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New Mexico Oncology and Hematology Consultants, Ltd. v. Presbyterian Healthcare Services

United States District Court, D. New Mexico

November 14, 2019

NEW MEXICO ONCOLOGY AND HEMATOLOGY CONSULTANTS, LTD., Plaintiff,
v.
PRESBYTERIAN HEALTHCARE SERVICES, PRESBYTERIAN NETWORK, INC., PRESBYTERIAN INSURANCE COMPANY, INC., and PRESBYTERIAN HEALTH PLAN, INC. Defendants.

          MEMORANDUM OPINION AND ORDER

          MARTHA VÁZQUEZ UNITED STATES DISTRICT JUDGE

         THIS MATTER comes before the Court on Defendants' Motion for Summary Judgment [Doc. 624]. The Court, having considered the motion, briefs, and relevant law, and being otherwise fully informed, finds that the motion is well-taken and will be granted.

         BACKGROUND

         Plaintiff New Mexico Oncology and Hematology Consultants, Ltd. (“NMOHC”) was founded in 1987 by partners Dr. Barbara McAneny and Dr. Clark Haskins. Plaintiff's (“P.”) Ex. 1-35. Dr. McAneny is now the Chief Executive Officer (“CEO”) of NMOHC. Id. NMOHC is an independent, physician-owned practice that offers patients a full range of oncology-related services, including medical oncology, radiation oncology, diagnostic imaging, laboratory testing, genetic counseling, pharmacy services, and hematology services. Defendants' Statement of Material Facts (“SMF”) 1, Third Amended Complaint (“TAC”) ¶ 24; P. Ex. 4-A ¶ 9. NMOHC operates the New Mexico Cancer Center (“NMCC”) in Albuquerque, as well as satellite facilities in Gallup, New Mexico and Silver City, New Mexico. P. Ex. 2-A ¶ 14. Currently, NMOHC employs ten medical oncologists and three radiation oncologists, as well as six nurse practitioners certified in medical oncology. P. Ex. 4-A ¶ 9.

         Presbyterian Healthcare Services (“PHS”) is an integrated healthcare system in New Mexico that participates in multiple markets, including the private health insurance market, the oncology market, and the inpatient hospital services market. SMF 2, TAC ¶¶ 37, 39, 46. Specifically, PHS owns eight hospitals, including its flagship facility Presbyterian Hospital in Albuquerque, Presbyterian Medical Group (“PMG”), a physician practice with over 800 physicians and over 2, 500 nurses, and the Southwest Health Foundation. P. Ex. 4-A ¶ 10. The Southwest Health Foundation, in turn, owns Presbyterian Network, Inc., which is the parent company of both Presbyterian Insurance Company, Inc. and Presbyterian Health Plan, Inc. (“PHP”). Id.

         Plaintiff filed its Complaint against PHS and Presbyterian Network on May 16, 2012 [Doc. 1], and its Second Amended Complaint [“SAC”] against those same Defendants on February 13, 2013 [Doc. 24]. In the SAC, Plaintiff asserted monopolization and attempted monopolization antitrust claims under Section 2 of the Sherman Act, 15 U.S.C. § 2, and under the New Mexico Antitrust Act (“NMAA”), N.M. Stat. Ann. § 57-1-2. Plaintiff's monopolization claims arise out of Defendants' alleged willful maintenance of a monopoly and/or monopsony[1]in the market for private health insurance services through the alleged anticompetitive acts of lowering Plaintiff's reimbursement rates, threatening to terminate Plaintiff's provider contract, and entering into an exclusive arrangement with United HealthCare (“United”). Doc. 24 ¶¶ 471-76, 483-89. Plaintiff's attempted monopolization claims arise out of Defendants' alleged attempt to monopolize the comprehensive oncology services market by engaging in the same acts that maintained their monopoly in the private health insurance markets and by committing the additional acts of limiting referrals to Plaintiff's physicians and requiring Plaintiff's patients to purchase chemotherapy drugs from Presbyterian Hospital's pharmacy. Id. ¶¶ 477-82, 490-95.

         Additionally, Plaintiff asserted state law claims for tortious interference with existing and prospective contractual relationships arising out of Defendants' alleged use of improper means to prevent and prohibit referrals to Plaintiff and to prevent Plaintiff's patients from purchasing chemotherapy drugs from Plaintiff and using Plaintiff's chemotherapy infusion center. Id. ¶¶ 496-503, 517-25. Plaintiff further asserted state law claims of injurious falsehood and unfair competition arising out of Defendants' alleged misrepresentation of Plaintiff's provider status to patients, Defendants' coercion of patients to switch to Presbyterian Hospital's physicians, their pressure on their physicians to refer patients in-house instead of to Plaintiff, their interference with the ability of their physicians to make referrals to Plaintiff, and their alleged illegal receipt and sale of drugs purchased at a discount from pharmaceutical manufacturers under the federal 340B program[2] (referred to herein as the “340B drugs” and the “340B program”) and sold in violation of program guidelines to reap inflated profits. Id. ¶¶ 8, 12, 505. Finally, Plaintiff asserted a claim under the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) arising out of Defendants' aforementioned alleged illegal receipt and sale of 340B drugs, and Defendants' issuance of a “mandate” requiring seniors covered by PHP's health insurance to purchase their chemotherapy drugs (including 340B drugs) from Presbyterian Hospital's pharmacy instead of from Plaintiff (hereinafter referred as the “Mandate”). Doc. 24 ¶¶ 8-12.

