Veteran antitrust
attorney K. Todd Wallace comments on a recent anti-steering case settlement
between Atrium Health and the U.S. Department of Justice
The U.S. Department of Justice announced that it has reached
a settlement with Atrium Health, submitting a proposed settlement for court
approval in a case that has been ongoing since 2016. At issue in the case was Atrium Health’s use
of anti-steering provision in its contracts with health insurance
companies. As explained by the DOJ in
its press release announcing the settlement, “[t]he Department alleged that
Atrium, the dominant hospital system in the Charlotte area, used its market
power to restrict health insurers from encouraging consumers to choose
healthcare providers that offer better overall value. The restrictions also
constrained insurers from providing consumers and employers with information
regarding the cost and quality of alternative health benefit plans.” If approved, the settlement would enjoin
Atrium Health from seeking to enforce the anti-steering provision against
health insurers and also prohibit including such provision in its contract with
insurers in the future.
The settlement represents an interesting development in
light of the recent U.S. Supreme Court decision in Ohio v. American Express. In
the American Express case, the
Supreme Court held that anti-steering provision in a two sided-market must be
evaluated as a whole. Many legal
scholars saw this development as potentially having significant effect on the analysis
of how other multiparty-market antitrust cases would be evaluated, such as those
involving the health insurance industry.
Interestingly, Second Circuit’s decision in the American Express case, which applied the
same reasoning later upheld by the Supreme Court, was the basis for Atrium
Health’s supplemental arguments in its 12(c) Motion for Judgment on the
Pleadings. In their opposition, the DOJ
argued that American Express was
wrongly decided by the Second Circuit, a position that would ultimately be rejected
by the Supreme Court. But more
importantly, the DOJ argued that the anti-steering provision at issue harms
both the patients and insurers. The DOJ
argued in their opposition briefing that “Plaintiffs also have alleged actual
anticompetitive effects on price and output for patients and the insurers who
pay for their health care. In Paragraph 14 of the Complaint, Plaintiffs allege
that when insurers have steered in spite of CHS’s restrictions, consumers have
paid less for health care. And in Paragraph 27 of the Complaint, Plaintiffs
allege that ‘[a]s a result of this reduced competition due to CHS’s steering
restrictions, individuals and employers in the Charlotte area pay higher prices’
and have less product choice. These are allegations of actual ongoing harm:
CHS’s steering restrictions result in Charlotte consumers paying more for
health care.”
It appears that the DOJ satisfied the whole market approach
as required by American Express, at
least at the initial pleading stage. Although one can only speculate as to what
ultimately motivated the parties to settle, it would be reasonable to assume that
the dual harm alleged by the DOJ could have played a factor the decision rather
than pursue its 12(c) motion to the end.
About K Todd Wallace
K Todd Wallace is an attorney and founding partner of the law firm Wallace Meyaski LLC. He has nearly 20 years of experience in the legal and business professions with established excellence in trial advocacy, negotiation, strategic and initiative planning, employment law compliance, government relations, mergers and acquisitions, and team building.
Website: https://ktoddwallace.com/
Law Firm Website: http://www.walmey.com/our-attorneys/k-todd-wallace/
Twitter: www.twitter.com - Todd Wallace@tarheeltodd94
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Blog at: https://ktoddwallaceblog.blogspot.com/
*** K. Todd Wallace is an attorney at Wallace Meyaski in New Orleans. He has nearly 20 years of experience in the legal and business professions with established excellence in trial advocacy, negotiation, strategic and initiative planning, government relations, mergers and acquisitions, and team building. See http://www.walmey.com/our-attorneys/k-todd-wallace/
