California system alleges Kaiser tried to monopolize health insurance market

Ayla Ellison (Twitter) - Print  | 

An appeals court has reinstated claims by a California health system that Kaiser Foundation Health Plan tried to monopolize the health insurance market in Solano County, Calif., according to Bloomberg Law

Fairfield, Calif.-based NorthBay Healthcare sued Oakland, Calif.-based Kaiser Permanente in 2017, alleging Kaiser Foundation Health Plan engaged in an anti-competitive conspiracy to deny or underpay for emergency care provided at NorthBay Medical Center and NorthBay VacaValley Hospital. The suit claimed Kaiser tried to "starve NorthBay of revenue in an effort to monopolize healthcare and insurance service markets in Solano County." 

The district court dismissed NorthBay's complaint on the ground that it failed to allege four essential elements of "causal antitrust injury," which are essential to its monopolization claims. NorthBay appealed the ruling, and the U.S. Court of Appeals for the Ninth Circuit reinstated the claims on Dec. 8. 

In a split decision, the appeals court held that NorthBay adequately alleged that Kaiser engaged in unlawful conduct and that NorthBay was injured by the alleged unlawful conduct. The court further held that NorthBay adequately alleged the injuries were caused by an anticompetitive aspect of the health plan's behavior and the alleged injuries were the type antitrust laws were meant to prevent.

Kaiser released the following statement to Becker's Hospital Review regarding the decision: 

"We are very surprised and disappointed that a three-judge panel of the Ninth Circuit reversed the district court's dismissal of the second amended complaint. We are evaluating our options regarding this split decision, which is a 'memorandum disposition' and therefore is not precedent, particularly in light of what Judge Bea called the 'thin gruel' of NorthBay's allegations and his description of the clear ways the December 8 decision conflicts with precedent. Kaiser Permanente is committed to affordable health care and that includes paying a fair and reasonable rate for emergency services provided to our members by other hospitals, consistent with California law. Kaiser Permanente's reimbursement rate for emergency services has been upheld in all three of the California cases that have resulted in verdicts in the past year."

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