Tri State Advanced Surgery Ctr., LLC v. Health Choice, LLC – April 2015 (Summary)

ANTITRUST

Tri State Advanced Surgery Ctr., LLC v. Health Choice, LLC, No. 3:14CV143-JM (E.D. Ark. Apr. 16, 2015)

The United States District Court for the Eastern District of Arkansas dismissed antitrust claims that had been brought against a physician-hospital organization and an insurer, finding that the complaint against them failed to satisfy the rule of reason analysis because it did not properly allege power over the relevant market.

In this case, an ambulatory surgery center and two surgeons who practice at that center (the plaintiffs) brought a lawsuit alleging that the physician-hospital organization and the insurer violated the Sherman Antitrust Act. The plaintiffs alleged that the insurer sent letters to the surgeons demanding that they attest that they would no longer refer patients to the out-of-network ambulatory surgery center and would instead refer patients to in-network facilities (such as the hospital that was part of the physician-hospital organization). When the doctors refused to comply, they were terminated from the insurer’s network.   They claimed these activities constituted an anticompetitive effort to dry up referrals to the ambulatory surgery center.

While the plaintiffs alleged that consumer choice had been limited since doctors were forced to stop referring patients to the ambulatory surgery center and patients were being precluded from using their out-of-network benefits for which they paid additional insurance premiums, the court held that these allegations were insufficient to show detrimental effect to competition since the services of the ambulatory surgery center were still available to the public. The court also held that the plaintiffs failed sufficiently to allege market power since they proposed to define the market impermissibly (by limiting it to patients who pay by private insurance bought from Cigna rather than by incorporating into the definition of “market” the alternative patients who were available to receive services at the ambulatory surgery center and surgeons). The court also found the “geographic market” proposed by the plaintiffs to be lacking since it referred generally to the Memphis metropolitan statistical area and “adjacent counties,” without delineating an area where patients may lack alternatives in the market should prices increase as a result of the defendants’ alleged activities.