Monday, January 11, 2010

Invalid Market Definition Dooms Physicians’ Claim of Exclusion from Network

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

A cardiology practice group and its member physicians could not maintain claims that an operator of several Arkansas hospitals conspired with insurers to restrain trade and monopolized, attempted to monopolize, and conspired to monopolize the market for in-hospital cardiology services in central Arkansas by excluding the group from health insurance network coverage, the U.S. Court of Appeals in St. Louis has decided.

The plaintiffs' relevant market allegations were insufficient as a matter of law, the court said. Dismissal of the claims (2009-1 Trade Cases ¶76,473) was affirmed.

Relevant Product Market

The complaint improperly defined the product market by how consumers paid for cardiology services, in the court's view. A relevant product market could not be defined by reference to whether patients who received services were privately insured. Such a theory "lack[ed] support in both logic and law," according to the court.

The general issue when determining a relevant product market concerned the choices available to consumers. Thus, the plaintiff had to look to alternative patients who were able to pay the required fees, not just those who paid using private insurance.

For purposes of the antitrust claims, it did not matter which kind of insurance the patients had, or whether private insurance and government insurance were reasonably interchangeable, because the lawsuit was not about the options available to patients. Rather, it was about the options available to shut-out cardiologists.

Relevant Geographic Market

The plaintiffs' limitation of the relevant geographic market to a single city was overly narrow. The definition failed to describe the geographic areas where customers could turn for cardiology procedures from the starting point of the defendant's trade area, the court observed.

By limiting the market to a city, the plaintiffs gerrymandered the relevant market to the location where cardiology procedures took place. In so doing, the complaint alleged that a low percentage of patients within the city left the proposed market, but ignored the possibility of a high percentage of patients entering the proposed market from outside the city.

An antitrust plaintiff had to allege a geographic market in which the defendant supplier drew a sufficiently large percentage of its business, the court explained. This failure to allege a coherent relevant geographic market provided an adequate and independent means of affirming dismissal of the claims.

Discovery Costs

The appellate court also ruled that the lower court did not abuse its discretion by declining to tax the defendant's discovery-related copying costs upon the unsuccessful plaintiffs after it had dismissed the suit.

No judicial decision required a district court to tax discovery-related expenses, the appellate court noted. To the contrary, numerous district courts within the appellate circuit had similarly refused to tax such costs.

The decision is Little Rock Cardiology Clinic PA v. Baptist Health, 2009-2 Trade Cases ¶76,849.

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