antitrust – Duane Morris Health Law

August 8, 2024 by Seth A. Goldberg

Health Insurance Reimbursement Price-Fixing MDL Formed

I recently reported that Multiplan and certain insurers in its network were accused of being a “cartel” that has agreed to underprice out-of-network reimbursement paid to providers in the Multiplan network in violation of federal antitrust laws. in the matter styled Live Well Chiropractic PLLC, et al. v. Multiplan, Inc., et al., (D. IL Civ. No. 1:24-cv–3680). That antitrust action, along with six other similar actions, were consolidated for pre-trial proceedings by the Joint Panel on Multi-District Litigation (JPML) into a multi-district litigation in the Northern District of Illinois before The Honorable Matthew Kennelly. See JPML Transfer Order.

While defendants in certain of the actions sought transfer of the MDL to the Northern District of California, and others hoped transfer would not occur until a motion to dismiss in an action in New York District Ct. was heard, the JPML ruled that ” the Northern District of Illinois is an appropriate transferee district for this litigation” because “six actions are pending in that district, which has the support of both some plaintiffs and all defendants. Two defendants are headquartered in Illinois, and several others are located nearby. Judge Matthew F. Kennelly is well-versed in the nuances of complex and multidistrict litigation, and we are confident he will steer this litigation on a prudent course.”

The price-fixing claims assert that Multiplan uses an algorithm that Multiplan claims “reprices” OON services based on historical reimbursements to providers providing the same services, and then “overrides” that amount to pay lower rates agreed upon by Multiplan and the insurers. The insurers, who are allegedly horizontal competitors, are claimed to provide competitively sensitive information about their reimbursement that they would not provide in a competitive market, and many serve on a Multiplan advisory board that meets in furtherance of the conspiracy to fix prices.

May 8, 2024May 8, 2024 by Seth A. Goldberg

Health Insurance Price-Fixing Cartel Alleged Against Multiplan and Insurers

Providers in a putative class action filed on May 7, 2024, claim that Multiplan and certain named insurers in its network are a “cartel” that has agreed to underprice out-of-network reimbursement paid to providers in the Multiplan network in violation of federal antitrust laws. The Complaint, filed in the District of Illinois as Live Well Chiropractic PLLC, et al. v. Multiplan, Inc., et al., (D. IL Civ. No. 1:24-cv–3680), alleges that Multiplan uses an algorithm that Multiplan clams “reprices” OON services based on historical reimbursements to providers providing the same services, and then “overrides” that amount to pay lower rates agreed upon by Multiplan and the insurers. According to the Complaint the insurers, who are allegedly horizontal competitors, provide competitively sensitive information about their reimbursement that they would not provide in a competitive market, and many serve on a Multiplan advisory board that meets in furtherance of the conspiracy to fix prices. A key component of the alleged price-fixing is Multiplan’s requirement that providers in its network agree not to balance bill patients for payments not made by the insurers. The Complaint alleges that Multiplan and the insurers have made billions off the alleged anticompetitive conduct, and seeks damages and injunctive relief.

March 22, 2024March 22, 2024 by Seth A. Goldberg

Private Equity Driven Healthcare Market Consolidation Scrutinized

Earlier this month, the Antitrust Division of the DOJ, the Department of Health and Human Services, and the Federal Trade Commission announced a joint cross-government inquiry into the control over health care by private equity firms and other corporate owners, and, in conjunction with that announcement, released a Request for Information seeking public comment from stakeholders, including patients, consumer advocates, doctors, nurses, health care administrators, employers, private insurers, PBMs, GPOs, nursing homes, hospices, home health agencies, hospitals, and other health care providers, facilities, providers of and entities that provide ancillary health care products or services, on how mergers and acquisitions have effected them, and what actions, if any, should be taken by the federal government to address adverse impacts that might result from market consolidation or corporate control issues. In a related press release, the FTC explained:

Private equity firms and other corporate owners are increasingly involved in health care system transactions, and, at times, those transactions may lead to a maximizing of profits at the expense of quality care. The cross-government inquiry seeks to understand how certain health care market transactions may increase consolidation and generate profits for firms while threatening patients’ health, workers’ safety, quality of care, and affordable health care for patients and taxpayers.

