other forms of investigation before approving the merger. If the court is not convinced that the merger is in the public interest, it is to disapprove the merger.
The AMA and the Nevada State Medical Association submitted Tunney Act comments critical of the merger to the DOJ on May 15, 2008. The DOJ has not yet responded.
Content provided by: Office of the General Counsel