FEDERAL COURT DENIES SUMMARY JUDGMENT TO BCBS OF RHODE ISLAND ANTITRUST CASE, ALLOWING HOSPITAL SYSTEM’S CLAIMS TO GO TO TRIAL

 

 

On April 23, 2018, Chief Judge William Smith denied summary judgment to Blue Cross and Blue Shield of Rhode Island on all counts in an antitrust case brought by Steward Health Care System, allowing the case to proceed to trial.  Steward’s complaint alleges that BCBSRI unlawfully blocked Steward from entering the Rhode Island healthcare and health insurance markets by thwarting its acquisition of Landmark Medical Center, a Rhode Island community hospital that was in receivership. 

Steward sued BCBSRI, alleging that it had illegally refused to deal on reasonable reimbursement rates in order to stop Steward from entering the Rhode Island market.  Steward also alleged that BCBSRI conspired with two other Rhode Island hospitals to steer patients away from Landmark to those hospitals.   

In analyzing the refusal to deal claim, the Court stated that “Steward sets forth an abundance of evidence that points toward a ‘distinctly anticompetitive bent,’ which could in turn persuade a reasonable jury that Blue Cross unlawfully monopolized the relevant markets by excluding Steward from Rhode Island.”  Among the evidence cited was BCBSRI’s termination of Landmark from its network, something that BCBSRI had never done before or since.

Most important in the Court’s view was that Steward had presented “plethora evidence that Blue Cross sacrificed short-term profits for the longer-term benefit of eradicating potential competition from Steward.”   This is because BCBSRI knew that termination of Landmark from its network would “substantially cost Blue Cross because it would force its subscribers to access other, more expensive, in-network hospitals.”  Thus, the Court found that a “reasonable jury could conclude that Blue Cross’s uniquely hard-care approach with respect to Landmark, just as negotiations with Steward were at a critical state, was not a legitimate business decision, but was designed to kill the Steward acquisition.”

The Court likewise denied summary judgment on the conspiracy claims, finding “in the record substantial evidence that, for conspiracy purposes, tends to exclude an inference of independent conduct.”  This evidence involved four separate episodes, all of which were designed to divert patients from Landmark to competing medical centers.

The case is Steward Health Care System, LLC et al. v. Blue Cross & Blue Shield of Rhode Island, case number 1:13-cv-0045.  The opinion is available here.