Antitrust Law Daily Wrap Up, ANTITRUST—Cal. App.: Trial court's demurrer on bankrupt California hospital operator's state antitrust complaint reversed on appeal, (Sep 24, 2026)

By Kenneth H. Ryesky, M.B.A., J.D.

During pendency of litigation, the California legislature enacted a statute specifically prohibiting the use or distribution of "a common pricing algorithm" as a method to violate state antitrust law.

A California state appellate court has reversed the demurrer granted to a data analytics provider and healthcare third-party payors in a lawsuit alleging the use of pricing algorithms in a conspiracy to hold down healthcare reimbursement rates for services provided to out-of-network patients. The court analyzed both the California statute sued under and the federal Sherman Act to conclude that the California antitrust statute reached the activities complained of, and the demurrer should have been denied. The demurrer grant was reversed, and the case was remanded to trial court for further proceedings (VHS Liquidating Trust v. Multiplan Corp., No. A171914 (Cal. App. Sep. 24, 2026)).

Background. Verity Health System of California, Inc. (Verity) grew from its 1856 origins as a Catholic Church-affiliated infirmary to operating six hospitals in California. Faced with significant financial difficulties, Verity filed for Chapter 11 bankruptcy, during which the VHS Liquidating Trust entity (VHS Trust) was established.

The MultiPlan Corporation, rebranded in 2025 as the Claritev Corporation, provides data analytics and cost management services to the American healthcare industry through its various subsidiary and affiliate entities (collectively, Claritev).

In 2021, the VHS Trust filed an action in California state court alleging that Claritev (then still MultiPlan) conspired with certain health insurers to reduce the reimbursements paid to Verity's hospitals for out-of-network (OON) patients through schemes that entailed the use of a pricing algorithm to effect price fixing and unlawful exchange of business information in violation of California's Cartwright Act [Cal. Bus. & Prof. Code §§ 16700 et seq.]. Claritev filed a Demurrer to the VHS Trust's complaint, contending that the "prices" alleged to have been fixed and/or manipulated were reimbursement rates paid for OON services by the named conspirators, and not the actual medical services provided to Verity's patients. Claritev also had contended that the information allegedly exchanged therefore did not constitute an illegal agreement to fix prices under the Cartwright Act.

The California trial court sustained Claritev's demurrer. VHS Trust appealed.

The Cartwright Act. The appellate court found that the Cartwright Act arguably applied to the transactions alleged in the VHS Trust's complaint. Although the Act specifically mentions "article, commodity or transportation" as the objects of its price-fixing prohibition [Cal. Bus. & Prof. Code § 16720(e)(2)], the act has long been construed by the courts as applying to services as well. The appellate court further found that that Cartwright Act's prohibitions apply to buyers and sellers alike. Although the complaint's market definition focused more upon the effects upon the market for medical services provided to OON patients and less upon the market in which healthcare service providers sought reimbursement for such services, the appellate court found that the market had been sufficiently defined at the pleading stage.

Federal antitrust law. Having "not identified any California case law directly addressing whether the Cartwright Act applies to OON reimbursements" but nevertheless finding that case law guidance does point in that direction, the appellate court analyzed federal antitrust case law. The court noted that while the Cartwright Act is one of many state antitrust statutes, it was modeled upon the Sherman Act analog statutes previously enacted earlier and is in many respects more stringent than the federal Sherman Act itself.

Noting that the "U.S. Supreme Court and federal appellate cases have recognized that insurer-provider transactions are legally distinct from an insurer's obligations to its subscribers, and the transactions are subject to antitrust scrutiny," the court found that federal case law also was consistent with applying the Cartwright Act to OON reimbursements. A reimbursement may be both a price for medical services dictated by a reimbursing entity and a contractual obligation of an insurer.

The Case is No. A171914.

Judge: Massullo, A.

Attorneys: Patrick M. Ryan (Bartko Pavia LLP) for VHS Liquidating Trust. Mohammad Keshavarzi (Phelps Dunbar LLP) for Multiplan Corp.

Companies: Multiplan Corp.

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