Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Rural healthcare services provider alleges anticompetitive conduct by county health maintenance organization, (Jan 29, 2014)

By Linda O’Brien, J.D., LL.M.

A health maintenance organization and county board have engaged in anticompetitive conduct by denying access to healthcare services in rural areas and conspiring to monopolize managed healthcare services in the county through the elimination of competition, according to a complaint filed in the U. S. District Court for the Eastern District of California (Horisons Unlimited v. Santa Cruz-Monterey-Merced Managed Medical Care Commission d/b/a Central California Alliance for Health., January 27, 2014).

Horisons Unlimited and Horisons Unlimited Health Care (collectively “Horisons”), nondenominational religious-based providers of healthcare services, operate clinics in rural areas of Merced County. Santa Cruz-Monterey-Merced Managed Medical Care Commission d/b/a Central California Alliance for Health (“Alliance”) is a health maintenance organization that provides managed healthcare services to publicly supported programs, businesses, and individuals.

The complaint states that, in 2008, the Board of Supervisors of Merced County (Merced) adopted an ordinance creating Alliance. Under the ordinance, all county residents eligible for Medi-Cal, the state Medicaid program, were required to be a member of a county-approved managed care plan in order to receive services under Medi-Cal. Alliance was established as the sole Medi-Cal managed care entity in the county, the entity with which all healthcare providers seeking to provide services to Medi-Cal beneficiaries would have to be contracted. Following the adoption of the ordinance, Horisons was forced to enter into a contract and become a member of Alliance due to the monopoly created by Merced and Alliance, according to the complaint.

The contract with Alliance required Horison to comply with Alliance’s credentialing standards for its healthcare providers. Although the contract allowed for temporary credentialing and Alliance can take up to six month to complete permanent credentialing, Alliance refused to temporarily credential many of Horisons’ otherwise licensed physician providers. The complaint alleges that Merced County is not a desirable location for professional healthcare providers and newly licensed healthcare providers frequently work for Horisons to gain experience that will enable them to gain employment in more attractive locations. This causes a large turnover of staff at Horisons and requires replacements to continue the level of services. Merced County has higher incidences of poverty, obesity, asthma, diabetes, and disabled persons than the state generally. Alliance’s delay in full credentialing and refusal to allow temporary credentialing limits access by these persons to needed healthcare.

In December 2013, Alliance ceased new enrollments at Horisons of persons in Alliance’s managed care plan on the ground that Horisons’ temporary credentialing violated the contract. Alliance further threatened to terminate Horisons’ contract altogether. Despite the needs of Horisons’ obese, asthmatic, diabetic, and disabled patients, Alliance has also threatened to terminate Horison’s contract unless the annual visits of its patients average no more than 3.2. These patients frequently require more visits to Horisons’ clinics, and Horisons has been forced not to bill Alliance for many of these medically necessary visits in order to keep the Alliance contract.

The complaint states that the main competition to Horisons for Medi-Cal managed care patients has been Golden Valley Health Centers, a federally qualified healthcare clinic. A Golden Valley executive, who has been a member of Alliance’s governing body, has (1) objected to religious services at Horison’s; (2) rebuffed efforts to work cooperatively with Horisons to meet patient needs; and (3) indicated that a goal of Golden Valley is to take over Horisons. In addition, Golden Valley is permitted by Alliance to use temporary credentialed providers who are similar to Horisons’ new professional providers without any adverse consequences. Merced and Alliance allegedly have conspired to monopolize Medi-Cal managed healthcare services in the county by the elimination of competition against Golden Valley Health Centers. The actions of Merced and Alliance restrain trade by denying access to crucial health services for persons who pass through or relocate to Merced County and hinders the establishment of healthcare services in rural areas, the complaint charged.

Horisons asserts claims for breach of contract and violations of Sections 1 and 2 of the Sherman Act, California Business & Professions Code, and the due process and free exercise of religion clauses of the U.S. Constitution. The action seeks injunctive relief, damages, interest, attorneys’ fees, and any other just and proper relief.

The case is No. 1:14-cv-00123-LJO-MJS.

Attorneys: Daniel O. Jamison (Dowling Aaron Incorporated) for Horisons Unlimited and Horisons Unlimited Health Care

Companies: Horisons Unlimited; Horisons Unlimited Health Care; Santa Cruz-Monterey-Merced Managed Medical Care Commission

News: Antitrust CaliforniaNews