Florida health care provider settles monopolization, conspiracy claims

Health First, Inc. and its subsidiaries have settled allegations that they attempted to establish a vertically integrated, self-reinforcing, illegally-maintained health care monopoly in Southern Brevard County, Florida. Just days after denying Health First’s motion for summary judgment, the federal district court in Orlando dismissed the antitrust claims with prejudice.

Omni Healthcare, Inc. and other physicians and physician practice groups filed suit against “fully integrated” health care corporation Health First, Inc. and three of its wholly owned subsidiaries: Holmes Regional Medical Center, Inc.; Health First Health Plans, Inc., and Health First Physicians, Inc. Omni alleged that Health First engaged in an anticompetitive scheme to monopolize Southern Brevard County’s interrelated health care markets for years and that the scheme has largely been successful.

The court denied Health First summary judgment on August 13, 2016, finding that Omni and other physicians and physician groups created genuine issues of material fact in whether Health First monopolized, attempted to monopolize, and conspired to monopolize the markets for physician services, Medicare Advantage, and ancillary services.

Anthem first to respond to merger challenges, government opposes quick trial

Two large insurance mergers–Cigna-Anthem and Aetna-Humana–have been hot topics since the deals were proposed. The latest hurdle, suits filed by the Department of Justice (DOJ), may be a bigger issue than anticipated, as the government argued against Anthem, Inc.’s request for a speedy trial. The DOJ argued that the issues at hand are more complex than other cases, requiring more time than the 88-day scheduling range Anthem requested.

The inevitable lawsuit 

On July 21, 2016, the DOJ filed lawsuits challenging both the Cigna-Anthem merger and the Aetna-Humana merger. Attorney General Loretta Lynch stated that the mergers would eliminate too much competition and, therefore, the motivation for insurers to lower their premiums and offer better benefits. Aetna and Humana both stated they would contest the suit, arguing that the deal would actually improve options for Medicare patients. These companies are two of the four largest Medicare Advantage providers. According to the DOJ, an Anthem-Cigna merger would result in only three insurers with networks that would sufficiently serve the country’s largest employers.

Cigna’s response to the suit was less robust, stating that if the deal closed at all, it would be sometime next year. The company is reviewing the merger agreement, which may require defense of the deal, and analyzing its options. Anthem took the position that the suit was a “step backwards” for consumers, but seemed open to a settlement.  A joint statement from Aetna and Humana suggested that some divestitures could preserve competition, but the government was doubtful.

The American Hospital Association (AHA) and the American Medical Association (AMA) believe that the suit protects consumers, and that fewer coverage options would undermine innovation. The Center for Healthcare Research & Transformation director noted that even if the deals reduced prices insurers pay to providers, consumers may not see any savings. She believes that the suits will be difficult for the companies to win. Failure would be costly for Aetna and Anthem, as the agreements state that Anthem would pay Cigna $1.85 billion and Aetna would pay Humana $1 billion in termination fees.

State responses

States are taking action on the suits as well. Eleven states, plus the District of Columbia, joined the DOJ’s challenge against the Cigna-Anthem merger, while eight states and D.C. joined to fight Aetna-Humana. Other state actions are pending as well, such as the New Hampshire Insurance Department’s is review of the Cigna-Anthem proposal. An AMA analysis found that the  merger would result in control of 64 percent of the state’s insurance market. According to the state, the two proceedings are separate, and the insurance commissioner still has the authority to act in the event that the lawsuit does not succeed. The state department is not yet prepared to hold hearings, and will wait to take action until the lawsuit is resolved.

Speedy trial

Anthem, the only company that has filed an answer in the lawsuits, requested that the judge provide a trial within 88 days, with a decision on the injunction coming within 35 days of the trial’s conclusion. The government strongly opposes such a quick timeline, as the case comes against the largest health care merger ever to be proposed. The DOJ finds that the case is more complex than another recent coal antitrust suit that was quickly resolved, which Anthem relied upon as an example in its answer.

