Justia Antitrust & Trade Regulation Opinion Summaries

The court affirmed the issuance of a permanent injunction enjoining the merger of Anthem and Cigna under Section 7 of the Clayton Act, 15 U.S.C. 18. The court held that the district court did not abuse its discretion in enjoining the merger based on Anthem's failure to show the kind of extraordinary efficiencies necessary to offset the conceded anticompetitive effect of the merger in the fourteen Anthem states: the loss of Cigna, an innovative competitor in a highly concentrated market. The court also held that the district court did not abuse its discretion in enjoining the merger based on its separate and independent determination that the merger would have a substantial anticompetitive effect in the Richmond, Virginia large group employer market. View "United States v. Anthem" on Justia Law

Plaintiff-Appellant Suture Express, Inc. appeals from the district court’s entry of summary judgment in favor of Cardinal Health 200, LLC (“Cardinal”) and Owens & Minor Distribution, Inc. (“O&M”) under Section 1 of the Sherman Antitrust Act, Section 3 of the Clayton Act, and the Kansas Restraint of Trade Act (“KRTA”). Suture Express, Cardinal, and O&M compete in the national broadline medical-and-surgical (“med-surg”) supply and distribution market. After Suture Express entered the "suture-endo" market and steadily grew its market share, Cardinal and O&M responded by instituting bundling packages in their contracts. Suture Express sued Cardinal and O&M, alleging that their bundling arrangements constituted an illegal tying practice in violation of federal and state antitrust laws. The court held that Suture Express’s federal claims failed as a matter of law because it could not establish that either Cardinal or O&M individually possessed sufficient market power in the other-med-surg market that would permit it to restrain trade in the suture-endo market. Even were this not the case, however, the court also held that: (1) Suture Express could not establish antitrust injury because it had not shown that competition itself had been harmed; and (2) Cardinal and O&M cited sufficient procompetitive justifications for the bundling arrangement to overcome any harm caused by any anticompetitive effects resulting from the bundle. Viewing the evidence in the light most favorable to Suture Express, the Tenth Circuit did not think the company could survive summary judgment under Section 1 of the Sherman Act, Section 3 of the Clayton Act, or the Kansas Restraint of Trade Act. "There simply is not enough probative evidence by which a reasonable jury could find that Cardinal’s and O&M’s bundling arrangement unreasonably restrained trade in violation of federal or state antitrust law." View "Suture Express v. Owens & Minor" on Justia Law

In 2010, Lenox MacLaren Surgical Corporation (“Lenox”) sued several related corporations, Medtronic, Inc.; Medtronic PS Medical, Inc. (“PS Medical”); Medtronic Sofamor Danek, Inc. (“MSD, Inc.”); and Medtronic Sofamor Danek Co. Ltd. (“MSD Japan”) (collectively, “Defendants”), for monopolization and attempted monopolization in violation of section 2 of the Sherman Act. Lenox alleged that Defendants engaged in illegal activity to advance a coordinated, anticompetitive scheme in which a related non-party, Medtronic Sofamor Danek USA, Inc. (“MSD USA”), also participated. Lenox sued MSD USA in 2007 on claims arising from the same set of facts. In this case, Lexon challenged the district court’s disposition of Defendants’ second motion for summary judgment, which claimed that Lenox could not prove the elements of its antitrust claims against any of the named Defendants individually, and that Defendants cannot be charged collectively with the conduct of MSD USA or of each other. They also argued that the doctrine of claim preclusion barred Lenox’s claims, in light of the prior proceeding against MSD USA. The district court granted summary judgment, holding that because Lenox could not establish each of the elements of an antitrust claim against any one defendant, or establish a conspiracy among them, Lenox’s claims failed as a matter of law. Lenox appealed. But finding no reversible error, the Tenth Circuit affirmed. View "Lenox MacLaren Surgical Corp. v. Medtronic" on Justia Law