         PHS and Presbyterian Network moved to dismiss with prejudice all claims in the SAC pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim. Doc. 33. In a Memorandum Opinion and Order entered on August 22, 2014 (“2014 Opinion”), the Court granted the motion to dismiss only as to Plaintiff's state law claim for injurious falsehood and Plaintiff's RICO claim. Doc. 79. The Court denied the motion as to Plaintiff's remaining claims. Id.

         Thereafter, Plaintiff filed the TAC, adding Presbyterian Insurance Company and PHP as Defendants. Doc. 123. PHS, Presbyterian Network, Presbyterian Insurance Company, and PHP are now Defendants in this action, and are referred to herein collectively as “Defendants.” In the TAC, Plaintiff added federal and state monopolization antitrust claims, alleging that Defendants willfully maintained a monopoly in the inpatient hospital services market and used that monopoly to drive Plaintiff out of the market for oncology services. Defendants moved to dismiss these new antitrust claims. Doc. 141. In a Memorandum Opinion and Order entered on March 14, 2016 (“2016 Opinion”), the Court granted the motion to dismiss, finding that Plaintiff failed to allege an antitrust injury as to the inpatient hospital services market, and thus lacked standing to bring a monopolization claim based on Defendants' alleged monopoly of the inpatient hospital services market. Doc. 316.

         As a result of the Court's rulings in the 2014 Opinion and the 2016 Opinion, the claims remaining in this action are: Plaintiff's monopolization claims under Section 2 of the Sherman Act and the NMAA arising from Defendants' alleged monopolization of the private health insurance markets (Counts I and IV); Plaintiff's attempted monopolization claims under Section 2 of the Sherman Act and the NMAA arising from Defendants' alleged attempt to monopolize the oncology market (Count III and VI); Plaintiff's state law tortious interference claims arising from Defendants' alleged referral practices (Count VII) and the Mandate (Count X); and Plaintiff's state common law unfair competition claim arising from Defendants' alleged coercion of patients to switch to Presbyterian Hospital's physicians, their pressure on their physicians to refer patients in-house instead of to Plaintiff, their interference with the ability of their physicians to make referrals to Plaintiff, and their alleged illegal receipt and sale of drugs purchased at a discount from pharmaceutical manufacturers under the federal 340B program and sold in violation of program guidelines to reap inflated profits (Count VIII).[3]

         STANDARD

         The court must “grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party need not “produce evidence showing the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Rather, “the burden on the moving party may be discharged by ‘showing' - that is, point out to the district court - that there is an absence of evidence to support the nonmoving party's case.” Id.; see also Sports Unltd., Inc., v. Lankford Enter., Inc., 275 F.3d 996, 999 (10th Cir. 2002) (Although “[t]he burden of showing that no genuine issue of material fact exists is borne by the moving party, ” when “the moving party does not bear the ultimate burden of persuasion at trial, it may satisfy its burden by pointing to a lack of evidence for the nonmovant on an essential element of the nonmovant's claim”). Once the moving party has met this burden, the nonmoving party must “go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Id. at 324. In making this showing, the nonmoving party may not rely on “the mere pleadings themselves.” Id.

         For purposes of Rule 56(a), a dispute is genuine “if there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way.” Becker v. Bateman, 709 F.3d 1019, 1022 (10th Cir. 2013). “An issue of fact is material if under the substantive law it is essential to the proper disposition of the claim.” Id. (citation omitted). In other words, “[t]he question . . . is whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. (citation omitted). On summary judgment, the court “construe[s] the factual record and the reasonable inferences therefrom in the light most favorable to the nonmoving party.” Mata v. Saiz, 427 F.3d 745, 749 (10th Cir. 2005).

         DISCUSSION

         I. Monopolization Claims (Counts I and IV)

         “Illegal monopolization under § 2 of the Sherman Act has two distinct elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” SOLIDFX, LLC v. Jeppesen Sanderson, Inc., 841 F.3d 827, 841 (10th Cir. 2016) (citation omitted).[4] To establish its monopolization claims, Plaintiff thus must show both “power in a relevant market” and “anticompetitive, ” or exclusionary conduct. Christy Sports, LLC v. Deer Valley Resort Co., Ltd., 555 F.3d 1188, 1192 (10th Cir. 2009). Defendants ask the Court to grant summary judgment in their favor on Plaintiff's monopolization claims on the ground that there is no evidence to demonstrate either of these elements.

