WEST PENN ALLEGHENY HEALTH SYSTEM, INC. v. UPMC et al, No. 2:2009cv00480 - Document 97 (W.D. Pa. 2009)
Court Description: MEMORANDUM AND OPINION re 82 Motion to Dismiss Counts I and II of Plaintiff's Amended Complaint and 78 Motion to Dismiss Complaint. Signed by Judge Arthur J. Schwab on 10/29/09. (Attachments: # 1 Table of Contents) (eca)
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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA WEST PENN ALLEGHENY HEALTH SYSTEM, INC., 09cv0480 ELECTRONICALLY FILED Plaintiff, v. UPMC and HIGHMARK, INC., Defendants. TABLE OF CONTENTS TO DOC. NO. 97 I. II. INTRODUCTION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FACTUAL BACKGROUND AND ALLEGATIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 A. The Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 B. Plaintiff s Allegations Re: The Hospital Market in Pittsburgh Area. . . . . . . . . . . . . . . . 2 C. Plaintiff s Allegations Re: The Health Insurance Market in the Pittsburgh Area.. . . . . . 3 D. Plaintiff s Allegations Re: Antitrust and Anti-competitive Conduct of Defendant UPMC and Defendant Highmark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 E. Plaintiff s Allegations Re: Highmark in Particular.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 F. Plaintiff s Allegations Re: UPMC in Particular. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1. Alleged Interference with West Penn Allegheny s Bond Offerings. . . . . . . . . . . . . 15 2. Alleged Raiding of Physicians. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3. Alleged Exclusive Dealing Agreements and Joint Venture Arrangements. . . . . . . 17 4. Alleged Anticompetitive Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 G. Plaintiff s Inconsistent Factual Allegations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 III. SUMMARY OF THE CLAIMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 A. Claims under Section 1 of the Sherman Act (Illegal Agreements) and Section 2 of the Sherman Act (Conspiracy to Monopolize) Against UPMC and Highmark (Counts I and II). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 B. Claims under Section 2 of the Sherman Act (Attempt to Monopolize) Against UPMC (Count III). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 C. Claims under State Law Against UPMC (Counts IV and V). . . . . . . . . . . . . . . . . . . . . 22 IV. SUMMARY OF DAMAGE ALLEGATIONS AND PRAYERS FOR RELIEF. . . . . . . . . 23 A. Plaintiff s Allegations Re: Damages.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 B. Plaintiff s Prayer for Relief.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 V. PROCEDURAL HISTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 VI. LEGAL STANDARD.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 A. General Standard of Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 B. Gatekeeper Function of the Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 VII. DISCUSSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 A. Motion to Dismiss.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 1. Defendant Highmark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 2. Defendant UPMC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 B. Analysis of Antitrust Injury.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 1. Plaintiff Suffered No Antitrust Injury from Discontinuation of the Community Blue Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 a. Plaintiff does not Allege that it Suffered any Antitrust Injury from the Discontinuation of Community Blue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 b. The Alleged Agreement to Discontinue Community Blue does not amount to an Unreasonable Restraint of Trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 c. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 2. Plaintiff Suffered No Antitrust Injury from Defendants Alleged Agreements Relating to Reimbursement Rates.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 a. Higher Payments to UPMC and Lost Profits do not Constitute an Antitrust Injury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 b. The Relief Requested by Plaintiff does not Represent the Best Interests of Consumers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 3. Highmark s Decision Not to Refinance Plaintiff s Debt is Not an Antitrust Injury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 4. Plaintiff has not Alleged any Harm to Competition in the Western Pennsylvania Health Care Services Market Due to Its Decrease in Market Share. . . . . . . . . . . . . 46 C. Analysis of the Application of Section 1 (Agreement) of the Sherman Act and Twombly/Iqbal to the Allegations in the Complaint (Count I). . . . . . . . . . . . . . . . . . . . 48 1. Allegations of Conspiracy as to UPMC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 2. Allegations of Conspiracy as to Highmark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 a. West Penn Allegheny s Claims Regarding Reimbursement Rates.. . . . . . . . . . 55 b. Highmark s Alleged Denial of West Penn Allegheny s Refinancing Requests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 c. West Penn Allegheny s Insurer Entry Theory.. . . . . . . . . . . . . . . . . . . . . . . . . . 58 d. West Penn Allegheny s Community Blue Allegations. . . . . . . . . . . . . . . . . . . . 58 e. Alleged Statements by Highmark s Chairman. . . . . . . . . . . . . . . . . . . . . . . . . . 60 D. Analysis of the Application Section 2 (Conspiracy) of the Sherman Act to the Allegations in the Complaint (Count II). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 E. Analysis of the Attempt to Monopolize Claims Against UPMC Alone (Count III).. . . 62 1. Conspiracy/Markey Allocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 2. Predatory Hiring. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 3. Defamation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 4. Acquisition of Mercy Hospital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 F. Analysis of Damage Claims and the Practical Implications of the Prayer for Relief. . . 69 G. Statute of Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 -2- H. State Court Claims of Employee Raiding and Unfair Competition (against UPMC) (Count IV) and Tortious Interference with Existing and Prospective Business Relations (against UPMC) (Count V).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 VIII. CONCLUSION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 -3-
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