CHICAGO, Nov. 23 – LAWFUEL – The Law News Network — Members of Healthcare and Litigation practices of Hogan Marren, Ltd., together with attorneys from the Washington, D.C. firm of Hogan & Hartson, LLP, have successfully defended Advocate Health Care Network, Advocate Health Partners and Advocate Health and Hospitals
Corporation against claims in arbitration by United Healthcare of Illinois and
UnitedHealth Networks, Inc. seeking over $250 million in antitrust damages and
equitable relief which would have required Advocate to contract with United
for up to five years at substantially reduced hospital reimbursement rates.
On November 18, 2005, after nearly two years of litigation, a three-member
panel of the American Arbitration Association (“AAA”) denied all of United’s
claims including antitrust claims that Advocate had engaged in illegal
price-fixing, group boycott, refusal to deal, tying and market allocation
violations between 1999 and 2004. The Panel found that United’s price-fixing
claims relating to the 2000-2002 Advocate physician contracts were barred by
the “equal responsibility doctrine” since United sought a joint contract with
Advocate’s employed and independent physicians. The Panel found United
benefited from the “substantial administrative efficiencies” in Advocate’s
network that made it attractive to United and its customers. Although not
required for their decision, the Panel concluded that Advocate’s joint
contract was not a per se violation of the antitrust laws, finding that
Advocate had offered sufficient evidence that the joint contracting “provided
United and other payers competitive benefit sufficient to offset any potential
harm to consumers.” The Panel also found United was unable to establish that
Advocate had the necessary “market power” to fix prices and concluded that
United would not have prevailed on its price-fixing claim under a Rule of
Reason analysis, even in the absence of the equal responsibility defense.
The arbitrators also found that Advocate’s attempt in August, 2003 to
jointly contract for its physicians with United in a “clinically integrated”
contract to begin January 1, 2004, was not a violation of the antitrust laws.
The Panel considered extensive testimony of Advocate’s development of a
clinical integration program and found that the evidence presented at the
hearing established that Advocate was prepared as of January, 2004 to provide
a “clinically integrated” product for fee-for-service patients. The Panel
found that the proposed benefits from such a program, as recognized by six
other health care insurers who entered into clinically integrated contracts
with Advocate between 2003 and 2005, “sufficiently justified Advocate’s
conduct in attempting to reach a joint contract with United.” The remainder
of United’s antitrust claims were barred, the Panel found, primarily because
United had failed to establish that Advocate’s fifteen percent (15%) share of
the hospital and physician markets in metropolitan Chicago constituted “market
power.”
Hogan Marren attorneys involved in the Advocate defense included the head
of the firm’s Healthcare Practice, John P. Marren, Patrick E. Deady, head of
the firm’s Litigation Practice, and Senior Litigation partner, Laura C. Liu.
For more information about the decision, you may contact, John or Pat at
312-946-1800. For a copy of the AAA decision, you may visit the firm’s
website at http://www.hmltd.com .
Web Site: http://www.hmltd.com
