By Nicole D. Prysby, J.D.
Antitrust claims brought by a laboratory services company after being denied in-network status and losing a contract failed for lack of standing and because the company did not define a relevant geographic or product market.
A laboratory services company’s antitrust claims against a competitor and a Medicaid managed care organization all failed for lack of standing and for lack of a relevant market, held a federal district court in Delaware. The plaintiff brought the claims after being denied status as an in-network provider for the managed care organization. It also alleged that it lost a contract after the other party to the contract discovered that it had been denied in-network status with the managed care organization. The company lacked standing because its only alleged injury was its own loss of a contract and loss of income. It also failed to allege a relevant geographic or product market. It only discussed where it and the competitor offer services, not where customers could rationally look for those services. It failed to define a relevant product market, because it did not identify which laboratory services are a part of the relevant product market, let alone which services are reasonably interchangeable (Prescient Medicine Holdings, LLC v. Laboratory Corp. of America Holdings, February 14, 2019, Noreika, M.).
Background. The plaintiff, Prescient Medicine Holdings, LLC (Prescient), a company that provides laboratory testing services, alleged that a competitor (Laboratory Corporation of America and Laboratory Corporation of America Holdings, collectively "LabCorp") and AmeriHealth, Inc., a managed care organization, conspired to exclude Prescient from providing services to the Delaware market. AmeriHealth is one of two managed care organizations providing managed Medicaid services in Delaware. Prescient applied to be an in-network provider, but AmeriHealth selected LabCorp as its exclusive in-network provider in Delaware. LabCorp also provided services to a nonprofit, Connections Community Support Programs, Inc. (Connections). In January 2018, Connections entered into an agreement with Prescient to replace LabCorp but allegedly after learning from LabCorp that AmeriHealth had denied Prescient’s application to be an in-network provider, Connections decided to keep LabCorp as its laboratory services provider. Prescient brought Sherman Act and Clayton Act claims against LabCorp and AmeriHealth.
Antitrust claims fail. The court found that Prescient lacked an antitrust injury, because its only alleged injury was individual: the loss of a contract with Connections and other lost income. Prescient made no allegation that it was completely shut out of the market, and AmeriHeath was only one of two managed care organizations that it could have contracted with. Prescient argued that the market as a whole was injured, because Medicaid patients were allegedly receiving lower quality care at a higher cost. The court rejected that argument because Prescient provided no supporting facts. Prescient’s argument was essentially that it is a superior provider than LabCorp, but that was not sufficient to show a market-wide reduction in quality because LabCorp was not the entire market—there were no allegations as to the second managed care organization in Delaware and its laboratory services provider.
The court also found that Prescient failed to allege a relevant market. The complaint failed to define a relevant geographic market, because it only discussed where Prescient and LabCorp offer services, not where customers could rationally look for those services. Prescient also failed to define a relevant product market, because it did not identify which laboratory services are a part of the relevant product market, let alone which services are reasonably interchangeable. Its proposed product market of "laboratory services" was too broad to adequately define a relevant product market. The court also rejected Prescient’s argument that it adequately addressed reasonable interchangeability in alleging that Connections replaced LabCorp with Prescient as the provider of its laboratory services. According to Prescient’s theory of the case, the relevant customer defining the product market is Delaware Medicaid patients, not community support programs like Connections. Prescient also failed to allege that the citizens who receive services from Connections are all Delaware citizens, all have health care insurance, and that the health care insurance is Medicaid.
This case is No. 1:18-cv-00600-MN.
Attorneys: Richard H. Cross, Jr. (Cross & Simon, LLC) for Prescient Medicine Holdings, LLC. Raymond J. DiCamillo (Richards, Layton & Finger, PA) for Laboratory Corp. of America Holdings and Laboratory Corp. of America. Jody Barillare (Morgan Lewis & Bockius LLP) for AmeriHealth, Inc. and AmeriHealth Caritas Delaware, Inc.
Companies: Prescient Medicine Holdings, LLC; Laboratory Corp. of America Holdings; Laboratory Corp. of America; AmeriHealth, Inc.; AmeriHealth Caritas Delaware, Inc.
MainStory: TopStory Antitrust DelawareNews
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