         A. Possession of Monopoly Power

         To establish that Defendants possess monopoly power, Plaintiff must first “identify[] the relevant product market, ” and then demonstrate that Defendants have “both power to control prices and power to exclude competition” in that market. Lenox MacLaren Surgical Corp. v. Medtronic, Inc., 762 F.3d 1114, 1119-20 (10th Cir. 2014); Reazin v. Blue Cross & Blue Shield of Kansas, Inc., 899 F.2d 951, 966-67 (10th Cir. 1990). “Power over price and competition may depend on various market characteristics, such as market trends, number and strength of competitors, and entry barriers.” Cohlmia v. St. John Med. Ctr., 693 F.3d 1269, 1282 (10th Cir. 2012). Market share, while “relevant to the determination of the existence of [] monopoly power, ” is not alone dispositive. Reazin, 899 F.2d at 967. In Reazin, the Tenth Circuit specifically stated that “market share percentages may give rise to presumptions, but will rarely conclusively establish or eliminate [] monopoly power.” Id. at 968; Cohlmia, 693 F.3d at 1282 (“[T]he absence of market share may give rise to a presumption that market power does not exist.”). Accordingly, in Reazin, the Court found that the defendant health insurer's market share, estimated to be between 45 percent and 62 percent of the relevant market, was “such that there could be at most a presumption of a lack of monopoly or market power.” Id. at 970. The Court “disagree[d] with [the insurer] that such a market share prohibits, as a matter of law, a conclusion of market or monopoly power.” Id. at 970 (emphasis in original). The Court then turned “to other characteristics of the private health care financing market at issue and to more specific evidence of [the insurer's] power over price and competition, ” including the maintenance of its “dominant position in the market.” Id. The Reazin Court found the following non-exclusive factors relevant to the monopoly power inquiry: “the number and strength of the defendant's competitors, the difficulty or ease of entry into the market by new competitors, consumer sensitivity to changes in prices, innovations or developments in the market, [and] whether the defendant is a multimarket firm.” Id. at 967 n.23.

         Here, Plaintiff's expert, Dr. Bradley N. Reiff, identified two markets relevant to Plaintiff's monopolization claims.[5] First, Dr. Reiff determined that “commercial health insurance purchased by employers based in Albuquerque” is a relevant market. P. Ex. 2-A ¶ 31. He then identified two subsets of this relevant market: (1) commercial fully insured covered lives, which “generally applies to smaller employers and individuals” - “where the employer or the individual is fully insured from the insurance company” - and (2) commercial self-insured covered lives, which “generally corresponds to larger employers and does not include individuals” - “where the insurance company is really administering a policy.” P. Ex. 2-A ¶ 67-68; P. Ex. 1-12 at 11-12. Dr. Reiff also determined that Medicare Advantage - a program providing premium support for beneficiaries signing up with private health companies, which is generally not available to individuals under the age of 65 - is “a separate relevant market.” Id. ¶ 36-40.

         Defendants argue that Plaintiff's monopolization claims fail because Defendants' share of these markets, as calculated by Dr. Reiff, “is well below the level that could support a claim of monopolization.” Doc. 624 at 17. Specifically, as to commercial fully insured health insurance (the first subset of the market of commercial health insurance), Dr. Reiff identified the following health insurers as participants in the market from 2008 to 2015: Defendant PHP, Blue Cross Blue Shield (“BCBS”) of New Mexico, Lovelace Health, United, out of state BCBS, Cigna, New Mexico Health Connections (“NMHC”), and Aetna. Id. at 52 (Table IV-1). From 2009 through 2015, PHP consistently had the highest market share in this category. Id. At its highest point in 2013, PHP's share was 54.7 percent. Id. Most recently, in 2015, PHP had a 49.6 percent share of the market, followed by BCBS with 24.9 percent, NMHC with 8.3 percent, United with 5.6 percent, out of state BCBS with 3.6 percent, Aetna with 1.7 percent, and Cigna with .8 percent. Id. According to Dr. Reiff, this data may “understate PHP for employer-based fully insured” lives, because it includes self-insured individuals. P. Ex. 1-12 at 111-12.

         Next, as to commercial self-insured health insurance (the second subset of the market of commercial health insurance), Dr. Reiff identified the following health insurers as participating in the market from 2008 to 2015: PHP, BCBS, United, Cigna, Lovelace Health, Aetna, and out of state BCBS. P. Ex. 2-A at 53 (Table IV-2). At its highest point, in 2008, PHP had the highest share of 33.8 percent, followed by Cigna with a 27.3 percent share. Id. Although its share declined thereafter, PHP continued to have the highest share in this category through 2013, at which point its share was 26.8 percent, followed by BCBS with a 26.3 percent share. Id. In 2014 and 2015, however, BCBS had the highest share. Id. Specifically, in 2014, BCBS had a 34.6 percent share and PHS had a 26.3 percent share, and in 2015, BCBS had a 35.2 percent share and PHP had a 26.8 percent share. Id. United was third in 2014 and 2015 with shares of 21.6 percent and 20.7 percent, respectively. Id.

