Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Ambulatory surgical center, insurers allegedly restrained trade in surgical services market, (Mar 31, 2015)

By Greg Hammond, J.D.

Owners and operators of ambulatory surgical centers (ASCs) in Northern California have alleged that a competing ASC management company, its ASC facilities, and two insurance carriers have restrained trade in the market for the provision of surgical services through ASCs; violated the Cartwright Act; and engaged in unfair and unlawful business practices in violation of the California Unfair Competition Law (Bay Area Surgical Management, LLC v. Aetna Life Insurance Co., Case No. 5:15-cv-01416).

The complaint, filed in the federal district court in San Jose, alleges that E3 Healthcare Management, its ASCs, Aetna Life Insurance Co., and United Healthcare Services, Inc. engaged in concerted action to deny reasonable payments to the named plaintiffs, so that the defendants would control the ASC market and prices in Northern California. Specifically, the defendants allegedly engaged in a concerted campaign of anticompetitive and monopolistic acts to exclude plaintiffs from the growing lucrative ASC market, including inducing a group boycott of participating surgeon plaintiffs’ ASCs; inducing and persuading patients not to patronize plaintiffs’ ASCs; reducing the payments to plaintiffs’ ASCs; and refusing to offer a reasonable and non-discriminatory network contract to plaintiffs.

As a result of the purported exclusionary conduct, the plaintiffs assert that competition in the ASC market in Northern California has been suppressed and consumers have suffered loss of choice and have been required to pay higher prices for services performed as ASCs than would otherwise be the case in a competitive market. Consequently, the competitive process, plaintiffs, and consumers have suffered antitrust injury through the unlawful trade restraining conduct, the plaintiffs allege.

The plaintiff ASC owners and operators filed a five-count complaint, claiming that the defendants: (1) violated Section 1 of the Sherman Act by engaging in agreements and combinations constituting unreasonable restraints of trade; (2) intentionally interfered with the plaintiffs’ prospective economic advantage; (3) intentionally interfered with the plaintiffs’ contractual relations; (4) violated the Cartwright Act by engaging in an unlawful trust in restraint of the trade and commerce; and (5) engaged in unfair and unlawful acts in violation of California Unfair Competition Law.

Although the plaintiffs allege they have suffered financial injury—including a deprivation of revenues and profits, diminished market growth, and loss of good will—as a proximate result of the defendants’ practices and conduct, the plaintiffs have not yet calculated the extent of past damages and cannot estimate future damages. They consequently allege that they will seek leave of court to insert he amount of damages sustained.

Nevertheless, they seek treble and actual damages sustained by reason of the federal antitrust violations, as well as reasonable attorney fees and costs of litigation, under Section 4 of the Clayton Act; a permanent injunction under Section 16 of the Clayton Act and Section 17203 of the California Unfair Competition Law; punitive or exemplary damages on its tort claim; and reasonable attorney fees.

Attorneys: Maxwell M. Blecher (Blecher Collins Pepperman & Joye) for Plaintiffs.

Companies: Bay Area Surgical Management, LLC; Forest Surgery Center, L.P.; SOAR Surgery Center, LLC; Knowles Surgery Center, LLC; National Ambulatory Surgery Center, LLC; Los Altos Surgery Center, L.P.; Aetna Life Insurance Co.; United Healthcare Services, Inc.; E3 Healthcare Management, LLC; Alpine Healthcare, LLC; Silicon Valley Surgery Center, L.P.; Waverley Surgery Center, L.P.; Bascom Surgery Center, L.P.; Campus Surgery Center L.P.; El Camino Ambulatory Surgery Center, LLC.

News: Antitrust StateUnfairTradePractices