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From Antitrust Law Daily, June 17, 2015

Conspiracy claims adequately alleged against health insurers, trade association

By Jeffrey May, J.D.

Aetna, Inc., Anthem Blue Cross and Blue Shield of Colorado, and UnitedHealthCare of Colorado, Inc. failed to convince the federal district court in Denver to dismiss claims that the health insurers participated in a conspiracy with hospital operators to drive complaining ambulatory surgery centers out of the market. The court also denied a trade association’s motion to dismiss the surgery centers’ second amended complaint (Kissing Camels Surgery Center, LLC v. Centura Health Corp., June 16, 2015, Martinez, W.).

The four complaining ambulatory surgery centers (ASCs) performed outpatient surgical procedures and treatments in a non-hospital environment. Non-hospital ASCs must have transfer agreements with hospitals to ensure that patients requiring emergency hospitalization receive rapid and adequate care. The plaintiffs contended that hospital operators, in an effort to prevent competition from the ASCs, refused to sign transfer agreements with the plaintiffs and participated in a conspiracy with health insurers to prevent physicians in their provider networks from referring patients to the plaintiffs’ facilities. They also alleged that Colorado Ambulatory Surgery Center Association, Inc. (CASCA)—a trade association that purported to represent the interests of ASCs but was financially supported by hospital operators—was instrumental in the formation of the boycott of the ASCs.

A defending hospital operator’s motion to dismiss the suit has been denied. In February 2014, the court granted motions to dismiss filed by the health insurers and trade association. Later, the court allowed the plaintiffs to file a second amended complaint (SAC) to support claims against the insurers and CASCA. The court now denies motions of Aetna, Anthem, UnitedHealthCare, and CASCA to dismiss the SAC.

Trade association involvement. At the outset, the court ruled that the plaintiffs alleged sufficient facts to establish that CASCA was an active member of the conspiracy to put the plaintiffs out of business and “not a mere tool of the conspiracy.” According to plaintiffs, two hospital operators that participated in the conspiracy dominated CASCA through membership on the association's board. As a result, the group purportedly represented the hospital operators' interests to the plaintiffs’ detriment. Moreover, an e-mail exchange among executives at one of the hospital operators could support claims that CASCA coordinated meetings on behalf of the hospital operator in order to instigate action by the defending insurers.

Insurers’ participation. The plaintiffs’ SAC contained explicit allegations of agreement and offered potential evidence supporting those allegations against the insurer defendants. The court pointed to meetings between the insurers and CASCA in furtherance of the alleged strategy. One meeting involving CASCA and the Colorado Association of Health Plans—an association of insurers whose board included executives from United and Anthem—was particularly “compelling,” according to the court. The plaintiffs claimed that a plan was established at the meeting for the insurers to “stop the flow of dollars” to the plaintiffs. Attendee’s notes purportedly evidence the establishment of a strategy by the participating Insurers to prevent the plaintiffs from obtaining patients. Further, the plaintiffs alleged that actions were taken by each of the insurer defendants within a matter of days after that meeting in accordance with the agreement.

Insurers’ motive. The court rejected the argument that the insurers lacked a rational motive to join the boycott of the ASCs. The plaintiffs explicitly alleged that the insurers entered the conspiracy at the behest of the hospital operators because those hospitals possessed great market power and were essential to the insurers’ networks, the court explained.

The case is Civil Action No. 12-cv-3012-WJM-NYW.

Attorneys: Joe Ramon Whatley, Jr. (Whatley Kallas, LLP) for Kissing Camels Surgery Center LLC, Arapahoe Surgery Center LLC, Hampden Surgery Center LLC, and Cherry Creek Surgery Center LLC. Kathryn A. Reilly (Wheeler Trigg O'Donnell, LLP) for Colorado Ambulatory Surgery Center Association, Inc. E. Desmond Hogan (Hogan Lovells US LLP) for Rocky Mountain Hospital and Medical Service Inc. Richard B. Benenson (Brownstein Hyatt Farber Schreck, LLP) for UnitedHealthCare of Colorado, Inc. Laura M. Sturges (Gibson Dunn & Crutcher, LLP) for Aetna, Inc.

Companies: Kissing Camels Surgery Center LLC; Arapahoe Surgery Center LLC; Hampden Surgery Center LLC; Cherry Creek Surgery Center LLC; Colorado Ambulatory Surgery Center Assn., Inc.; Rocky Mountain Hospital and Medical Service Inc.; UnitedHealthCare of Colorado, Inc.; Aetna, Inc.

MainStory: TopStory Antitrust ColoradoNews

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