         Third, as to the Medicare Advantage market (the second relevant market identified by Dr. Reiff), Dr. Reiff identified the following health insurers as participants from 2008 to 2015: PHP, Health Care Service Corp. (BCBS), United, Cigna, Lovelace Health, Aetna, and out of state BCBS. Id. (Table IV-3). From 2011 to 2015, PHP had the highest share in this market. Id. Most recently, in 2015, at its highest point, PHP had a share of 48.2 percent, followed by BCBS with a 32 percent share, United with a 9 percent share, and out of state BCBS with a 2.4 percent share. Id.

         Defendant is correct that, according to Dr. Reiff's calculations, PHP's most recent share in each of the relevant markets and submarkets is below 50 percent. Doc. 624 at 17. The Court cannot agree, however, that this is fatal to Plaintiff's monopolization claims. As explained in the 2014 Opinion, Defendants' theory that a threshold market share percentage must be met in order to sustain a monopolization claim is inconsistent with binding Tenth Circuit precedent. See Doc. 79 at 20-23. Indeed, as noted above, Reazin specifically held that a 45 percent to 62 percent share of a health insurance market - a range virtually identical to the one calculated here - does not foreclose a conclusion of monopoly power. Accordingly, consistent with Reazin, the Court determines that Dr. Reiff's market share calculations do not as a matter of law disprove that PHP possesses monopoly power, but rather give rise to a presumption that PHP lacks monopoly power.

         In the 2014 Opinion, applying three of the four factors identified in Reazin, this Court held that several allegations in the SAC, if proven, would establish that despite its market share, PHP possesses monopoly power. See Id. at 23-26. As to the first Reazin factor, number and strength of competitors, the Court noted the following allegations: “the private insurance market is concentrated and includes only PHP, Lovelace, Blue Cross, United HealthCare, and Cigna”; two of Plaintiff's competitors “each have less than a ten percent market share”; “Defendants have tied up additional health insurers - i.e., United HealthCare and Cigna - with exclusive dealing arrangements in order to prevent their working with rivals and potential entrants, thus causing further concentration of the private health insurance market”; and “Blue Cross is planning to exit the market for private health insurance.” Id. at 23-24. The Court found that these allegations, taken together, “demonstrate that Defendant PHP effectively has only one competitor, Lovelace, whose market share is, construing the allegations in the complaint in Plaintiff's favor, significantly less than PHP's . . . market share.” Id. at 24.

         Plaintiff's allegations of market concentration are not borne out by the evidence. There are, in fact, more than five health insurers in each of the relevant markets and submarkets, PHP has less than 50 percent of the shares in each of those markets and submarkets, and PHP does not even have the highest share in one of the markets. As detailed above, in the commercial fully insured health insurance submarket, Dr. Reiff identified eight health insurers. Although this submarket includes both Lovelace Health and BCBS, in June 2014, BCBS purchased the membership of the Lovelace Health Plan. P. Ex. 1-7 at 115. Accordingly, for 2014 and 2015, Lovelace did not participate in this submarket, leaving seven health insurers. In 2015, PHP had a share of nearly 50 percent of this submarket, followed by BCBS, with a share of nearly 25 percent. Similarly, in the commercial self-insured health insurance submarket, Dr. Reiff identified seven health insurers. Again, after BCBS's purchase of the Lovelace Health Plan membership, Lovelace no longer participated in this market, leaving six health insurers. In 2015, BCBS was the market leader with a share of approximately 35 percent of this submarket, followed by PHP, with a share of approximately 27 percent. United followed with a share of approximately 21 percent. Dr. Reiff noted that “United, Cigna and Aetna . . . all have substantial shares” of this market. P. Ex. 2-A ¶ 68. Finally, in the Medicare Advantage market, Dr. Reiff identified five health insurers. When BCBS purchased Lovelace's membership in 2014, the number reduced to four health insurers. In 2015, PHP had a share of approximately 48 percent, followed by BCBS with a share of 32 percent. Plaintiff has provided no evidentiary basis for its conclusion that this data demonstrates that the relevant markets are “concentrated.” Indeed, President of BCBS, Kurt Shipley, testified that, “if anything, [the health insurance market] is more competitive now than it's been in a while. We have other carriers that are pretty aggressive at the moment.” Defendants' (“D.”) Ex. 8 at 145. Mr. Shipley further testified that PHP and BCBS “are both pretty strong in the Albuquerque market at this point.” P. Ex. 1-7 at 146.

