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From Antitrust Law Daily, December 18, 2018

Antitrust claim fails in physician-insurer billing dispute

By Nicole D. Prysby, J.D.

A physician failed to adequately allege that an insurer and its competitors reached an unlawful agreement to exclude primary care physicians from providing allergy services and therefore his Sherman Act claim failed, the federal district court in Nashville has held. Although the physician alleged that the insurer contacted its competitors and attempted to get them to adopt the position, there was no evidence that the insurer succeeded in getting the other insurers to do so. However, the physician’s claim for tortious interference with a business relationship claim would go forward, based on his allegation that the insurer interfered with his business relationships by orchestrating the false denial of reimbursement claims for allergy care. His § 1983 claim failed, because he did not have a federally enforceable right under the antidiscrimination provision of the Medicaid Act. His First Amendment retaliation claim also failed because although the insurer threatened monetary sanctions against him after he complained to a state agency, there was no allegation that it actually imposed them. His Declaratory Judgment Act claim would go forward, because a declaratory judgment could settle the controversy as to the appropriateness of the insurer’s reimbursement denials (Sewell v. Amerigroup Tennessee, Inc., December 14, 2018, Crenshaw, W.).

Background. A physician and his medical practice filed suit against a Medicaid insurance company, following a billing dispute. The medical practice provided a variety of services, including allergy care and allergen immunotherapy. It contracted with an allergy service to assist with certain ancillary allergy services such as application of the skin-prick test. A number of the patients of the practice were covered by Medicaid (through TennCare) and up until 2016, the insurer promptly paid allergy-related reimbursement claims. In 2016, the insurer began denying the claims and asserted that primary care physicians should not be providing allergy-related services. The physician alleged that the insurer attempted to convince its competitors to adopt the same position regarding eliminating reimbursement for allergy testing or immunotherapy at the primary care level. In March 2017, the insurer met with TennCare to discuss terminating contracts with primary care physicians who were providing allergy care, but TennCare voiced reservations about the proposal, given the lack of board-certified allergists in the network, and ultimately took no action. The claim denials continued and the physician complained to the state insurance agency. He then filed the lawsuit, alleging antitrust and other claims.

Sherman Act claim. The insurer argued that the physician failed to (1) allege an actual agreement or concerted action to restrain trade, (2) define the relevant product or geographic market implicated, and (3) establish an antitrust injury. The court agreed as to the first argument. The physician alleged that the insurer attempted to convince its competitors to adopt the same position regarding eliminating reimbursement for allergy testing and immunotherapy at the primary care level and met with them in pursuit of that goal. But he did not allege that an actual agreement existed. He also failed to allege sufficient circumstantial facts to plausibly raise an inference of an unlawful agreement. He claimed that the insurer used an Office of Inspector General advisory opinion (which questioned whether primary care physicians should provide allergy related services) as a pretext to exclude primary care physicians from providing allergy services and shared the pretext with its competitors. But there were no allegations that the competitors actually ceased reimbursement for allergy medical services provided by primary care physicians or that TennCare took any action. Although the physician alleged a host of actions by the insurer (such as abnormal behavior and inconsistent reasons for denying reimbursement), he failed to sufficiently allege that an agreement was reached between the insurer and its competitors. Therefore, his Sherman Act claim failed.

42 U.S.C. § 1983 and First Amendment retaliation claims. The insurer argued that the physician’s § 1983 claim should fail because it was not a state actor and even if it was, the physician did not have a federal enforceable right under § 1983. The court did not address the issue of whether the insurer was a state actor, because it concluded that the physician did not have a federally enforceable right. He had relied on the antidiscrimination provision of the Medicaid Act, which provides that a Medicaid insurer shall not discriminate with respect to participation or reimbursement of providers who act within the scope of the provider’s license. But the court found that the Medicaid antidiscrimination provision does not create a private federal cause of action enforceable through § 1983. The law is phrased in terms of benefitting Medicaid insureds, not providers and is aimed at giving insurers the parameters to manage their networks to meet the needs of their enrollees, as opposed to providing providers with a private right of action.

The physician’s First Amendment retaliation claim also failed, because his complaint failed to set out what First Amendment impairment was suffered. He claimed that his complaints to the state agency caused the insurer to retaliate against him in the form of letters threatening sanctions, but after the alleged retaliation, he continued to complain to the state. His continued exercise of his First Amendment rights in the face of the insurer’s allegedly adverse action belies any impairment of his First Amendment rights. And although the insurer threatened monetary sanctions, there was no allegation that it actually imposed them.

Tortious interference and Declaratory Judgment Act claims. The insurer argued that the claim for tortious interference with a business relationship should be dismissed because there were no allegations that it acted with the intent to cause third parties to cease their business with the physician and there were no allegations that he actually lost business from any particular patient, vendor, or other business partner. But the court rejected that argument, finding that the physician adequately pleaded both improper motive and actual damages resulting from the tortuous interference. He alleged that the insurer knew of the practice’s business relationships and specifically alleged that the insurer interfered with those business relationships by orchestrating the false denial of reimbursement claims for allergy care. As a result, the practice suffered substantial economic harm in the form of revenue reduction, a decreased patient pool, and a strained relationship with its allergy service partner.

The Declaratory Judgment Act claim also would go forward. Even after the dismissal of the Sherman Act and § 1983 claims, substantive claims remained, including claims for breach of contract, tortious interference with a business relationship, and violation of Tennessee’s Prompt Payment Act. A declaratory judgment could settle the controversy as to the appropriateness of the insurer’s reimbursement denials, thus settling the primary controversy between the parties and serving a useful purpose in clarifying the legal relations at issue. There was no evidence of an improper motive in bringing the claim and there were no current state proceedings on the issue or an alternate, more effective remedy.

This case is No. 2:17-cv-00062.

Attorneys: Ashley E. Cowgill (Pillsbury, Winthrop, Shaw & Pittman, LLP) for C.S. Sewell and Christopher Sewell. Brian F. Hendricks (Reed Smith LLP) for Amerigroup Tennessee, Inc. d/b/a Amerigroup Community Care.

Companies: Amerigroup Tennessee, Inc. d/b/a Amerigroup Community Care

MainStory: TopStory Antitrust TennesseeNews

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