Consolidation is happening in insurers and health systems throughout the country. A recent legal case in Louisiana sheds some light on where the judiciary may be going with this. In July of last year, the Biomedical Research Foundation Shreveport (BRFHH) and Vantage Health Plan (Vantage) filed an antitrust lawsuit against Willis-Knighton Health System, alleging that Willis-Knighton was unfairly taking away doctors and, in turn, their privately insured patients. The case alleged that the Willis-Knighton Medical Center was “unlawfully stripping plaintiff UH-Shreveport of its commercially insured business,” with the plan to eventually entirely take over UH-Shreveport, which would effectively give Willis-Knighton a “complete monopoly” in the relevant market. Such a monopoly would “substantially increase health care costs, reduce health care quality, and seriously harm insurers, employers, and consumers.”
According to the plaintiffs, Willis Knighton’s share of hospital admissions in Shreveport and surrounding area is around 60% overall, and approximately 75% among commercially insured patients.
Vantage was concerned (and asserted alone) that some of Willis-Knighton’s prior acquisitions, physician referral practices, and non-compete employment contracts, violated section 2 of the Sherman Act (prohibits monopolization and attempted monopolization) and section 7 of the Clayton Act (prohibits anticompetitive acquisitions and mergers).
Willis-Knighton has not only vehemently denied the allegations contained in the complaint, but also filed a Motion to Dismiss. Willis-Knighton argued that Vantage did not allege a “cognizable theory of anticompetitive conduct,” which is required to establish a section 2 claim; that Vantage did not establish antitrust injury, a “threshold requirement for a plaintiff in any antitrust claim;” and that the behavior Vantage complains of is so vague that it cannot support a “plausible, non-speculative claim.”
On March 31, 2016, Judge Elizabeth C. Foote determined that Vantage did plead anticompetitive conduct in its complaint since several competitors of Willis-Knighton were acquired by Willis-Knighton, thereby lessening the competition and increasing Willis-Knighton’s market share in the relevant market. Since Judge Foote found that Vantage did plead anticompetitive conduct in their complaint, she denied Willis-Knighton’s motion to dismiss for failure to plead anticompetitive conduct. However, the idea that Willis-Knighton acquired physicians from competitors, resulting in the weakening of those competitors, did not rise to the level of Section 2 liability because the complaint did not allege that Willis-Knighton hired the physicians to deny them to any of its competitors. Judge Foote also found that Willis-Knighton presented a rational business purpose in hiring the additional physicians and related non-compete agreements: to be able to treat more patients.
Willis-Knighton also argued that all of Vantage’s claims should be dismissed due to lack of specificity as required under court precedent. However, the district court found that Vantage did allege facts that were sufficient enough to provide the necessary causal links between Willis-Knighton’s actions and the alleged future harm. The court also found that reference to Willis-Knighton’s current high market shares in the complaint provided enough of a basis to make past monopoly power plausible.
The district court found that Vantage’s allegation that it was injured by Willis-Knighton refusing to contract with it does not actually constitute an antitrust injury.
However, Judge Foote allowed the case to proceed on the grounds that Vantage suffered an injury insofar as Willis-Knighton demanded exorbitant reimbursement rates. However, while this portion of the claim survived being dismissed, Vantage must prove later on that Willis-Knighton increased prices as a result of its anticompetitive acts, in order to prove an actual antitrust injury.
This case, and the recent permission from the court for progression, show that the recent trend in health plan provider consolidation may wind up slowing down, even if only temporarily while this case blows over.