         Further, there is no evidence that PHP has “exclusive dealing arrangements” with United or Cigna. Plaintiff alleges in the TAC that “through contractual and/or tacit agreements, ” United and Cigna are “adjuncts to PHP, ” and in its opposition to Defendants' motion continues to argue that the market share of United and Cigna should be discounted as a result of these agreements. TAC ¶ 65; Doc. 677 at 29. The undisputed evidence, however, demonstrates that neither Cigna nor United has ever had any agreement with PHP, and that both Cigna and United view PHP as a competitor. Specifically, Pamela Braun, who was Director of Network Management at Cigna during the relevant time period, testified that Cigna did not have a partnership or any other type of affiliation with PHP, because it was a competitor. D. Ex. 28 at 156. Similarly, when Dustin Taylor, testifying on behalf of UHC, was asked, “Are you aware of any relationship or arrangement between United Healthcare and Presbyterian Health Plan, ” he responded, “We have none. They are a competitor.” D. Ex. 29 at 37. Moreover, Julie Nickerson, Director of Finance/Operations at NMOHC, testified that she understood that United and Cigna each competed with PHP, that none of these was the same company, and that each had different contracts with NMOHC. D. Ex. 27 at 63. Dr. McAneny also provided similar testimony that, in terms of competing for employers to buy their product, United and Cigna compete against PHP. D. Ex. 3 at 311.

         Admittedly, there is evidence that both United and Cigna have contracts with Presbyterian Hospital, as a provider, whereby Cigna and United are prohibited from contracting with Lovelace Hospital, one of the three hospitals in the Albuquerque area, and other non-PHS providers. See P. Ex. 2-A ¶ 83 (“In Albuquerque, PHS will not contract with an insurer that contracts with Lovelace, and often requires that Albuquerque Health Partners or certain other non-Presbyterian providers be excluded from plans contracting with PHS.”) For example, Dr. McAneny testified that “United will only work with Presbyterian Hospital. And in contract negotiations with United I was told that they were working with Presbyterian.” P. Ex. 1-7 at 20-21. Further, the contract between PHS and Cigna provides that “Cigna will not offer in its network of Participating Providers any services rendered at any general hospital located in the Service Area other than Presbyterian and the University of New Mexico Health Sciences Center facilities.” P. Ex. 1-101 at 4. Similarly, an internal Cigna email states: “The Presby hospital LOA includes Presby Medical Group and is exclusive except for UNM and specialty types not owned or contracted with PMG.” P. Ex. 1-102.

         While Plaintiff's expert opines that PHS's practice of negotiating semi-exclusive[6]contracts with insurers, such as Cigna and United, protects Presbyterian Hospital from competition, P. Ex. 2-A ¶ 82, he provides no similar opinion that this practice protects PHP, as a health insurer, from competition. Nor does Plaintiff provide any evidentiary support for its theory that PHS's contracts with United and Cigna prevent them from effectively competing against PHP. In short, Plaintiff has failed to demonstrate that PHS's contracts with Cigna and United render Cigna and United “adjuncts to PHP, ” or cause further concentration of the relevant markets.[7]

         Finally, BCBS did not exit the the relevant health insurance markets, but rather, as Dr. McAneny testified, has “become a very significant player in Albuquerque.” D. Ex. 7 at 19. As discussed above, in June 2014, BCBS purchased the membership of the Lovelace Health Plan. Mr. Shipley testified that BCBS is “stronger than [it was] prior to that acquisition, ” and that “Presbyterian is surprised at how much of their business [BCBS] is capturing.” P. Ex. 1-7 at 146; D. Ex. 20; see also D. Ex. 15 (“BCBSNM appears to have a definite opportunity to write PHP and possible UHC business.”); D. Ex. 22 (“[BCBS] well positioned in NM and showing competitive strength in products and rates.”). And as Dr. Reiff's calculations demonstrate, BCBS has the second highest share of both the commercial fully insured health insurance submarket and the Medicare Advantage market, and the highest share of the commercial self-insured health insurance market. Nor are BCBS's shares of these three markets “significantly less” than PHP's shares. Accordingly, based on the undisputed evidence, the first Reazin factor does not support finding possession of monopoly power.

         As to the second Reazin factor, the difficulty or ease of entry into the market by new competitors, the 2014 Opinion noted the following allegations: “significant barriers to entry exist in the private health insurance market and entering this market even under normal conditions requires significant capital, expertise, and time”; “Blue Cross does not have enough enrollees to independently facilitate entry”; “firms that currently exist have not been able to challenge Defendants' market position for many years (particularly given Defendants' alleged monopoly power of hospital inpatient services)”; “no meaningful entry has occurred in decades”; “entry by new firms has failed because Defendants have closed significant market segments to these entrants”; and “Defendants have maintained their dominant position over many years and have expanded their market position with the acquisition of hundreds of physician practices.” Doc. 79 at 24-25.

