Antitrust Law Daily Wrap Up, ANTITRUST—W.D. Pa.: UPMC settles monopolization claims, discharged from suit, (Aug 1, 2016)

By Greg Hammond, J.D.

University of Pittsburgh Medical Center (UPMC)—Pittsburgh’s largest health care provider—has been released from an action alleging it conspired with a health insurance provider to monopolize the markets for medical care and health insurance in Western Pennsylvania. The federal district court in Pittsburgh granted final approval of a settlement with a purchaser of small group health insurance coverage, finding the settlement to be fair, reasonable, adequate, and in the best interests of the small group settlement class (Cole’s Wexford Hotel, Inc. v. UPMC, July 29, 2016, Conti, J.).

Cole’s Wexford Hotel, Inc. purchased small group health insurance coverage from Highmark, Inc.—the largest health insurance provider in the Pittsburgh area—and its subsidiaries, including Highmark Health Insurance Co. (HHIC). Cole’s alleged that it suffered damages as a result of a sustained and orchestrated anticompetitive conspiracy entered into by the UPMC and Highmark. Specifically, Cole’s claimed that UPMC had market power in the market for inpatient services and the market for tertiary and quaternary acute care inpatient services. Similarly, Highmark purportedly had market power in the health insurance and/or health care financing and administration for small group private employers market. UPMC and Highmark allegedly conspired, agreed, and acted in an organized, orchestrated, and deliberate fashion to control, divide, and/or monopolize both the market for medical care and the market for health insurance in the Western Pennsylvania area, Cole’s asserted.

In granting final approval, the court noted that a presumption of fairness applied because the settlement was negotiated at arm’s length through court-ordered mediation; the parties were represented by reputable counsel with substantial class action, antitrust, and complex litigation experience; there was sufficient formal and informal discovery and both the parties and counsel were knowledgeable about the facts of the case and the potential risks of continued litigation; no class member objected to the settlement; and only two class members opted out. The Girsh factors also weighed in favor of approving the settlement, according to the court, which concluded that the settlement was therefore fair, reasonable, adequate, and in the best interests of the small group settlement class.

The court consequently certified a settlement class, with regard to UPMC only, which includes all persons, whether natural or fictitious, who purchased small group health insurance coverage in Western Pennsylvania from, or otherwise paid any small group plan premiums or portion thereof, to HHIC or a similar for profit subsidiary of Highmark, Inc. between July 1, 2010, and March 21, 2012. Highmark remains a defendant in the antitrust litigation.

The case is No. 2:10-cv-01609-JFC.

Attorneys: Andrew M. Stone (Stone Law Firm, LLC), Patrick K. Cavanaugh (Del Sole Cavanaugh Stroyd, LLC) and David S. Stone (Stone & Magnanini LLP) for Cole’s Wexford Hotel, Inc. Keith E. Whitson (Schnader, Harrison, Segal & Lewis) and Paul M. Pohl (Jones Day) for University of Pittsburgh Medical Center. Alexander W. Saksen (Gordon & Rees, LLP) and Andrew J. Robinson (Latham & Watkins LLP) for Highmark, Inc.

Companies: Cole’s Wexford Hotel, Inc.; University of Pittsburgh Medical Center; Highmark Inc.

Cases: Antitrust PennsylvaniaNews