After denying cert in health law cases, SCOTUS ends term

The Supreme Court concluded its 2015 term by cleaning house and disposing of many pending petitions for writ of certiorari. In doing so, the High Court declined to hear—and thereby, affirmed the lower court rulings in—a number of health law cases in its order lists of June 27 and June 28, 2016. The Court denied petitions in cases regarding health care employees, the False Claims Act (FCA) (31 U.S.C. §3729 et seq.), and a Washington state law requiring the timely delivery of all prescription medications by licensed pharmacies that was challenged pharmacists with religious objections to certain medications. In wake of the Court’s decision in Whole Women’s Health v. Hellerstedt, it also denied certiorari in two Targeted Regulation of Abortion Providers (TRAP) law challenges.

Health care workforce

The Court denied petitions in both Prime Healthcare Services, Inc. v. Service Employees International Union (Dkt. 15-1448) and Home Care Association of America v. Weil (Dkt.15-683). Prime Healthcare appealed the Ninth Circuit’s unpublished decision finding that it failed to sufficiently allege harm to competition or monopoly power in favor of a conspiracy and monopolization claims against Kaiser Permanente, Kaiser-affiliated companies, and two unions (for more information on this case, see Court dismisses antitrust lawsuit against Kaiser Foundation entities and United Healthcare Workers unions, Health Law Daily, July 29, 2013). In Home Care, the Court’s denial upholds the D.C. Circuit’s decision that the Department of Labor’s revised domestic worker regulations (78 FR 60453, October 1, 2013) that extended minimum wage and overtime protections to home care workers was a reasonable interpretation of the Fair Labor Standards Act due to changes in the long-term home care industry.

False Claims Act

In PharMerica Corporation v. U.S. ex rel. Gadbois (Dkt. 15-1309), PharMerica asked the Court to review its 2015 decision in Kellogg Brown & Root Services, Inc. v. U.S. ex rel Carter, which found that the FCA’s first-to-file rule does not bar subsequent relator claims if earlier lawsuits were dismissed (see Nothing to fear: whistleblower action timeline not suspended during war, Health Law Daily, May 27, 2015). Based on that decision, the First Circuit allowed a whistleblower to revive an earlier case brought against PharMerica that was originally barred under the first-to-file rule (see PharMerica requests Supreme Court review of FCA’s first-to-file bar, Health Law Daily, April 28, 2016; FCA action dismissed under first-to-file bar may get another chance on remand, Health Law Daily, December 17, 2015).

Religious pharmacists

In Stormans, Inc. v. Weisman (Dkt. 15-862), a divided Court denied cert, leading to a dissent from Justice Alito, joined by the Chief Justice and Justice Thomas. Washington state medication prescribing rules require the timely delivery of all prescription medications by licensed pharmacies; an individual pharmacist may refuse to deliver a prescription due to religious objections, so long as another pharmacist working for the pharmacy provides timely delivery. If there is no other pharmacist to provide timely delivery, pharmacists and pharmacy owners must deliver the prescription even in the face of religious objections. The Ninth Circuit determined that the state law is neutral and of general application, and is rationally related to a legitimate government purpose, and therefore does not violate the Constitutional protections of the Free Exercise, Due Process, or Equal Protection clauses (see Prescribing rules withstand religious attacks, patient safety takes the higher ground, Health Law Daily, July 24, 2015).

In his dissent, Justice Alito suggested that the law will make religious pharmacists “unemployable” and notes that the facts in the case show that the pharmacy in question, Ralph’s Thriftway, does not stock emergency contraceptives, but rather uses the practice of facilitated referrals, sending customers to other nearby pharmacies, to ensure timely delivery. The dissent also argued that the law in question is not neutral, because there is evidence to suggest that it was passed predominantly to “‘stamp out the right to refuse’ to dispense emergency contraceptives for religious reasons.”