The public comment period will end on May 6, 2024.

April 3, 2017April 3, 2017 by Seth A. Goldberg

FTC to Keep Healthcare and Pharmaceutical Sectors in Antitrust Crosshairs

While the Trump Administration’s antitrust policy is still developing, and most believe it will provide for less enforcement than antitrust policy under the Obama Administration, the Federal Trade Commission announced on Friday, March 31, that it has no intention of letting up on the healthcare and pharmaceutical sectors, where the FTC has been increasingly active over the past few years. In 2016, the FTC challenged the mergers of hospitals/health systems in Illinois and Pennsylvania, and initiated actions to protect pharmaceutical price competition; early 2017 has been no different.

Thus, while the Trump Administration’s antitrust policy unfolds, and it may be less strict than the antitrust policy of the prior administration, healthcare and pharmaceutical industry participants should stay vigilant about antitrust compliance because the FTC intends to remain focused on competition in those sectors.

April 12, 2016April 12, 2016 by Seth A. Goldberg

Wound Company’s Antitrust Claim Tossed

Having dismissed the Sherman Act Section 1 conspiracy and Section 2 monopolization claims of Suture Express in August 2013, a federal judge in Kansas, on April 11, 2016, tossed the remainder of plaintiff’s $200 million claim, which asserted that Cardinal Health and Owens & Minor, wound care companies, entered into a predatory pricing scheme to prevent hospitals from buying the plaintiff’s competing products. Suture Express, Inc., v. Cardinal Health, Inc., et al., 2:12-cv-02760.

The court determined that the summary judgment record did not demonstrate an injury to competition in the acute care market resulting from defendants’ alleged pricing arrangement, as the plaintiff failed to establish that defendants had market power. Rather, according to the court, the record on summary judgment demonstrated a competitive market, where a number of defendants’ rivals have been able to grow their businesses and compete effectively against defendants, while defendants’ market shares have remained relatively stable; in fact, the court found that defendants’ themselves competed against one another.

In dismissing the case, the court noted, as courts usually do in cases where the record demonstrates, at most, an injury only to the plaintiff, the antitrust laws were designed to protect competition not competitors, and the failure to demonstrate an injury to competition in the market is fatal to a plaintiff’s Sherman Act claims.

Although, as this case shows, antitrust defendants may have to endure lengthy and expensive litigation, experienced antitrust counsel, familiar with the deep and growing body of defense-oriented antitrust decisions, have a number of arrows in their quiver for shooting down antitrust claims.

February 26, 2016 by Seth A. Goldberg

FTC Settles Antitrust Claims Against Orthopedists

Following an investigation, on December 14, 2015, the FTC filed a Complaint and a Decision and Order that resolved antitrust claims against 19 orthopedists in Berks County, PA, arising out of a 2011 merger of six independent physician groups in which the orthopedists practiced. Those six groups merged to form Keystone Orthopaedic Specialties (“Keystone”).

According to the Complaint, the 19 orthopedists comprised 76% of the 25 physician orthopedic physician services market in Berks County. Prior to the merger, competition among orthopedists was robust, with the 25 orthopedists in the market practicing in 11 different physician groups. The merger, however, resulted in market concentration likely well above the thresholds for presuming market power and illegality under the Herfindahl-Hirschman Index.

According to the Complaint, because of the highly concentrated market and entry barriers, health plans operating in Berks County were unable to establish networks of orthopedists for their enrollees in Berks County, and were therefore forced to pay higher rates to the Keystone orthopedists, which they passed on to their enrollees.

The Decision and Order imposes extensive multi-year restrictions on the types of joint arrangements the Keystone orthopedists and their practices may enter into going forward, prohibiting some arrangements altogether, while requiring FTC consent for others.

The lesson of Keystone is simple. Physicians practicing in independent physician groups who are contemplating a joint venture of any kind should retain antitrust counsel to advise on and resolve any antitrust issues before the arrangement is consummated in order to avoid regulator scrutiny and the potential for the severe penalties and practice restrictions that come with it.

