Per se versus ‘Rule of Reason’ Standard: Judge in Blue Cross Antitrust MDL Proceeding Certifies His Decision For Interlocutory Appeal

Posted in Antitrust, Health Insurers & Managed Care Organizations, Healthcare Litigation

In a somewhat unexpected but highly significant move, United States District Judge David Procter (Northern District of Alabama), who is presiding over the In re Blue Cross Blue Shield Antitrust Litigation (Case No. 2:13-cv-20000, N.D. Alabama), has granted defendants’ request that he certify his ruling that the defendants’ alleged conduct should be assessed under a per se standard (and not the “rule of reason”) for immediate interlocutory appeal to the 11th Circuit Court of Appeals. So, unless the 11th Circuit rejects Judge Procter’s request, it appears that we will receive an appellate court decision on this issue prior to the entry of a final judgment in this massive, and closely watched, action.

The multi-district litigation matter, which is now almost five years old, combined over 80 separate lawsuits from all across the country into two putative classes of plaintiffs – a subscriber class and provider class – and, as Judge Procter has noted, is “reportedly one of the largest (if not the largest) antitrust litigations ever filed.” As Judge Procter has further explained, in all of these cases, “the plaintiffs allege that the defendants (virtually all of the Blue Cross Blue Shield insurers across the nation – “the Blues”) have violated the antitrust laws by agreeing to allocate exclusive geographic service areas, imposing output restrictions, fixing prices for certain products and services secured from health care providers, and boycotting health care providers who reside outside of a Plan’s allocated geographic service area.”  In an April 5 decision, the Court held that “Defendants’ aggregation of a market allocation scheme together with certain other output restrictions is due to be analyzed under the per se standard of review,” a ruling that would permit plaintiffs to prove liability in the case against the Blues simply by showing that the defendants entered into such an agreement, without being required to prove that the effect of any such alleged agreement was anticompetitive and/or counterbalanced by procompetitive benefits (unlike in a “rule of reason” case, which would require such additional proof). Recognizing the significance of the ruling, the Blues quickly filed a request that they be permitted to appeal the decision to the 11th Circuit, rather than await a final judgment in the matter. Continue Reading

Pharmacies Accuse Drug Maker of Anticompetitive Contracting to Restrict Biosimilar Market

Posted in Antitrust, Health Insurers & Managed Care Organizations, Healthcare Litigation, Pharmacy, Drugs, Medical Devices & Equipment

Walgreens and Kroger have filed an antitrust action in the United States District Court for the Eastern District of Pennsylvania accusing Johnson & Johnson (J&J) of engaging in anticompetitive conduct designed to stymie the growth of biosimilar alternatives to J&J’s Remicade, a biologic drug used to treat certain chronic immune disorders (Walgreen Co. v. Johnson & Johnson, Case No. 2:18-cv-02357-JCJ, Eastern District of Pennsylvania). The action is only the latest in a string of suits filed against J&J challenging its sales practices relating to Remicade. Pfizer, the maker of Inflectra, a biosimilar alternative to Remicade, previously filed an action against J&J making similar claims, as did a number of union benefits funds. Several of these previously-filed actions have already been consolidated in the Eastern District of Pennsylvania as the In re Remicade Antitrust Litigation, Case No. 2:17-cv-4326, JCJ, before Judge J. Curtis Joyner. In all likelihood, the Walgreens case will be referred to Judge Joyner and become part of the consolidated action as well.    Continue Reading

Florida Court Affirms Rejection of CON of a Hospice Operator’s Application, Despite a “Regional Monopoly”

Posted in Antitrust, Government Affairs, Licensure & Regulatory

Florida’s First District Court of Appeals has affirmed a decision by the Florida Agency for Health Care Administration (AHCA) that denied an application by Compassionate Care Hospice of the Gulf Coast (CCH) to open a hospice in Sarasota County.  (Compassionate Care Hospice of the Gulf Coast v. State of Florida, No. 1D16-5062, Fla. Dist. Court of Appeals). Notably, AHCA denied CCH’s request despite noting that there is currently only one hospice operator in Sarasota County (Tidewell Hospice), and thus acknowledging that Tidewell has a ‘monopoly” on such services in the area.  Continue Reading

U.S. Supreme Court Rules That Class Action Waivers Are Enforceable

Posted in Healthcare Law, Healthcare Litigation, Labor Relations & Employment Law

Employers may require employees to enter into arbitration agreements that waive such employees’ ability to participate in a class or collective action lawsuit, the U.S. Supreme Court ruled this week. In a long-awaited decision that represents a significant victory for employers, the Court in Epic Systems Corp. v. Lewis held that such agreements do not violate the National Labor Relations Act and are enforceable.

The employees in the case argued that the NLRA statutorily prevents employees from waiving their right to assert claims as a class or collectively, thus falling within the “saving clause” of the Federal Arbitration Act (FAA), which permits courts from enforcing arbitration agreements that are illegal. At the outset, Justice Neil Gorsuch, writing for the Court’s majority in a 5-4 decision, rejected the employees’ contention, reasoning that the “saving clause” recognizes only defenses that apply to “any” contract, such as fraud, duress or unconscionability. In reaching this holding, the Court emphasized the FAA’s mandate that courts generally enforce, not override, the terms of arbitration agreements. Continue Reading

Derailing the Gravy Train – Trump Unveils Plan to Reduce Drug Prices

Posted in Healthcare Law, Healthcare Reform Legislation, Pharmacy, Drugs, Medical Devices & Equipment

Throughout his presidential campaign, President Trump championed the need to allow the government to negotiate drug prices on behalf of the Medicare program. However, that third rail for pharmaceutical companies was not included as part of the President’s recently released blueprint for lowering drug prices. Instead, the plan takes aim at the entire supply chain that lies between drug manufacturers and patients, including health insurers, distributors, pharmacy benefit managers and even foreign governments.

