Antitrust Law Daily Surgery centers sufficiently state boycott claims against Cigna
Monday, February 23, 2015

Surgery centers sufficiently state boycott claims against Cigna

By Jeffrey May, J.D.

The federal district court in Denver has refused to dismiss claims against Cigna Healthcare, Inc. for conspiring with hospitals and others to drive complaining ambulatory surgery centers out of the market. The surgery centers sufficiently alleged a per se illegal group boycott involving both vertical and horizontal collusion to avoid dismissal of claims under Sec. 1 of the Sherman Act and the parallel provision of the Colorado Antitrust Act (Arapahoe Surgery Center, LLC v. Cigna Healthcare, Inc., February 20, 2015, Martinez, W.).

The court rejected Cigna's contention that the allegations of conspiracy were conclusory. The plaintiffs' allegations were “far from invoking mere antitrust `buzz words.’” The plaintiffs alleged an overt agreement.

According to the complaint, Cigna participated in a conspiracy with two hospital systems, HCA-HealthONE and Centura Health Corporation, as well as a trade association and the other dominant health insurers to restrain trade in the Metro Denver South and Colorado Springs markets for ambulatory surgery services. Cigna allegedly sent letters to contracted physicians, threatening termination if the physicians referred patients to the complaining surgery centers. The plaintiffs also offered evidence of purported conspiratorial meetings and e-mails exchanged between co-conspirators.

Cigna contended that dismissal was necessary because the challenged conduct did not constitute an unreasonable restraint of trade under either the per setest or rule of reason analysis. However, the complaining surgery centers convinced the court that the per se approach was appropriate for analyzing the alleged restraint.

Cigna argued against application of the per se rule on the ground that the plaintiffs offered no specific factual allegations that it conspired with its competitors. However, the conspiracy included horizontal collusion by multiple entities with market power to deprive the plaintiffs of customers and, therefore, fit the model of a group boycott, the court explained.

The court also rejected Cigna's assertion that its actions against physicians had procompetitive effects that made per se treatment inappropriate, such as lowering plan costs. Cigna’s actions to reduce its own costs were not shown to result in any benefits to competition.

Related ruling. The court concluded that the claims were adequately stated against Cigna, despite a February 2014 order in a related case alleging the same underlying conspiracy, which dismissed the plaintiffs’ claims against the insurer defendants. In that matter, the plaintiffs failed to allege that the insurers actually agreed with the hospitals to join the conspiracy, the court explained. The claims against Cigna, on the other hand, included references to meetings and e-mails evidencing an agreement.

This is Civil Action No. 13-cv-3422-WJM-CBS.

Attorneys: Joe Ramon Whatley, Jr. (Whatley Kallas, LLP) for Arapahoe Surgery Center, LLC, Cherry Creek Surgery Center, LLC, Hampden Surgery Center, LLC, Kissing Camels Surgery Center, LLC, SurgCenter of Bel Air, LLC, and Westminster Surgery Center, LLC. Edwin Packard Aro (Arnold & Porter LLP) for Cigna HealthCare, Inc., Connecticut General Life Insurance Co. Cigna HealthCare Mid-Atlantic, Inc., and Cigna HealthCare of Colorado, Inc.

Companies: Arapahoe Surgery Center, LLC; Cherry Creek Surgery Center, LLC; Hampden Surgery Center, LLC; Kissing Camels Surgery Center, LLC; SurgCenter of Bel Air, LLC; Westminster Surgery Center, LLC; Cigna HealthCare, Inc.; Connecticut General Life Insurance Co.; CignaHealthCare Mid-Atlantic, Inc.; Cigna HealthCare of Colorado, Inc.

MainStory: TopStory Antitrust ColoradoNews

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