January 27, 2016 by Seth A. Goldberg

Dental Providers and Labs Allege Antitrust Conspiracy

Dental and orthodontic practices and dental laboratories around the U.S. are being represented in class actions filed this week in federal courts in Texas and New York, see, e.g., Comfort Care Family Dental, P.C. et al v. Henry Schein, Inc. et al, 1:16-cv-00282 (E.D. NY), that claim defendants Henry Schein, Inc., Patterson Companies, Inc., and Benco Dental Supply Company (“Benco”), alleged to be the dominant dental product distributors in the U.S., together controlling over 80% of the national market for the distribution of dental supplies and dental equipment, conspired to boycott competitors in that market in violation of Section 1 of the Sherman Act.

The Comfort Care complaint asserts that Defendants’ conduct constitutes a horizontal group boycott that resulted in either a per se violation of Section 1 or a violation of the Sherman Act under the “rule of reason,” and alleges that Defendants “frequently communicated with each other at in-person meetings, via electronic mail and texts, and through phone calls” to collectively respond to new competitors and pressure dental associations as part of the group boycott. The Comfort Care complaint also provides economic information purporting to demonstrate that the alleged market is highly concentrated, has high barriers to entry, and has experienced increased pricing despite static or declining demand, all of which support the claim of anticompetitive conduct.

In addition to the private antitrust actions, as the Comfort Care complaint alleges, various state AGs and the FTC are investigating Defendants’ conduct as well, and Benco has already agreed to a consent judgment with the Texas AG pertaining to some of the conduct at issue in the private actions.

April 6, 2015April 6, 2015 by Seth A. Goldberg

Specific Facts Suggest Hospitals and Insurers Agreed to Group Boycott

A per se violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, generally requires an agreement among horizontal competitors that unreasonably restrains trade. To withstand a motion to dismiss, a Section 1 plaintiff must allege facts that suggest direct of evidence of an agreement among the defendants, as opposed to alleging facts that merely are consistent with parallel conduct. These principles have been referred to by some courts as creating a heightened pleading standard for Section 1 claims.

In Arapahoe Surgery Center, LLC, et al. v. Cigna Healthcare, Inc., et al., 2015 U.S. Dist. Lexis 28375 (D. CO.), the Colorado District Court determined that the plaintiffs’ allegations of a group boycott were sufficient to meet the pleading requirements under Section 1, and therefore denied a motion to dismiss filed by three insurance carrier defendants. The specificity of the factual allegations concerning the agreement among the defendants, and the acts in furtherance thereof, underscore the importance of antitrust compliance in the healthcare and health insurance industries. Continue reading “Specific Facts Suggest Hospitals and Insurers Agreed to Group Boycott”

February 3, 2015February 27, 2015 by Philip H. Lebowitz

Health System Integration and Antitrust Laws on Collision Course

Health systems attempting to fulfill the mandate of integrating hospitals and physicians may find themselves accused of going too far. Although the Affordable Care Act, shared savings, gainsharing and other alternative payment methodologies have made integration of physicians, hospitals and other providers an operational goal, success in reaching that goal may be challenged by private antitrust actions.

In a recent Florida federal court decision, the antitrust complaint of “several of Southern Brevard County’s physicians and physicians practice groups” was held to have stated a monopolization claim against Health First, Inc. and three of its wholly-owned subsidiaries — an insurer, a hospital and a physician practice group. Essentially, by fully integrating its business, and incentivizing in-network referrals and managed care pricing, Health First became vulnerable to claims of tying, exclusive dealing, price discrimination and monopolization.

Continue reading “Health System Integration and Antitrust Laws on Collision Course”

April 25, 2012August 21, 2014 by Philip H. Lebowitz

Antitrust Laws No Help to Excluded Physicians

When physicians are excluded from medical staff privileges because the hospital has entered into an exclusive agreement with other physicians, the element of “exclusion” often raises the suggestion that somehow the antitrust laws are implicated and competition has been adversely affected. The recent opinion of the United States Court of Appeals for the Third Circuit in Bocobo v. Radiology Consultants of South Jersey, P.A., et al. , No. 07-3142 (3d Cir. April 13, 2012)(not precedential), explains why the antitrust laws do not afford a remedy to an excluded physician when a hospital contracts with a provider group that does not include the plaintiff physician.

Continue reading “Antitrust Laws No Help to Excluded Physicians”