         Plaintiff does not present evidence to substantiate most of these allegations, and mistakenly suggests that it is Defendants' burden to disprove them. See Doc. 677 at 30. Nonetheless, there is some evidence in the record that there are significant and continuing barriers to entry into the relevant markets. First, there can be no dispute that any new insurer would need to build a provider network. As discussed above, because Presbyterian Hospital “is perceived as higher quality than other hospitals in Albuquerque, ” PHS is able to negotiate semi-exclusive contracts with insurers seeking access to its network in Albuquerque. P. Ex. 2-A ¶ 82. With the exception of certain carve outs, PHS (as a provider) does not contract with BCBS for BCBS's insured patients living in Albuquerque. Id. Thus, PHS is able to segment the market: an insurer is limited to entering the market with PHS in its network or with Lovelace in its network, but never with both. According to Mr. Shipley, this “segmentation” of the market, whereby an insurer effectively must choose between having Presbyterian Hospital or Lovelace Hospital in its provider network, “still exists today.” P. Ex. 1-7 at 145. And for BCBS, “lack of a Presbyterian delivery system in Albuquerque is the major barrier to writing more business in the larger group segment.” P. Ex. 1-22 (emphasis in original).

         Further, and perhaps as a result of this market segmentation, as Dr. Reiff's report demonstrates, PHP was able to maintain its lead of the commercial fully insured health insurance submarket and Medicaid Advantage market during the eight-year period analyzed. While PHP is second in the commercial self-insured health insurance submarket, it had the highest share in that submarket market for six years, from 2008 to 2013, and since then, has followed closely in second place.

         As to historical evidence of actual entry, in the commercial self-insured health insurance submarket and the Medicaid Advantage market, there have been no new entrants during the relevant time period. There has been one new entrant in the commercial fully insured health insurance submarket: NMHC, which entered that submarket in 2014, when health insurance exchanges were implemented in New Mexico under the Affordable Care Act (“ACA”). Notably, NMHC was able to increase its share from 2 percent in 2014 to 8.3 percent in 2015. There is conflicting evidence, however, regarding the financial strength and sustainability of NMHC. Compare D. Ex. 23 at 78, 82-83, 59 (testimony of Anne Brennan, CEO of NMHC, that, as of November 2015, NMHC was “financially very strong” and has “a sustainable model to operate in New Mexico for a long time, that NMHC was profitable in the first quarter of 2016 and anticipated being profitable in 2016, and that NMHC's products are competitive from a premium standpoint, offering plans with high quality for a competitive price) with P. Ex. 1-31 at 107-08 (testimony of Mr. Taylor of United that while NMHC has grown, “given the financials we've seen for the past years on exchange providers, they're not long for the game unless they make some significant changes”) and P. Ex. 1-11 at 369 (testimony of Lisa Farrell Lujan, President of PHP and Presbyterian Network, that “there's a question around” whether NMHC will be able to continue operating in the long term”). Further, Dr. Reiff opines that while “it is possible that subsidized premiums at exchanges have a constraining effect on commercial premiums charged to small group employers who have significant numbers of employees with income below the ACA eligibility thresholds, . . . the evidence indicates that the availability of exchanges has [had and may have] no constraining effect on PHP's behavior.” Ex. 2-A ¶ 34. Dr. Reiff further notes that plans like NMHC that entered the market through the ACA “have a relatively small share of the overall commercial insurance market, and are not an option for employers.” Id. ¶ 71. Thus, NMHC's sole entrance into the commercial fully insured health insurance submarket does not foreclose the conclusion that significant and continuing barriers to entry exist in the relevant health insurance markets. Because the evidence supports, at least in part, Plaintiff's allegations of barriers to entry, the second Reazin factor weighs in favor of finding monopoly power.

