United States: Kissing Camels Antitrust Suit Against Health System Moves Past Another Hump In The Road

Last Updated: September 4 2015
Article by Bruce D. Sokler and Farrah Short

In June, an antitrust suit brought by plaintiff ambulatory surgery centers ("ASCs") against a health system, health insurers, and a trade association survived a motion to dismiss. Last week, the ASCs' case cleared the hump of summary judgment and will now proceed to trial. Kissing Camels Surgery Center LLC et al. v. Centura Health Corp. et al., 1:12-cv-03012 (D.Col. August 28, 2015). The District Court found sufficient evidence of a conspiracy to reduce competition for ambulatory surgery services, making summary judgment inappropriate.

Background Recap1

The Plaintiff ASCs2 perform outpatient surgical procedures and treatments in non-hospital environments in Denver and Colorado Springs, Colorado, frequently at a lower price than hospital surgical services. The surviving Defendants include health insurers,3 a trade association,4 and a dominant private health system ("Centura") that competes with Plaintiffs.5

Plaintiffs filed their initial complaint in November 2012, and amended in April 2013. In February 2014, the District Court granted Defendants' motions to dismiss the earlier complaint for failure to plead sufficient facts to establish the predicate agreement for the conspiracy claims.  Granted leave to amend, Plaintiffs then filed a second amended complaint. In December 2014 the Defendant insurers and trade association filed a motion to dismiss, which was denied in June.  The motion for summary judgement which was denied here was filed by Defendant health system in September 2014.

Plaintiffs alleged that Centura conspired to reduce competition for ambulatory surgery services by not doing business with the Plaintiff ASCs, and using its market power to pressure physicians and insurers to also not do business with them. For example, Plaintiffs alleged that Centura pressured the Defendant insurers into penalizing physicians for referring business to the Plaintiff ASCs. Plaintiffs also alleged that Centura used its market power to convince the Defendant insurers not to contract with competing independent surgery centers, including the Plaintiff ASCs. Plaintiffs further alleged that Centura controlled the Defendant trade association, and that the trade association aided in the conspiracy against Plaintiffs, including by sending false allegations about the Plaintiffs to the state regulatory agency.

District Court's Analysis of Motion for Summary Judgement

Centura moved for summary judgment on all claims against it: (1) conspiracy in restraint of trade (Sherman Act Section 1); (2) conspiracy to monopolize (Sherman Act Section 2); and (3) attempted monopolization (Sherman Act Section 2).

Centura argued that the conspiracy claims failed for lack of evidence that it conspired with the other health system (who was previously dismissed as a defendant) or with the Defendant insurers. Centura cited the Supreme Court's heightened standard for Section 1 claims that "ambiguous" evidence is insufficient as a matter of law. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986). Nonetheless, the District Court found that the evidence presented by Plaintiffs tends to exclude the possibility of independent action by Defendants. While the District Court acknowledged that Plaintiffs' cited email evidence of a meeting between the CEOs of Centura and the other health system did not contain any indication of an agreement, the Court felt that handwritten notes from a meeting about actions to be taken in relation to "bad ASC's" [sic] sufficiently supported the existence of an agreement between Defendants. Further, even though Centura representatives did not attend that meeting, the District Court found that Centura had previously chosen to act through a joint venture entity that did participate in the meeting. Specifically, the Court cited to an earlier email from a Centura hospital CEO that said "I think we need to use [the joint venture] as our 'front' on this [issue of competition from Kissing Camels]." While the District Court acknowledged that the email was "far from definitive" due to its lack of date proximity to the meeting in question, it still found that there was a question of fact for a jury.

On the attempted monopolization claim, Centura argued that there was no evidence that it had a dangerous probability of achieving monopoly power, citing its market share of only 4.3% for ambulatory surgery patient visits and 16.4% for use of operating rooms. Plaintiffs countered that Centura's market share should be combined with the joint venture's market share, resulting in a 62% share. The District Court also pointed to an email in which Centura's COO expressed concern about Plaintiffs' potential to "hurt [the joint venture] or the [Centura hospital]," which suggested that Centura and the joint venture were not competitors and therefore their market shares could be combined. Thus there was a question of material fact as to the relevant market share.

Finally, Centura argued that Plaintiffs' claim must fail for lack of antitrust injury, because the only injury presented was injury to Plaintiffs themselves as competitors. Although it recognized that the antitrust laws are intended to protect competition and not individual competitors, the District Court relied on precedent that suggests "a plaintiff's injury alone can constitute antitrust injury under certain circumstances." Accordingly, the District Court held that it could not grant summary judgment merely because the injury here was to Plaintiffs' ability to compete if there was also evidence that competition had been harmed. The District Court found that Plaintiffs' expert report was sufficient to defeat summary judgment with its conclusion that the elimination of Plaintiffs as competitors in the highly concentrated market would have a negative impact on competition.

In our earlier alert, we observed:

"In the health care provider marketplace, payment changes, referral patterns, controversy over ASCs 'cream skimming' profitable cases are prevalent. Much attention is rightfully paid to government enforcement efforts. And many private antitrust cases have been dismissed for lack of plausible antitrust theory and sufficient antitrust-related facts. The Kissing Camels opinion is a reminder that some private cases can be constructed that survive the motion to dismiss — which at a minimum means that lengthy, expensive, and distracting antitrust merits litigation will follow. Moreover, Kissing Camels demonstrates yet again that documents, emails, and provocative statements by executives are the yeast from which antitrust claims will arise."

Here, Plaintiffs still have the biggest hump in the road ahead of them — winning at trial.  However, that is probably small consolation to the Defendants, who have the risk at trial and have been subjected to expensive, distracting private antitrust litigation. And it is worth highlighting once more the critical role that written documents with provocative language have played in this case in getting Plaintiffs to trial. Not only did those documents help Plaintiffs defeat a motion to dismiss, but they also raised a sufficient factual dispute to defeat summary judgment.

Footnotes

1.  A more detailed summary of the case background can be found in our prior alert discussing the denial of the motion to dismiss.

2.  Kissing Camels Surgery Center, LLC, Cherry Creek Surgery Center, LLC, Arapahoe Surgery Center, LLC, and Hampden Surgery Center, LLC.

3.  Rocky Mountain Hospital and Medical Service, Inc., d/b/a Anthem Blue Cross and Blue Shield of Colorado, UnitedHealthCare of Colorado, Inc., and Aetna, Inc.

4.  Colorado Ambulatory Surgery Center Association, Inc.

5.  Centura Health Corporation ("Centura").

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Bruce D. Sokler
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions