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(Article from Insurance Law Alert, June 2017)

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The Tenth Circuit dismissed monopoly, conspiracy and common law tort claims against Blue Cross and Blue Shield Association (“BCBSA”), finding that the complaint failed to sufficiently allege such violations.  Bristow Endeavor Healthcare, LLC v. Blue Cross and Blue Shield Assoc., 2017 WL 2350204 (10^th Cir. May 31, 2017).

Bristow Endeavor Healthcare, an operator of medical facilities in northeast Oklahoma, entered into an in-network provider agreement with Health Care Service Corporation (“HCSC”), a BCBSA company in Oklahoma for some of its facilities.  When Bristow asked HCSC to add a new facility (CORE) to the existing provider agreement, HCSC refused to do so, and the parties were unable to reach a separate agreement as to CORE.  Thereafter, Bristow filed suit, alleging that HCSC’s refusal to grant CORE in-network status resulted from a conspiracy to restrain trade with Hillcrest Healthcare System and Ardent Health Systems, Bristow’s largest competitors.  Bristow claimed that the purpose of the conspiracy was to prevent CORE from fully competing in the northeast Oklahoma healthcare market, thereby allowing Hillcrest to maintain and expand its market share in that region.  An Oklahoma federal district court dismissed the complaint, and the Tenth Circuit affirmed.

The Tenth Circuit acknowledged that the Sherman Act conspiracy claim was “a reasonably close question” but concluded that the complaint did not plausibly allege a conspiracy.  The court explained that while Hillcrest and Ardent may have been motivated to undermine Bristow as a competitor, HCSC would be acting against its own interest if it agreed to reduce competition in the healthcare market.  The court rejected Bristow’s suggestion that HCSC acted at Hillcrest’s behest because it wanted to maintain Hillcrest’s business, noting that the complaint did not include specific allegations that Hillcrest possessed market power sufficient to compel HCSC to act against its own interest.  The court deemed insufficient allegations that an Ardent representative claimed he could “leverage his relationship with HCSC to keep CORE out of network,” explaining that the complaint lacked details as to any such arrangement or conversation between Ardent and HCSC.