The Trump administration’s “American Patients First” plan lays out four “key strategies for reform.” These strategies involve two phases. In the first phase, the President may direct the US Department of Health and Human Services (HSS) to issue guidance geared toward accomplishing these strategies. The second phase involves further analysis of the complexities of the system and submitting proposed rules for feedback. The following summary condenses the almost 40-page plan into the most salient points since not all of the ideas are fully fleshed out. Continue Reading

California Attorney General Brings Action Against Sutter Health Contending its Contracting Practices Violate the Antitrust Laws

Posted in Antitrust, Hospitals & Health Systems

The California Attorney General recently filed a precedent-setting antitrust action against Sutter Health, the largest health system in Northern California (People of the State of California v. Sutter Health, Case No. CGC-18-565398, San Francisco Superior Court), contending that Sutter Health’s contracting practices violate the antitrust laws. The action, filed in the San Francisco Superior Court, seeks to “restore competition in healthcare markets in California,” and claims that Sutter Health has “found a way to illegally control price and severely limit competition by compelling [insurers] to enter into contracts that improperly block any and all practical efforts to foster or encourage price competition between Sutter and any rival hospital systems.” To remedy the alleged violations, the State seeks, among other things, to have the Court require Sutter Health to terminate the challenged contracting practices, to “disgorge” previously received “overcharges” that Sutter Health received as a result of those practices, and to require Sutter Health to submit to mandatory arbitration to determine Sutter Health rates going forward. Continue Reading

The 2018 SMMC Proposed Contract Awards: Where Do You Go From Here?

Posted in Government Affairs, Licensure & Regulatory, Health Insurers & Managed Care Organizations, Medicare & Medicaid

On April 24 the Agency for Health Care Administration (“AHCA”) released its proposed contract awards for the Statewide Medicaid Managed Care (“SMMC”) Program.  The determinations that AHCA made for this 5 year, $90 billion re-procurement were surprising to many and are likely to result in a significant reshaping of the program that currently exists.  First, however, AHCA must resolve any potential challenges that may surface from disaffected parties. A listing of Proposed Awardees and a brief discussion of Florida’s Bid Protest requirements follows. Continue Reading

Health Insurers Contend Allergy Test Maker’s Antitrust Claims Make No Economic Sense – Seek Early Dismissal on that Basis

Posted in Antitrust, Health Insurers & Managed Care Organizations, Healthcare Litigation

Three health insurers accused of having violated the antitrust laws in Academy of Allergy & Asthma in Primary Care v. Blue Cross Blue Shield of Louisiana, et al. (Eastern District of Louisiana), have filed motions seeking a swift win in the matter prior to the commencement of discovery. In support of their request, Humana, Blue Cross Blue Shield of Louisiana and Blue Cross Blue Shield of Kansas each contend that the allegations in the Complaint are implausible on their face, and thus fail to satisfy the test for pleading an antitrust conspiracy set forth by the United States Supreme Court in Ashcroft v. Iqbal (“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.”) Continue Reading

GDPR: What You Need to Know Now

Posted in Health Insurers & Managed Care Organizations, Healthcare Law, Hospitals & Health Systems, Technology

It is safe to say that there has been much fear and confusion over the European Union (EU) General Data Protection Rule, or GDPR. With an effective date of May 25, 2018, and little guidance as to how the GDPR applies to organizations that do not have a physical presence in the EU or do not target their goods and services to EU residents, companies, including healthcare entities, with few, if any, business contacts with EU members are challenged to bring their companies into compliance.  We have outlined below the fundamental questions that healthcare entities are likely asking themselves regarding GDPR, including whether they must comply with yet another data privacy regulation. Continue Reading

Reversal of Fortune: Rhode Island Court Withdraws “Tentative” Decision to Grant Summary Judgment to Health Insurer in Health System Antitrust Case and Sets Matter for Trial

Posted in Antitrust, Health Insurers & Managed Care Organizations, Healthcare Law, Healthcare Litigation

In what was a surprise result, on April 23, Judge William Smith (Chief Judge of the District of Rhode Island) reversed the “tentative” decision he had announced last November, in Steward Health v. Blue Cross & Blue Shield of Rhode Island, which would have granted defendant Blue Cross & Blue Shield of Rhode Island (BCBS-RI) summary judgment on all claims in the case. Instead, in a 101 page decision, Judge Smith ruled that this closely watched antitrust case, in which Steward Health alleged that BCBS-RI violated the antitrust laws in an effort to keep Steward Health, a Massachusetts-based health system, out of the Rhode Island market, will proceed to trial. In explaining the reason for his changed view on defendant’s motion, Judge Smith stated “…this is a complicated case, and the areas of antitrust law governing the claims [are], to put it kindly, confused and opaque.”     Continue Reading

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