The federal antitrust enforcement agencies brought three hospital merger challenges and three criminal antitrust enforcement actions in healthcare in the past year. Combined with the incoming Democratic administration, healthcare antitrust enforcement is likely to remain strong in 2021.
Our Health Antitrust Year in Review:
Examines specific antitrust challenges and enforcement actions that impacted hospitals and health systems, payors and other healthcare companies in 2020;
Offers lessons learned from these developments in the midst of the COVID-19 pandemic; and
Provides analysis of the enforcement trends, federal guidelines and state policy updates that are likely to shape the healthcare antitrust landscape in 2021.
Alexandra Lewis, an incoming associate in our Chicago office, also contributed to this Special Report.
In 2019, the total number of antitrust cases filed against providers dropped to 20 after the 2018 bump (27 cases). In the latest Health Antitrust Litigation Update for Providers, we discuss what kinds of cases were brought over the past two years and how they were decided, and what cases warrant particular attention in 2020.
2018 saw a significant upswing in antitrust litigation against health care providers; 27 cases were filed in 2018 versus 17 in 2017. In the latest Antitrust Update for Health Care Providers, we discuss what caused the notable rise, what kinds of cases were brought over the past two years and how they were decided, and what cases warrant particular attention in 2019.
In this Special Report, we highlight notable trends in antitrust litigation involving health care providers over the past two and a half years. Our complimentary update identifies the types of cases filed against providers, who is filing them, case results and currently pending cases to watch.
To bring a claim for antitrust damages, indirect purchasers must show that they have antitrust standing. They must demonstrate that their injuries are sufficiently direct and intertwined with the alleged cartel conduct that they are entitled to recover an overcharge, despite being downstream – sometimes by several levels – from the direct purchasers.
WHAT HAPPENED:
In Supreme Auto Transport LLC, et. al. v. Arcelor Mittal, et al. (Supreme Auto), defendant steel producers defeated state antitrust, consumer protection, and unjust enrichment claims brought by a purported class of indirect purchasers of retail products containing steel. The court found that plaintiffs lacked antitrust standing to recover for their alleged indirect harm.
Plaintiffs alleged that defendant steel manufacturers conspired to restrict steel output, thereby raising the price of steel. Plaintiffs contended that direct purchasers of steel passed on these price overcharges to the plaintiff purchasers of steel-containing products such as refrigerators, dishwashers, automobiles, and construction equipment.
The court found it appropriate to apply the Associated General Contractors (AGC) standard – the prevailing test for antitrust standing under federal law – to each of the state antitrust claims. AGC looks at factors including the causal connection between the violation and the harm, the directness of the injury, and the risk of speculative and duplicative damages to determine whether a plaintiff is a proper party to bring the antitrust action.
Though plaintiff retail customers described their injury as inextricably intertwined with the defendants’ alleged restriction of the steel market, the court held that plaintiffs’ injury was too remote to confer standing. The complaint failed to account for interceding steps in the distribution and manufacturing chain that occurred between defendants’ production of raw steel and plaintiffs’ purchase at retail of a product containing steel as a component. Nor did the complaint provide a basis to link the steel in an end-use product to that produced in any of defendants’ steel mills.
The court determined that remoteness similarly doomed the plaintiffs’ other state law claims because they could not establish proximate cause between plaintiffs’ harm and defendants’ alleged misconduct.
The court also found that plaintiffs’ claims were time-barred, rejecting class action tolling of the statutes of limitations or relation back of the amended claims.
WHAT THIS MEANS:
Supreme Auto adds to a growing body of caselaw (see, e.g., In re Aluminum Warehousing Antitrust Litigation; In re Dairy Farmers of America, Inc. Cheese Antitrust Litigation) in which courts have found that indirect purchasers’ relationship to the alleged misconduct is too attenuated for plaintiffs to possess antitrust standing. Courts are rejecting attempts by indirect purchaser plaintiffs to justify standing based on their injury being “inextricably intertwined” with injuries of market participants.
A defendant facing antitrust claims by indirect purchasers should raise any gaps in the link between the alleged misconduct and the ultimate injury, highlighting interceding parties, steps in the manufacturing and distribution processes, and component traceability issues. This can be done in a [...]
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