         As to the fourth factor, [8] whether the defendant is a multimarket firm, the Court noted the following allegations: “Defendants are part of a multimarket enterprise that competes in, at a minimum, the hospital inpatient services market, the private health insurance market, and the comprehensive oncology market”; “because Defendants are part of a multimarket firm, they can use their power in one market to impede entry in another market”; and “Blue Cross cannot act as a substitute for, or challenge the market position of, Defendant PHP because Blue Cross enrollees cannot receive covered treatment at Presbyterian Hospital and because Presbyterian's monopoly power over hospital inpatient services ensures that patients seeking treatment at Presbyterian will not purchase Blue Cross's products.” Doc. 79 at 25. There is evidence in the record to support at least some of these allegations. First, there is no dispute that PHS is an integrated health care system that participates in multiple markets, including the relevant health insurance markets identified by Dr. Reiff, the comprehensive oncology market, and the inpatient hospital services market, and that PHS makes decisions at an “enterprise level.” See P. Ex. 1-11 at 42-43, 46 (Lisa Farrell, then Vice President of PHS's Integrated Care Solutions (“ICS”) department, testified that ICS was formed around 2010 to focus on “enterprise initiatives, ” that “[t]he goal of ICS was to lower the overall cost of care without harming quality, ” and that this goal was accomplished “through work in PHP and in our delivery system”); P. Ex. 1-11 at 166-67 (Ms. Farrell further testified that ICS decided at an enterprise level the rates at which PHP would reimburse the PHS delivery system, and that the pricing model would allow PHP and the delivery system to share in drug savings); see also P. Ex. 1-62 (“[A] key component to the enterprise oncology strategy is to establish parameters that say ‘these are the terms under which we will contract for oncology services: specific rate ranges, drug costs, quality standards, etc.' Once established we need to ensure that our own system falls within those parameters.”) (emphasis added). There is also no dispute that PHS prohibits insurers who contract with it from contracting with other providers, and thus uses its power as a health care provider to, at the very least, set limits on the terms of entry into the health insurance market. And while there is evidence that BCBS is a strong competitor of PHP, there is also evidence that BCBS is prevented from expanding its market share because of its limited access to Presbyterian Hospital.

         Defendants admit that the evidence shows that PHP is part of a multimarket firm, but attempt to argue away the significance of this evidence by noting that “courts universally recognize that ‘leveraging' power in one market to gain an advantage in another is not inherently suspect under the antitrust laws.” Doc. 624 at 19 (emphasis in original). This argument is inapposite, as Reazin specifically found the question of whether a defendant is a multimarket firm relevant to the determination of monopoly power. Because the evidence supports Plaintiff's allegations that Defendants comprise a multimarket firm and have used their dominance in one market to impede entry in another, the fourth Reazin factor weighs in favor of finding monopoly power.

         Accordingly, there is evidence of significant and continuing barriers to entry and Defendants' power as a multimarket firm. There is also evidence that PHP holds a dominant position in the relevant health insurance markets. Given this evidence, the Court well might conclude that a genuine issue of fact remains as to PHP's possession of monopoly power despite its market share of less than 50 percent. The Court, however, need not make this determination. As set forth below, Plaintiff fails as a matter of law to establish the second element of its monopolization claims, and thus its claims cannot survive summary judgment.

         B. Exclusionary Conduct

         To establish the second element of its monopolization claims, namely, that PHP willfully acquired or maintained its monopoly power, Plaintiff must demonstrate that PHP engaged in anticompetitive, or exclusionary conduct. Christy Sports, 555 F.3d at 1192. Because “the antitrust laws protect competition, not competitors, . . . the Sherman Act is not concerned with overly aggressive business practices, or even conduct that is otherwise illegal, ” but rather with conduct that “unfairly tends to destroy competition itself.” JetAway Aviation, LLC v. Bd of Cty. Comm'rs of County of Montrose, Colo., 754 F.3d 824, 834-35 (10th Cir. 2014).

         Although “anticompetitive conduct comes in too many forms and shapes to permit a comprehensive taxonomy, . . . the question [courts] often find [themselves] asking is whether, based on the evidence and experience derived from past cases, the conduct at issue before [them] has little or no value beyond the capacity to protect the monopolist's market power.” Novell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1072 (10th Cir. 2013). Accordingly, the question of whether conduct is exclusionary “cannot be answered simply by considering its effect on [the plaintiff].” Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 605 (1985). Rather, the court must “consider its impact on consumers and whether it has impaired competition in an unnecessarily restrictive way.” Id. Only “[i]f a firm has been attempting to exclude rivals on some basis other than efficiency, [is it] fair to characterize its behavior as [anticompetitive].” Id.

         In the 2014 Opinion, this Court interpreted the SAC to allege two sets of acts as exclusionary conduct: first, that in the most recent provider contract, PHP lowered reimbursement rates to NMOHC below competitive levels and declined to cover services offered by NMOHC, with the intent to “financially strangle” and eliminate Plaintiff from the comprehensive oncology market; and second, that PHP entered into an exclusive arrangement with United, such that United will not take market actions without PHP's approval, causing significant concentration of the private health insurance market. Doc. 79 at 27-28, 33-34. Although not alleged in the TAC, Plaintiff now argues that a third category of conduct, the Mandate, is also exclusionary. As discussed herein, under binding precedent and based on the undisputed evidence, none of these categories of conduct is exclusionary within the meaning of Section 2.

