Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Urgent care center alleges anticompetitive agreement between competitor and insurance company, (Jun 28, 2013)

By Tobias J. Gillett, J.D., LL.M.

A company that established an urgent care center in Batavia, New York has filed a complaint in the federal district court in Buffalo alleging that a healthcare system and an insurance provider have colluded to exclude the urgent care center from the Genesee County, New York market (Insource Development Services of Batavia, LLC v. HealthNow New York, Inc., June 25, 2013).

According to the complaint, Insource Development Services of Batavia, LLC opened an urgent care center (UCC) in Batavia, New York, in mid-June 2013. The UCC allegedly permits consumers to treat minor injuries or sicknesses that would otherwise have to be treated through United Memorial Medical Center’s UCCs, or through United’s emergency room at much higher cost.

Insource alleges that the only two other UCCs operating in the greater Genesee County, New York area are operated by United, and “are frequently closed for unexplained reasons or are open for only very short hours.” United therefore had a monopoly on the relevant market prior to Insource’s entry.

Before entering the market, Insource allegedly engaged in discussions with health insurance provider HealthNow New York Inc. regarding the possibility of opening a UCC in Batavia, New York, a plan that HealthNow endorsed at the time. While negotiating rates HealthNow would pay Insource, and after informing Insource that it would send a list of rates a contract for final agreement, HealthNow ceased negotiations without notice, and declined to engage in further negotiations, or even to return telephone calls.

Insource claims that these actions resulted from a “vertical, collusive arrangement” between HealthNow and United, under which they agreed “to restrict competition in the relevant market” and “to exclude and/or boycott Insource from the relevant market.” The complaint also alleges that United previously engaged in anticompetitive conduct, including opening one of its own UCCs, that successfully excluded another UCC operated by Lakeside Memorial Hospital from the market.

HealthNow provides medical insurance coverage to approximately 50% of the people in the relevant market who have private medical insurance, and an inability to service HealthNow patients would cause Insource to lose revenue, according to Insource. United’s arrangement with HealthNow is allegedly intended to drive Insource’s UCC out of business so United can regain its monopoly. United has also tortiously interfered with contractual relationships Insource has with other healthcare providers. HealthNow has allegedly stated “that allowing Insource to operate a UCC in Batavia, New York does not fit into HealthNow’s business plan.”

Insource asserts claims for violations of Sections 1 and 2 of the Sherman Act and New York Donnelly Act (General Business Law §§340-347), as well as tortious interference with contractual relations against United and fraudulent inducement/promissory estoppel against HealthNow. Insource seeks compensatory, treble, and punitive damages; attorneys’ fees; costs; and preliminary and permanent injunctions.

The case is No. 1:13-cv-00668-WMS.

Attorneys: John J. Keenan (Colucci & Gallaher, P.C.) for Insource Development Services of Batavia, LLC.

Companies: Insource Development Services of Batavia, LLC; HealthNow New York Inc.; United Memorial Medical Center

News: Antitrust NewYorkNews