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From Health Law Daily, December 11, 2013

Class certified to proceed with antitrust claims against Chicago-area health care system

By Jeffrey May, JD

The federal district court in Chicago has certified a class of all end-payors who purchased inpatient and outpatient health care services directly from NorthShore University HealthSystem (formerly known as Evanston Northwestern Healthcare) to proceed with claims that the Chicago-area health care system engaged in monopolistic conduct following an anticompetitive hospital acquisition (In re: Evanston Northwestern Healthcare Corporation Antitrust Litigation, December 10, 2013, Chang, E).

Background. The decision to grant the plaintiffs' renewed motion for class certification in this long-running action follows a remand order from the U.S. Court of Appeals in Chicago and unsuccessful settlement negotiations. In January 2012, the Seventh Circuit vacated the district court's 2010 denial of class certification. The appellate court ruled that it was an abuse of discretion to deny certification on the ground that the putative class could not show predominance for purposes of Federal Rule of Civil Procedure 23(b)(3).

The putative class sought to recover for paying artificially inflated prices for health care services following the 2000 acquisition, which the FTC had found in administrative proceedings violated federal antitrust law. The appellate court ruled that common questions would predominate in regard to whether the acquisition violated federal antitrust law and that uniformity of nominal price increases following the transaction was not a condition for class certification, as the lower court had held.

Class action establishment. In its ruling issued yesterday, the federal district court concluded that the plaintiffs established that a class action was the superior method for adjudicating the controversy. Thus, they satisfied the only remaining requirement of Rule 23 that had not already been decided.

NorthShore unsuccessfully argued that class action litigation was inferior to either arbitration or to individual litigation. Although NorthShore had not waived its right to arbitrate—as the plaintiffs asserted—the court concluded that the issue of arbitration was premature.

According to NorthShore, managed care organizations (MCOs) were bound by arbitration agreements with the system and arbitration was a superior method for adjudicating the class claims. However, the MCOs, although included in the proposed class, were not parties to the case. Thus, the sensible course, according to the court, was to decide whether to certify the class without considering the possibility of arbitration, bring the MCOs into the case, see what their position was on arbitration, and then decide who must arbitrate.

Further, the MCOs' theoretical interest in controlling individual lawsuits was not enough to prevent class certification. NorthShore had argued that class litigation was not superior to individual litigation because, in light of their potentially large individual claims, the MCOs and their self-insured subscribers had an interest in individually controlling any claim against NorthShore.

Lastly, the court rejected NorthShore’s argument that a certified class would be unmanageable because any trial would require hundreds of mini-trials analyzing many individual NorthShore-MCO contracts. The appellate court had concluded that the plaintiffs’ expert could use common evidence to show that all of the class members suffered some antitrust impact. By helping to answer the antitrust liability question in one fell swoop, the expert's methodology would eliminate the need for hundreds of mini-trials on liability. Therefore, class certification was superior to re-litigating liability in individual repeat proceedings, the court held.

Rule 23(a) prerequisites. The court also disposed of NorthShore's argument that it needed to revisit each of Rule 23(a)’s certification prerequisites, even though the putative class had already satisfied most of them for purposes of the earlier vacated ruling. Although the prior order was technically vacated, the Seventh Circuit did not disturb the previous findings of typicality and adequacy, in the district court's view. Further, the court had found that class counsel was adequate, and the parties had agreed that the numerosity and commonality factors were satisfied.

The case is No. 07-cv-04446.

Attorneys: Duane M. Kelley (Winston & Strawn LLP) for Evanston Northwestern Healthcare Corp. Fred T. Isquith (Wolf Haldenstein Adler Freeman & Herz LLP) for Steven J. Messner. Andrew Szot (Miller Law LLC), Lori Ann Fanning (Jacobs Burns Orlove & Hernandez) for Painters District Council No. 30 Health & Welfare Fund. David James Doyle (Winston & Strawn LLP) for Northshore University HealthSystem.

Companies: Evanston Northwestern Healthcare Corp.; Northshore University HealthSystem

MainStory: TopStory AntitrustNews OPPSNews IllinoisNews

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