Antitrust Law Daily Blue Cross allegedly colluded to restrain competition for lab testing services
Tuesday, November 15, 2016

Blue Cross allegedly colluded to restrain competition for lab testing services

By Michael Menzhuber, J.D., LL.M.

Independence Blue Cross (IBC) and a clinical laboratory network colluded to prevent companies that provide infectious disease laboratory testing services from becoming "in network" providers of services to IBC’s insured, according to a complaint filed by a laboratory services company in the federal district court in Philadelphia (Medical Diagnostic Laboratories, LLC v. Independence Blue Cross, November 10, 2016).

According to the complaint, on or about July 1, 2014, IBC entered into an "in network" agreement with Laboratory Corporation of America Holdings (LabCorp) to become IBC’s exclusive provider of outpatient laboratory services. After entering into the agreement, IBC’s website continued to represent that insureds were free to use the laboratory services providers of their choice and expressly stated that preferred provider organization members could use out-of-network laboratory services, albeit at potentially different reimbursement terms.

The complaint alleges that the plaintiff, Medical Diagnostic Laboratories (MDL), provides unique testing services that have resulted in provider agreements with 32 of the 36 Blue Cross Blue Shield Networks. Although LabCorp does not provide many of these testing services, and despite IBC’s website stating that insureds could use out-of-network laboratories of their choice, IBC and LabCorp have purportedly threatened and coerced physicians and other medical services providers to direct all of their laboratory work to LabCorp, not to out-of-network providers like MDL. Also, since entering into its agreement with LabCorp, IBC allegedly refused to provide reimbursement for services that in-network physicians and other providers have ordered from MDL.

The complaint further alleges that, because of IBC’s dominant market power in Southeastern Pennsylvania, where it controls approximately two-thirds of the private health care market and almost all of certain demographic groups such as union workers, it is effectively impossible for doctors and other medical services providers to be economically viable without in-network status with IBC. By acting in concert to prevent in-network providers from referring certain laboratory testing to MDL and other LabCorp competitors, IBC and LabCorp have injured competition for such services, reduced consumer and physician choice for those services, and lowered the quality of available laboratory services.

The complaint asserts claims for relief under Section 1 of the Sherman Act, tortious interference with existing and prospective business relations, and unfair competition. The action seeks injunctive relief, compensatory and punitive damages, pre- and post-judgment interest, costs of the suit and attorney fees, and any other just and proper relief.

The case is No: 2:16-cv-05855-GJP.

Attorneys: Richard L. Scheff, Peter Breslauer, Sidney S. Liebesman, and Ernest D. Holtzheimer (Montgomery, McCracken, Walker & Rhoads, LLP) for Medical Diagnostic Laboratories, LLC.

Companies: Independence Blue Cross; Laboratory Corporation of America Holdings; Medical Diagnostic Laboratories, LLC

MainStory: TopStory Antitrust PennsylvaniaNews

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