Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Out-of-network ambulatory surgical care centers allege anticompetitive conduct by health care insurance administrators, (Dec 19, 2013)

By Linda O’Brien, J.D., LL.M.

Four health care insurance administrators have engaged in anticompetitive conduct by refusing to pay out-of-network ambulatory surgical care centers for the medical treatment of the insurers’ plan members and conspiring to drive the surgical centers from the market, according to a complaint filed in the federal district court of Denver (Arapahoe Surgery Center, LLC v. Cigna Healthcare, Inc., December 18, 2013).

Arapahoe Surgery Center, LLC, Cherry Creek Surgery Center, LLC, Hampden Surgery Center, LLC, Kissing Camels Surgery Center, LLC, Surgcenter of Bel Air, LLC, and Westminster Surgery Center, LLC (collectively, “Surgical Centers”) are ambulatory surgical care facilities providing surgical services to patients who did not require hospitalization. Cigna Healthcare, Inc., Connecticut General Life Insurance Company, Cigna Healthcare – Mid-Atlantic, Inc., and Cigna Healthcare of Colorado, Inc. (collectively, “Cigna”) are third-party administrators of various employers’ health care plans or insurers of health care policies.

The complaint states that Cigna offers health insurance plans that differentiate between coverage for medical treatment provided by (1) in-network providers who negotiated discounted rates with the insurer and (2) out-of-network providers who do not have a contract with the insurer. Health insurance plans that allow members to seek medical services from out-of-network health care providers charge higher premiums for the members’ flexibility to obtain medical care from the provider of their choice. Cigna pays less for in-network services under its provider agreements that it is required to pay out-of-network providers. In-network fees are generally set at rates lower than a provider’s usual and customary charges in exchange for the insurers’ steering patients to in-network providers, according to the complaint.

The Surgical Centers have implemented payment policies that reduce patients’ out of pocket costs to match their in-network benefit levels. The complaint alleges that Cigna has denied numerous claims or drastically reduced its payments to the Surgical Centers based on its “fee forgiveness” policy. This policy was designed to force out-of-network providers to change to in-network so Cigna could pay the lower in-network rates. The policy also was designed to significantly decrease payments to out-of-network providers and entitle Cigna to shared savings payments available under many of its customer contracts.

Cigna conspired with other health insurers and hospital systems in a joint boycott designed to drive the Surgical Centers from the market, according to the complaint. One method allegedly agreed to by Cigna and its co-conspirators to drive the Surgical Centers out of business was to stop the referrals of patients. The Cigna and the co-conspirators agreed to terminate or threaten to terminate participating physicians who referred patients to the Surgical Center facilities and require the physicians to refer patients to ambulatory surgical facilities owned by co-conspirator hospital systems. The method would increase health insurer profits since Cigna could pay generally lower in-network rates that they would be required to pay under their members’ out-of-network benefit plans, the Surgical Centers claimed.

The Surgical Centers assert claims for breach of contract, breach of the implied covenant of good and fair dealing, and violations of Section 1 of the Sherman Act, the Colorado Antitrust Act, and Employee Retirement Income Security Act (ERISA). The action seeks declaratory and injunctive relief, treble damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 1:13-cv-03422-WYD.

Attorneys: Joe R. Whatley (Whatley Kallas LLP) for Arapahoe Surgery Center, LLC, Cherry Creek Surgery Center, LLC, Hampden Surgery Center, LLC, Kissing Camels Surgery Center, LLC, Surgcenter of Bel Air, LLC, and Westminster Surgery Center, LLC.

Companies: Arapahoe Surgery Center, LLC; Cherry Creek Surgery Center, LLC; Hampden Surgery Center, LLC; Kissing Camels Surgery Center, LLC; Surgcenter of Bel Air, LLC; Westminster Surgery Center, LLC; Cigna Healthcare, Inc.; Connecticut General Life Insurance Company; Cigna Healthcare – Mid-Atlantic, Inc.; Cigna Healthcare of Colorado, Inc.

News: Antitrust ColoradoNews