Stay current on the latest developments from agencies including the CFPB, Federal Reserve, FDIC, and OCC to advise clients on real-life regulatory situations.
By Liz Crampton
The Justice Department can continue to pursue a case claiming a Charlotte, N.C. health care system illegally prevented insurers from steering patients to lower-cost options, a judge ruled March 30 ( United States of America et al v. The Charlotte-Mecklenburg Hospital Authority, W.D.N.C., 3:16-cv-00311-RJC-DCK, 3/30/17 ).
The judge’s decision to allow the case to continue puts pressure on the DOJ’s litigators because it is only the second case involving steering claims the antitrust division has brought in its history. The government lost its first steering case against American Express Co. on appeal in September and is debating whether to file for U.S. Supreme Court review.
In this case, Judge Robert Conrad of the U.S. District Court for the Western District of North Carolina noted that the American Express opinion involved different markets from the health care arena.
He said the allegations against Carolinas Health System, or CHS, involve factual issues that must be evaluated by discovery.
In its complaint, the DOJ argued that Carolinas Health System, the largest health care provider in the state, imposed unlawful restrictions in its contracts with local commercial health insurers. Those restrictions limit consumers’ ability to find less expensive health-care services in the area and are illegal, the government said.
In briefs filed in October, CHS argued that the DOJ’s case against it should be dismissed for the same reasons the U.S. Court of Appeals for the Second Circuit rejected the DOJ’s position in the American Express case. The DOJ had claimed that American Express illegally barred merchants from steering customers to Visa and Mastercard.
Conrad disagreed and stated that he’s not “bound by the Second Circuit’s decision,” but he added that he considers the ruling “instructive.” It’s the only other case in which the government has challenged steering restrictions as anticompetitive.
If the Supreme Court takes the American Express case, that would be “huge” because the government hasn’t lost a case on a market definition basis in “forever,” said Theodore Voorhees Jr., an antitrust attorney at Covington & Burling LLP, at a conference March 30.
The DOJ was “slammed” by the appellate court for not looking at the competitive impacts in a multi-sided market that has two distinct customer bases, he said. The American Express case is “incredibly important and will be even more so if the Supreme Court takes it up,” Voorhess said.
“The Second Circuit’s analysis is deeply rooted in the details and dynamics of the credit-card industry, using specific hypothetical examples from that industry to prove its point,” Conrad wrote. He added that he has not yet been presented with facts to conclude whether CHS’s steering restrictions have pro-competitive or anticompetitive benefits.
“This factual dispute, like the one in Am. Express, must be evaluated with the benefit of discovery before this court can make a pronunciation such as the one the Second Circuit made,” he said.
To contact the reporter on this story: Liz Crampton in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Fawn Johnson at email@example.com
The text of the opinion is at http://src.bna.com/nB3
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)