Antitrust Law Daily Wrap Up, ANTITRUST—W.D. Pa.: Workers' comp cost containment provider had standing to sue third-party administrator and insurer, (Feb 19, 2016)

By Edward L. Puzzo, J.D.

A firm that provided workers' compensation cost containment services to workers' compensation insurers and third-party administrators (TPA) had standing to bring an antitrust action against a TPA and insurer that sought to exclude it from the relevant market, according to the federal district court in Pittsburgh (Premier Comp Solutions LLC v. UPMC, February 18, 2016, Cercone, D.).

Plaintiff Premier Comp Solutions provides cost containment services to workers' compensation insurers and third-party administrators (TPAs). Defendants UPMC Benefit Management Services and UPMC Health Benefits, doing business as WorkPartners, provide workers' compensation TPA services to insured and self-insured employers, and was also a workers' compensation insurance carrier in Pennsylvania. Premier brought an antitrust action alleging that the defendants sought to drive it from the market for workers' compensation cost containment services.

Antitrust standing. UPMC moved to dismiss on the grounds that Premier's complaint failed to allege an antitrust injury and therefore it lacked standing to bring an antitrust action. The court responded that Premier alleged more than harm to its own business; it also alleged harm to competition cause by UPMC's efforts to remove a low-cost containment service provider in the relevant market.

According to Premier's allegations, Defendant WorkPartners asked Premier in February 2014 to perform an extensive medical bill review and repricing test audit in order to compare Premier with competitor MCMC. The audit results indicated that Premier's performance was superior, but WorkPartners nevertheless awarded its repricing medical bill review business to MCMC. Premier also alleged that WorkPartners used its Premier's panel database to develop its in-house database, and then barred WorkPartners' employer insureds from using Premier. Premier alleged that, as a result of such conduct, numerous employers that could benefit from Premier’s cost containment services were told by WorkPartners that they could not do business with Premier. The only remaining option was to purchase cost containment services from WorkPartners and UPMC.

Accepting those allegations as true for the purpose of the motion to dismiss, the court found that Premier's alleged injury was of the type for which the antitrust laws were intended to provide redress. Thus, the court denied defendants' motion to dismiss on the basis of lack of antitrust standing.

Relevant market. Antitrust injury also required an evaluation of the relevant product market and geographic market, the court stated.

Premier alleged a relevant product market of employers who purchased workers' compensation policies and cost containment services in the stated geographic area. Defendant alleged that Premier improperly placed insured and self-insured employers into a single market, and further improperly placed the sale of insurance with TPA cost containment services into a single market with disparate cost containment services.

The court did not agree that these groupings were improper. The combination of services offered by Premier—panel development, medical bill review, injury management, and physical therapy services and diagnostic network services—reflected its belief that, based on commercial realities, it must offer a grouping of services in order to compete in the market. Premier's complaint also had alleged a geographic market consisting of Pennsylvania and 20 other states. Premier had alleged sufficient facts, the court found, to define a plausible relevant market, using the accepted metric of "the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it.”

Finding that Premier had (1) sufficiently defined the geographic market; (2) alleged both market power and barriers to entry; and (3) alleged anticompetitive effects and exclusionary conduct, the court denied defendants' motion to dismiss.

The case is Civil Action No. 2:15-cv-00703-DSC.

Attorneys: Stanley M. Stein (Stanley M. Stein, PC) for Premier Comp Solutions, LLC. Richard B. Dagen (Axinn, Veltrop & Harkrider LLP) for UPMC and UPMC Health Benefits, Inc. d/b/a UPMC WorkPartners. Matthew F. Smith (Buchanan Ingersoll & Rooney PC) for MCMC, LLC.

Companies: Premier Comp Solutions, LLC; UPMC; UPMC Management Services, Inc.; UPMC Health Benefits, Inc.; MCMC, LLC.

Cases: Antitrust PennsylvaniaNews