Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Health care data technology developer allegedly used sham patent infringement litigation to suppress competition, (Jul 27, 2015)

By Linda O’Brien, J.D., LL.M.

A developer of health care claims data grouping software has suppressed competition in the grouping technology market by unlawfully obtaining a patent portfolio and initiating sham patent infringement litigation against a competitor, according to a complaint filed in the federal district court in San Jose, California (Cave Consulting Group, Inc. v. OptumInsight, Inc., July 24, 2015).

Cave Consulting Group, Inc. (CCGroup) and OptumInsight are software and consulting firms that develop cloud-based technology focused on evaluating and improving the efficiency (cost of care) and effectiveness (quality of care) of health care providers.

The complaint states that the field of healthcare informatics relies on information technology and analytical software to evaluate the services that healthcare practitioners provide to patients. One of the key inputs in evaluating the efficiency and effectiveness of that care is claims data records. In order to be useful as an input, the vast collection of claims data is organized into bundles called “episodes of care,” which represent the collection of services provided to a patient during the management of a particular instance of a medical condition. There is a special type of software, referred to as an “episode of care grouper,” that is used to import collections of claims data and group it into discrete episodes of care.

According to the complaint, in 1994, Dennis Dang and Mitchell Portnoy formed Symmetry Health Data Systems to develop software for grouping medical claims data into episodes of care. Symmetry filed a patent application with the U.S. Patent and Trademark Office (USPTO) on Dang’s grouping methodology, but withheld information that the company previously tried to commercialize the invention by licensing it to a large health insurance provider. In 1998, the USPTO issued the patent, U.S. Patent No. 5,835,897 (the ‘897 patent) with claims that read on Dang’s grouping methodology. In 2003, OptumInsight purchased Symmetry and all of its intellectual property, including the ‘897 patent and eight related patent applications. Despite having full knowledge of Dang’s earlier conception of the invention and commercialization attempt, OptumInsight prosecuted its patent applications.

From 2005 to 2014, there were only three products available in the market for episode of care grouper software. OptumInsight offered a grouper tool known as “Episode Treatment Groups”; CCGroup offered a competing tool known as “Cave Grouper”; and Truven Health Analytics Inc. offered a third competing tool known as “Medical Episode Groups.”

The complaint alleges that OptumInsight is the dominant competitor, serving 85 to 90 percent of the grouper software market. OptumInsight obtained its dominant position by advertising, threatening to enforce, and enforcing a portfolio of patents that covered methods for constructing episodes of care. Acquiring its patent portfolios through fraud on the USPTO provided OptumInsight with an unfair competitive advantage, the lawsuit claimed. In 2011, OptumInsight initiated a patent infringement lawsuit against CCGroup. However, OptumInsight later withdrew all but two of its patents from the suit after CCGroup uncovered its inequitable conduct. Although at trial a jury found CCGroup did not infringe OptumInsight’s remaining asserted claim, CCGroup allegedly had already incurred substantial legal fees and expenses defending against OptumInsights’ baseless claims.

The plaintiff asserts claims for malicious prosecution, false advertising in violation of the Lanham Act, and monopolization and attempted monopolization in violation of Section 2 of the Sherman Act. The action seeks declaratory and injunctive relief, treble and punitive damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 3:15-cv-03424-JCS.

Attorneys: Holly A. House (Paul Hastings LLP) and Richard L. Brophy (Armstrong Teasdale LLP)

Companies: Cave Consulting Group, Inc.; OptumInsight, Inc.

News: Antitrust CaliforniaNews