Antitrust Law Daily Wrap Up, TOP STORY—E.D. Cal.: No reconsideration of order allowing healthcare provider to pursue conspiracy to monopolize claims, (Aug 1, 2014)

By Linda O’Brien, J.D., LL.M.

In an action by a rural healthcare services provider against a health maintenance organization and county board for allegedly conspiring to monopolize managed healthcare services in the county, the federal district court in Fresno has denied reconsideration of its order allowing the provider to proceed on its claims for conspiracy to monopolize (Horisons Unlimited v. Santa Cruz-Monterey-Merced Managed Medical Care Commission, July 31, 2014, O’Neill, L.).

Horisons Unlimited, a healthcare services provider in rural Merced County, filed a complaint against the County of Merced and the sole county-approved managed care plan, Santa Cruz-Monterey-Merced Managed Medical Care Commission (“Alliance”), alleging that the defendants conspired with a competing healthcare services provider to monopolize managed healthcare services in Merced County. Although the court dismissed the provider’s claims for antitrust damages and violations of California’s Cartwright Act, the court ruled that the provider’s claims against the County and Alliance for conspiracy to monopolize were allowed to proceed. The County moved for reconsideration.

The court found that the County failed to show that the court committed manifest errors of law or fact, or that denying reconsideration would result in manifest injustice. Relief from a final judgment may be granted where (1) it is necessary to correct manifest errors of law or fact, (2) there is newly discovered evidence, (3) it is necessary to prevent manifest injustice, and (4) there is an intervening change in controlling law. In rejecting the County’s argument that every allegation in the complaint was performed by Alliance, the court noted that the elements of a conspiracy to monopolize require an allegation of a single overt act in furtherance of the conspiracy and not an overt act by each co-conspirator.

Horison alleged that Alliance, as the sole state Medicare managed plan in Merced County, held exclusive power to contract with any healthcare provider thereby giving Alliance considerable market power. Alliance took certain actions that were detrimental to Horison and gave preferential treatment to a competitor. In the court’s view, the allegations gave rise to an inference that the County, Alliance and the competitor agreed to monopolize the healthcare services provider market and for Alliance to use its market power to act in furtherance of the conspiracy. Thus, the County failed to show any manifest errors of law or fact, or manifest injustice in the court’s findings on the sufficiency of Horison’s allegations of a conspiracy to monopolize.

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

Attorneys: Daniel O. Jamison (Dowling Aaron Inc.) for Horisons Unlimited, and Horisons Unlimited Health Care. Anthony R. Eaton (Wilke Fleury Hoffelt Gould and Birney LLP) for Santa Cruz-Monterey-Merced Managed Medical Care Commission. Roger S. Matzkind, Merced County Counsel, for County of Merced.

Companies: Horisons Unlimited; Horisons Unlimited Health Care; Santa Cruz-Monterey-Merced Managed Medical Care Commission; County of Merced; Golden Valley Health Centers

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