Advocate Health Care and NorthShore University HealthSystem operate hospital networks in Chicago’s northern suburbs. They propose to merge. The Clayton Act forbids asset acquisitions that may lessen competition in any “section of the country,” 15 U.S.C. 18. The Federal Trade Commission and the state sought an injunction, pending the Commission’s consideration of the issue. To identify a relevant geographic market where anticompetitive effects of the merger would be felt, plaintiffs relied on the “hypothetical monopolist test,” which asks what would happen if a single firm became the sole seller in a proposed region. If such a firm could profitably raise prices above competitive levels, that region is a relevant geographic market. The Commission’s expert economist chose an 11-hospital candidate region and determined that it passed the hypothetical monopolist test. The district court denied a preliminary injunction, finding that the plaintiffs had not demonstrated a likelihood of success on the merits, but stayed the merger pending appeal. The Seventh Circuit reversed; the geographic market finding was clearly erroneous. The evidence was not equivocal: most patients prefer to receive hospital care close to home and insurers cannot market healthcare plans to employers with employees in Chicago’s northern suburbs without including some of the merging hospitals in their networks. The district court rejected that evidence because of some patients’ willingness to travel for care; its analysis erred by overlooking the market power created by the remaining patients’ preferences (the “silent majority” fallacy). View "FTC v. Advocate Health Care Network" on Justia Law

Penn State Hershey Medical Center is a leading academic medical center, with 551 beds and more than 800 physicians. Hershey offers all levels of care, but specializes in more complex, specialized services, unavailable at most other hospitals. Hershey draws patients from a broad area. PinnacleHealth System has three hospital campuses, two in Harrisburg, and another in Mechanicsburg, focusing on cost-effective primary and secondary services, with only a limited range of more complex services. It employs fewer than 300 physicians and provides 646 beds. In 2014, Hershey and Pinnacle signed a letter of intent for a proposed merger. Their respective boards subsequently approved the merger; the Hospitals notified the Federal Trade Commission (FTC), and, in 2015, executed a “Strategic Affiliation Agreement.” The FTC opposed the merger and filed suit under the Clayton Act and the FTC Act. The district court denied a preliminary injunction pending the FTC’s adjudication on the merits, finding that the opponents of the merger did not properly define the relevant geographic market, a necessary prerequisite to determining whether a proposed combination is sufficiently likely to be anticompetitive as to warrant injunctive relief. The Third Circuit reversed after determining the government’s likelihood of success and weighing the equities, finding that a preliminary injunction would be in the public interest. The Hospitals did not rebut the government’s prima facie case that the merger is likely to be anticompetitive. View "Fed. Trade Comm'n v. Penn State Hershey Med. Ctr." on Justia Law

Deborah is a New Jersey charity hospital. CGPA is a group of New Jersey cardiologists. Because no CGPA physician could perform advanced cardiac interventional procedures (ACI) procedures, in 1992, CGPA and Deborah began a relationship that resulted in the transfer of numerous ACI patients to Deborah. In 2005, the CGPA doctors entered into an exclusive agreement to provide Virtua Hospital with cardiovascular services. Referrals to Deborah dropped off significantly. In 2006, CGPA hired a doctor who had previously worked at Deborah and was capable of performing some ACIs. CGPA terminated its agreement with Deborah. In 2007, CGPA signed agreements with doctors who worked primarily at Penn Presbyterian Hospital. Virtua is not mentioned in those contracts, but Deborah alleges that Virtua was an unnamed participant in negotiations and that the goal was to drive Deborah out of business. Deborah sued, asserting that this arrangement constituted an illegal restraint on trade and resulted in harm to competition, in violation of the Sherman Act. The district court granted Virtua and CGPA summary judgment, holding that Deborah did not introduce sufficient evidence to show injury to competition in the designated market. The Third Circuit affirmed, noting that Deborah identified the “products” and i the market at issue. Virtua did not challenge Deborah’s market definitions in the district court. Having set the parameters for the dispute, Deborah failed to meet its self-imposed burden. View "Deborah Heart & Lung Center v. Virtua Health Inc" on Justia Law

