Royal Mile Co., Inc., v. UPMC (Summary)

ANTITRUST MONOPOLIZATION

Royal Mile Co., Inc., v. UPMC, No. 10-1609 (W.D. Pa. Sept. 27, 2013)

The U.S. District for the Western District of Pennsylvania dismissed the second amended complaint brought by several companies against a health care provider and health care insurer who were alleged to have conspired in violation of federal antitrust law to maintain their respective monopolies in Western Pennsylvania, thereby causing the companies to pay inflated premiums for health care coverage.

The companies alleged that the conspiracy between the provider and insurer allowed the provider to impose “monopoly rents” on the market by overcharging the insurer, knowing that the insurer would abuse its monopoly status and pass on excessive “monopoly rents” to its subscribers, the companies here. As such, the conspiracy forced policyholders, such as the companies that brought this lawsuit, to pay inflated, above-market rates for health insurance that would not exist but for the conspiracy.

The court found that the filed rate doctrine – which bars antitrust suits based on rates that have been filed and approved by federal and state agencies – barred the companies’ claims.  The court held specifically that a determination by the state insurance department that the rates charged by the insurer were not excessive, inadequate, or unfairly discriminatory is not subject to review by the court, nor can the court select a hypothetical rate that the department would have approved for the insurer in the absence of the conspiracy.  Accordingly, due to the filed rate doctrine, the companies would be unable to allege an estimated measure of damages, which is an essential element of a Sherman Act antitrust claim.

Finally, the court held that the companies’ claim for tortious interference with existing or prospective contractual relations was time-barred because failing to disclose the conspiracy between the provider and insurer was not sufficient to establish an affirmative independent act of concealment to toll the statute of limitations.