TRAP laws

The Court also denied certiorari in a pair of TRAP law cases. In Currier v. Jackson Women’s Health Organization (Dkt. 14-997), the Fifth Circuit upheld a preliminary injunction preventing the enforcement of a Mississippi law requiring abortion facility physicians to have admitting privileges at a local hospital and staff privileges to replace the on-staff physicians at local hospitals (see Admitting privileges requirement for abortion clinics put on hold, Health Law Daily, July 31, 2014). Similarly, in Schimel v. Planned Parenthood of Wisconsin (Dkt. 15-1200), the Seventh Circuit affirmed a permanent injunction against a Wisconsin law requiring a physician performing an abortion to have admitting privileges at a hospital no more than 30 miles from the clinic where the abortion is performed (see Court terminates enforcement of Wisconsin law requiring admitting privileges for abortion doctors, Health Law Daily, November 24, 2015). These two Circuit Court decisions align with the Court’s decision released the previous day in Whole Women’s Health, which found that a Texas abortion law requiring physicians at abortion clinics to have admitting privileges at a nearby hospital and obligating clinics to meet ambulatory surgical center standards violated the Constitution by creating an undue burden on access to abortion services (see High Court strikes down Texas abortion restrictions as unconstitutional burdens, Health Law Daily, June 27, 2016).

Supreme Court remand may signal end for data breach class actions

The Supreme Court’s decision to remand a Fair Credit Reporting Act (FCRA) case to the Ninth Circuit Court of Appeals may affect the future of class actions brought by victims of health care data breaches.  The High Court told the Ninth Circuit to determine whether the respondent in Spokeo, Inc. v. Robins (May 16, 2016) sustained a concrete injury for purposes of proceeding with FCRA allegations based on Spokeo’s alleged dissemination of incorrect information about the respondent.  The opinion emphasized the importance of the concreteness element of the injury-in-fact requirement of standing, and could endanger lawsuits filed by data breach victims based on impending injuries.

Spokeo

The respondent alleged that while he was “out of work” and “actively seeking employment,” Spokeo, a website that calls itself a “people search engine,” posted misinformation about him that was detrimental to his job search.  Specifically, he claimed that the misinformation stating that he was married with children, employed, and in “very strong” economic health made him appear overqualified for work, desirous of a higher salary, and unwilling to travel or relocate. He alleged that Spokeo’s actions violated the FCRA, which requires consumer reporting agencies to “follow reasonable procedures to assure maximum possibly accuracy.”

A district court determined that the respondent did not have standing to sue, but the Ninth Circuit reversed, noting that Spokeo violated the respondent’s individual statutory rights and that his interests regarding how his credit information was handled were “individualized rather than collective.”  Writing for the majority, Justice Alito noted that standing requires an injury in fact that is both “concrete and particularized,” in addition to being “actual or imminent.” While the Ninth Circuit’s analysis concluded that the respondent’s injury was particularized, affecting him “in a personal and individual way,” the Supreme Court determined that the appellate court did not perform a separate analysis to determine whether the injury was concrete, with Justice Alito noting that “not all inaccuracies cause harm or present any material risk of harm.” He also noted, however, that concrete injuries may be tangible or intangible.  Justice Thomas concurred, while Justice Ginsburg, joined by Justice Sotomayor, dissented.

Health care ramifications

The Supreme Court’s view on concreteness could affect the ability of data breach victims to file class actions against the entities that held their protected health information (PHI). Prior cases have dealt with the “actual or imminent” aspects of alleged injuries, with circuits disagreeing with one another. In 2015, for example, the U. S. Court of Appeals for the Seventh Circuit determined that retail customers whose credit card information had been hacked were subject to a “certainly impending” risk or future injury involving fraudulent charges and identity theft, even though they had not actually fallen victim to those actions (see Credit hacking case opens door to health care class actions, August 11, 2015).  It issued a similar decision in 2016  in Lewert v. P.F. Chang’s China Bistro, Inc. (April 14, 2016), another credit hacking case, noting that the injuries were concrete.

In Khan v. Children’s National Health System (May 18, 2016), decided after Spokeo, the U.S. District Court for the District of Maryland determined that the plaintiff had did not have an injury in fact.  It noted that, in the context of data breaches, victims allege “an injury in fact arising from increased identity theft if they put forth facts that provide either (1) actual examples of the use of the fruits of the data breach for identity theft, even if involving other victims; or (2) a clear indication that the data breach was for the purpose of using the plaintiffs’ personal data to engage in identity fraud.” In Khan, phishing emails targeted a hospital system’s employees’ emails that happened to contain some PHI, but the court found no evidence that hackers targeted PHI for the purposes of committing identity fraud.  The Khan court noted that the majority of district courts follow this line of reasoning. Stakeholders should follow the Spokeo case, as the ultimate decision may be an indication of the future trend of data breach class actions.