Blue Cross controls more than 60% of the Michigan commercial health insurance market; its patients are more profitable for hospitals than are patients insured by Medicare or Medicaid. BC enjoys “extraordinary market power.” The Justice Department (DOJ) claimed that BC used that power to require MFN agreements: BC would raise its reimbursement rates for services, if a hospital agreed to charge other commercial insurers rates at least as high as charged to BC. BC obtained MFN agreements with 40 hospitals and MFN-plus agreements with 22 hospital systems. Under MFN-plus, the greater the spread between BC's rates and the minimum rates for other insurers, the higher the rates that BC would pay. Class actions, (consolidated) followed the government’s complaint, alleging damages of more than $13.7 billion, and seeking treble damages under the Sherman Act, 15 U.S.C 15. In 2013, Michigan banned MFN clauses; DOJ dismissed its suit. During discovery in the private actions, plaintiffs hired an antitrust expert, Leitzinger. BC moved to exclude Leitzinger’s report and testimony. Materials relating to that motion and to class certification were filed under seal, although the report does not discuss patient information. BC agreed to pay $30 million, about one-quarter of Leitzinger's estimate, into a settlement fund and not to oppose requests for fees, costs, and named-plaintiff “incentive awards,” within specified limits. After these deductions, $14,661,560 would be allocated among three-to-seven-million class members. Class members who sought to examine the court record or the bases for the settlement found that most key documents were heavily redacted or sealed. The court approved the settlement and denied the objecting class members’ motion to intervene. The Seventh Circuit vacated, stating that the court compounded its error in sealing the documents when it approved the settlement without meaningful scrutiny of its fairness to unnamed class members . View "Shane Group, Inc. v. Blue Cross Blue Shield of Mich." on Justia Law

Plaintiff is a 26-bed, for-profit, physician-owned hospital that specializes in acute-care surgical services. Its Dayton-area competitors include the defendant hospitals (Premier Group), which have joint operating agreement for negotiating managed care insurance contracts and sharing revenues and losses through an agreed-upon formula, while maintaining separate asset ownership and filing separate tax returns and other corporate forms. Plaintiff sued, alleging violation of the Sherman Act, claiming that Premier was not a single entity, but a group of hospitals capable of concerted action to keep plaintiff from competing in the market. The court dismissed, concluding that Premier was a single entity. The Sixth Circuit reversed, citing the Supreme Court’s multi-factored test for determining whether a joint venture constitutes a “combination” under 15 U.S.C. 1: the condition of the business before and after the restraint is imposed; the nature of the restraint and its effect, actual or probable; the reason for adopting the particular remedy, and the purpose or end sought to be attained. The summary judgment record indicated that the purpose of Premier was to prevent plaintiff from entering the Dayton market; there was evidence of coercive conduct, threatening physicians and insurance companies with financial loss if they did business with plaintiff. There was also evidence of continued competition among the defendants, creating a genuine issue of material fact. View "Med. Ctr. at Elizabeth Place, LLC v. Atrium Health Sys." on Justia Law

Wellmark, Inc., an Iowa-based health insurer that belongs to the national Blue Cross and Blue Shield (BCBS) network, contracted with health care providers in Iowa to provide services at certain reimbursement rates. Wellmark agreed to make those rates available both to self-insured Iowa plans that it administers and to out-of-state BCBS affiliates when those entities provide coverage for services provided in Iowa. Plaintiffs, a number of Iowa chiropractors, sued Wellmark, claiming that Wellmark had abused monopoly power in violation of the Iowa Competition Law. The Supreme Court affirmed the district court’s dismissal of some of the chiropractors’ antitrust claims and remanded on Plaintiffs’ remaining claims. On remand, Plaintiffs stipulated that their remaining antitrust claims regarding the agreements between Wellmark and both the self-insuring employers and the out-of-state BCBS affiliates were being asserted on a per se theory. The district court rejected Plaintiffs’ per se theories and entered summary judgment for Wellmark. The Supreme Court affirmed, holding that Wellmark’s arrangements with the self-insured employers and out-of-state BCBS licensees did not amount to per se violations of Iowa antitrust law. View "Mueller v. Wellmark, Inc." on Justia Law

Astellas holds patents on a cardiac test and sells its unpatented pharmaceutical product, Adenoscan, for using during that test. The Medical Center, which conducts cardiac tests, filed suit under Section 1 of the Sherman Act, 15 U.S.C. 1, alleging that Astellas is able to overcharge the Medical Center for the Adenoscan product by unlawfully tying the patented right to perform the patented cardiac test to the purchase of the unpatented Adenoscan. The court concluded that the district court did not abuse its discretion in refusing the Medical Center's request to certify a class seeking damages against Astellas for unlawful tying because the direct purchaser rule precludes the Medical Center's own treble damages claim. The district court also did not abuse its discretion in refusing to certify the class for purposes of seeking injunctive and declaratory relief. Accordingly, the court affirmed the judgment of the district court. View "Lakeland Regional Medical Center v. Astellas US, LLC, et al." on Justia Law