A federal court said physicians can go forward with a lawsuit that challenges MultiPlan Inc.’s way of doing business—a scheme in which physicians allege the company conspires with insurers to underpay physicians by billions of dollars and one that leads to fewer health care choices for patients.
A judge in the U.S. District Court Northern District of Illinois denied MultiPlan’s request to dismiss the lawsuit that was filed against the company by the Litigation Center of the American Medical Association and State Medical Societies and the Illinois State Medical Society (ISMS).
The court, among other things, said that the AMA Litigation Center and ISMS plausibly alleged a horizontal, hub-and-spoke price-fixing agreement that violates federal antitrust law and that the physician groups also plausibly alleged state antitrust violations.
The “ruling is the clearest statement yet by a court that MultiPlan’s lack of transparency, accuracy and integrity in the insurer-run system for paying out-of-network medical bills is an antitrust violation,” said Bruce A. Scott, MD, in reaction to the decision in the case, American Medical Association and Illinois State Medical Society v. MultiPlan Inc.
Dr. Scott, now the AMA’s immediate past president, said MultiPlan has corrupted payment rates and that their “secretive price-fixing cartel” has benefited most health insurers. Instead of setting their out-of-network payment rates independently, roughly 700 of the country’s 1,100 insurers use MultiPlan to set their rates. That includes the nation’s 15 largest health plans. MultiPlan’s revenues were $709 million in 2021, up from $564 million in 2020 and $23 million in 2012.
“MultiPlan and the commercial health insurance companies have profited from the rigged system, while forcing physicians to accept lower and lower payment amounts for out-of-network services—payments that in many cases do not cover the cost of delivering care to patients,” Dr. Scott said. “Ending this conspiracy is a good start toward creating an open and honest system that will restore fair reimbursements and help ensure patients have access to the care they need.”
The judge directed lawyers from each side to meet and create a pretrial schedule for the case to move forward. While almost all of the claims in the lawsuit will move forward, the judge did dismiss unjust enrichment claims under various state laws saying that there was not enough detail in the lawsuit to support the claims.
Of note, in February MultiPlan rebranded itself as Claritev amid legal challenges that it is facing. The AMA Litigation Center and ISMS lawsuit is one of many lawsuits across the country challenging insurance companies.
Also of note, the U.S. Department of Justice filed a statement of interest in the case—which is similar to an amicus brief—that pointed out legal errors in MultiPlan’s motion to dismiss the lawsuit.
Find out more about the cases in which the AMA Litigation Center is providing assistance and learn about the Litigation Center’s case-selection criteria.
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Here’s what physicians allege
The AMA Litigation Center and ISMS have said that MultiPlan is acting as “unlawful cartel” for health insurance companies. Their lawsuit alleges that MultiPlan acts as the central hub while insurers are the spokes in a “hub-and-spoke” conspiracy that has effectively stifled competition.
The lawsuit takes the company to task for violating the Sherman Act. It allegedly did so by, among other things, creating pricing agreements with payers that unreasonably restrain trade and agreeing with insurers to exchange extensive, current, confidential and competitively sensitive pricing information with one another. The aim and effect of those actions was to decrease payments to physicians and health care organizations for out-of-network goods and services.
The initial 124-page complaint that the AMA Litigation Center and ISMS filed cites business documents, admissions and sworn testimony that shows MultiPlan violated antitrust laws because they:
- Previously competed on out-of-network pricing.
- Agreed to stop competing on out-of-network pricing.
- Directly harmed physicians and other health care providers through the agreement because they paid them billions of dollars less than they would have been paid, but for the cartel.
In the recent ruling, the federal court judge said that “although the defendants scoff at the idea that there can be a plausible allegation of an agreement among MultiPlan's 700-plus third-party-payer clients, MultiPlan has allegedly made each of the third-party payers aware of a broader horizontal agreement through its statements that it can ‘align’ a third-party payer's rates with other MultiPlan clients by using disclosed competitively sensitive information.”
As a result, the judge rejected MultiPlan’s alternative explanation that companies are lowing prices by seeking their services and he wrote that third-party payers that contract with MultiPlan know that the company is capable of aligning rates without losing subscribers and that “plaintiffs have thus plausibly alleged that third-party payers who utilize MultiPlan's rate calculation and negotiation services are familiar with the scope of the alleged price-fixing scheme and have therefore collectively agreed to fix prices for out-of-network service payments.”
Learn more about how this lawsuit targets collusion in health care pricing.
