When Does the Payment of Low Reimbursement Rates or Other Conduct by an Insurer Violate the Antitrust Laws?


Healthcare providers and insurers should be aware of a recent decision by the U.S. Court of Appeals for the Third Circuit—West Penn Allegheny Health System, Inc. v. UPMC1—in which the court reinstated an antitrust challenge brought by a hospital system against another hospital system and the area's largest insurer. The opinion is noteworthy because among the court's findings is the conclusion that a healthcare provider may have a viable antitrust claim when it is forced to accept low reimbursement rates as a result of an alleged conspiracy between an insurer and another hospital or when it loses key employees to another dominant competitor.

The Alleged Conspiracy Between an Insurer and a Hospital to Weaken a Competitor Hospital

Plaintiff West Penn Allegheny Health System, Inc. ("West Penn"), Pittsburgh's second-largest hospital system, sued the University of Pittsburgh Medical Center ("UPMC"), the city's largest hospital system, and Highmark, Inc., the largest health insurer in the Allegheny County market, for violations of the antitrust laws and state laws. West Penn contended that UPMC and Highmark had entered into a conspiracy, in violation of section 1 of the Sherman Act, pursuant to which UPMC used its power in the provider market to insulate Highmark from competition in the insurance market; and in exchange, Highmark used its power in the insurance market to strengthen UPMC and weaken West Penn. West Penn also maintained that UPMC attempted to monopolize the Pittsburgh-area market for specialized hospital services in violation of section 2 of the Sherman Act.

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Published In: Antitrust & Trade Regulation Updates, Civil Procedure Updates, Health Updates, Insurance Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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