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From Health Law Daily, April 7, 2017

Blue Cross plans’ uniform denial of telemetry devices not anticompetitive

By Kayla R. Bryant, J.D.

When Blue Cross Blue Shield Association (BCBS) and administrators of various insurance plans licensed by BCBS decided not to cover telemetry devices, it was not competition-reducing conduct. A Pennsylvania District Court found that Lifewatch Services, Inc. (Lifewatch) failed to bring an antitrust claim against BCBS and dismissed the complaint in its entirety (Lifewatch Services, Inc. v. Highmark, Inc., April 3, 2017, Robreno, E.).

Telemetry services. Lifewatch provides mobile cardiac outpatient telemetry (MCOT) devices for arrhythmia monitoring, and identifies as one of the two largest sellers of these monitors. Lifewatch runs two patient-monitoring facilities for patients who are privately insured, where personnel analyze transmitted data. The company believes that scientific evidence supports the use of telemetry services, and stated that despite such evidence, almost all BCBS plans uniformly hold that telemetry is never medically necessary for any patient or condition. This, Lifewatch alleged, amounts to a conspiracy to deny insurance coverage for MCOT devices and is a "horizontal anticompetitive agreement."

Antitrust claim. Lifewatch claims that BCBS plans’ uniform decision not to cover telemetry services has distorted the market, reduced the demand for and output of MCOT devices, and has caused Lifewatch to suffer reduced revenue and profits. The company argued that the distortion causes anticompetitive effects which reduce the quality of cardiac monitoring. In its motion to dismiss, BCBS stated that Lifewatch failed to allege an antitrust injury, because harming an individual’s company’s profits due to failing to purchase their devices is not equivalent to harming competition. BCBS noted that it treated all telemetry monitor providers equally in denying coverage.

The court agreed with BCBS, finding no violation of antitrust laws because the purpose of the laws is to protect the public from market failure based on trade restrictions that significantly impacted competition. The court noted that even assuming that Lifewatch had adequately pleaded that a conspiracy existed and harmed its sales, Lifewatch could not show that any such conspiracy was undertaken to restrain trade to harm competition because all telemetry providers are equally affected. The complaint was dismissed with prejudice.

The case is Civil Action No. 12-5146.

Attorneys: Andrew M. Meerkins (Shook, Hardy & Bacon LLP) and Michael J. McCarrie (Artz Health Law) for LifeWatch Services, Inc. Daniel E. Laytin (Kirkland & Ellis LLP), Sheryl L. Axelrod (The Axelrod Firm, PC) and Stephen A. Loney, Jr. (Hogan Lovells US LLP) for Blue Cross and Blue Shield Association, WellPoint, Inc., Horizon Blue Cross Blue Shield of New Jersey, Blue Cross Blue Shield of South Carolina and Blue Cross Blue Shield of Minnesota.

Companies: LifeWatch Services, Inc.; Blue Cross and Blue Shield Association; WellPoint, Inc.; Horizon Blue Cross Blue Shield of New Jersey; Blue Cross Blue Shield of South Carolina; Blue Cross Blue Shield of Minnesota

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