Horisons Unlimited v. Santa Cruz-Monterey-Merced Managed Med. Care Comm’n (Summary)

MANAGED CARE ANTITRUST

Horisons Unlimited v. Santa Cruz-Monterey-Merced Managed Med. Care Comm’n,
No. 1:14-CV-00123-LJO-MJS (E.D. Cal. June 30, 2014)

The United States District Court for the Eastern District of California granted in part and denied in part a motion to dismiss antitrust, discrimination, and breach of contract claims brought by a non-denominational religious health care provider (the “Clinic”), which serves California’s Medi-Cal beneficiaries. The claims were brought against a Medi-Cal managed care plan (the “Plan”) and the County. The Plan was the only Medi-Cal managed care plan in the County, and the Clinic was forced to contract with it in order to continue to provide care to Medi-Cal beneficiaries.

A provision in the contract stated that the Plan must credential the Clinic’s providers. The Clinic alleged that the County and the Plan took up to six months to complete credentialing, and refused to grant temporary credentials to the Clinic’s providers. This was in spite of the Plan’s routine practice of granting temporary credentials to providers of the Clinic’s main competitor, whose CEO was on the Plan’s Board. The Clinic alleged that it was on the brink of bankruptcy and would continue to lose $350,000 per month because of the actions of the County and the Plan.

The court dismissed the Clinic’s antitrust claim against the County for only offering one managed care plan because a statutory provision allowed for such limited offerings as long as the managed care plan met statutory qualifications. However, the court denied the Plan’s motion to dismiss the Clinic’s claim for conspiracy to monopolize the market (to the extent the claim was seeking injunctive relief) because a reasonable jury could determine that the Plan and the Clinic’s competitor conspired to monopolize the Medi-Cal healthcare provider market. However, with respect to this claim and the Clinic’s request for monetary damages, the court found that the Plan was entitled to immunity under the Local Government Antitrust Act.

Next, the court dismissed the Clinic’s discrimination and breach of contract claims. The court found that the Clinic failed to come close to stating a claim that the County or the Plan deprived the Clinic of its First Amendment right. Additionally, the Clinic failed to show the County and the Plan breached their contract by refusing to grant temporary credentials to the Clinic’s providers because the contract did not contain a provision that permitted temporary credentials.