         1. PHP and United

         As discussed above, Plaintiff has failed to demonstrate any arrangement between PHP and United, let alone one whereby United will not take market actions without PHP's approval. Mr. Taylor's testimony on behalf of United specifically refuted the notion of any such arrangement and clarified that United views PHP as a competitor. Further, Plaintiff presented no evidence that the vertical contract between Presbyterian Hospital, as a health care provider, and United, as an insurer, constrains competition between the horizontal entities, United and PHP, two insurers. Nor did Plaintiff present evidence that the contract was “devised or encouraged” by PHP. See U.S. Healthcare v. Healthsource, Inc., 986 F.2d 589, 594 (1st Cir. 1993). Accordingly, there is no basis for the Court to view any contractual terms between Presbyterian Hospital and United as effectively an exclusive dealing, horizontal agreement between PHP and United as competitors. See Id. (rejecting argument that vertical agreement between doctors and insurance plan was implicitly horizontal agreement among doctor stockholders of insurance plan that, “if devoid of joint efficiencies, might warrant condemnation” where plaintiff “supplied [the court] with no evidence of such a masquerade”). It follows that the contract between Presbyterian Hospital and United cannot establish the anticompetitive conduct necessary to satisfy the second element of Plaintiff's monopolization claims.

         2. PHP's Reimbursement and Coverage Decisions

         a. Relevant Facts

         To support its allegations regarding PHP's reimbursement rates and coverage decisions, Plaintiff points to evidence documenting the history of NMOHC's relationship with PHS, the history of NMOHC's contract negotiations with PHP, and the intersections of each. Originally, NMOHC and PHS had a cooperative relationship for the provision of oncology services. SMF 3, TAC ¶ 222. Through the 1990's, PHS did not employ any medical oncologists. TAC ¶ 223. Instead NMOHC physicians, who had (and continue to have) staff privileges at Presbyterian Hospital, provided oncology services (other than radiation oncology services) to enrollees of PHP. Id.

         By late 1998, Dr. McAneny started to talk to her partners about creating a freestanding cancer center with radiation and imaging. P. Ex. 1-35. The original plan was to work a joint venture with PHS, which the doctors at NMOHC regarded as “their hospital.” Id. NMOHC and PHS disagreed as to PHS's potential role in a new cancer center. See P. Ex. 1-9 (Jim Hinton, President and CEO of PHS, testified that “one of the original offers was that we would be an owner of some physical assets, . . . and that doesn't really create a sustainable relationship to own a piece of a building”); see also P. Ex. 1-33; P. Ex. 1-49; P. Ex. 1-50. Ultimately, NMOHC opened NMCC in 2002, without any PHS involvement. P. Ex. 1-35. Even after completion of the cancer center, NMOHC continued discussions with PHS as it “really expected a JV.” P. Ex. 1-35. PHS gave NMOHC a contract for radiation oncology services, but the joint venture, as envisioned by NMOHC, never came to pass. Id.

         In or about 2005, PHS began planning for a comprehensive cancer center. See P. Ex. 1-53. PHS realized that while it led Albuquerque's “slowly declining inpatient oncology market with [a] 44% share, ” this was in contrast to its 17 percent share in all other oncology services, and thus PHS's role had “not kept pace with market need or ha[d] declined due to competitor inroads.” Id. Peter Snow, Vice President for Strategy at PHS, testified that at that time, “inpatient activity” in oncology services “was being shifted to an outpatient arena.” P. Ex. 1-5 at 103. While there was “less and less need for inpatient services, ” PHS “was being niched into an inpatient-only role. That was the concern.” Id. This led to PHS's “desire to develop a more comprehensive, full-service oncology program.” Id.

         By October 2005, PHS concluded that it needed to develop a comprehensive oncology program in Albuquerque. See P. Ex. 1-34. This conclusion was based on its assessment that: PHS was not then positioned to participate in the most rapidly growing and profitable oncology service segments, including medical oncology and “an increasing array of oncology related pharmaceuticals” that could offer a “big opportunity to decrease PHP costs”; that PMG and PHP could “support PHS migration to new segments; and that PHS had a “unique opportunity to provide continuum of care patients demand.” Id.

         In 2007, PHS rolled out its plan to “provide multi-disciplinary, coordinated oncology care.” D. Ex. 5. To that end, PHS established a medical oncology practice, hired Dr. Mitch Binder to serve both as a medical oncologist and the program medical director, and hired three additional medical oncologists to work at the practice. Id.; see also P. Ex. 1-35. Effective April 27, 2007, PHS contracted with MD Anderson to provide radiation oncology services. D. Ex. 5. It was PHS's intention “to build a one-stop shop cancer center so patients [could] come to one location for all of their outpatient cancer care.” Id.

         Once PHS decided to develop its own oncology program, joint venture discussions between PHS and NMOHC refocused on “PHS's vision of oncology and how NMOHC fits into that vision.” D. Ex. 4. PHS's goal was to “create the most effective integrated cancer delivery system in the nation.” P. Ex. 1-36.

         According to Dr. McAneny, sometime in 2005, Jim Hinton, President and CEO of PHS, Mark Reifsteck, Senior Vice President of PHS, and Lauren Cates, COO of PHS, came to NMCC to meet with her, Dr. Steven Bush, and their office manager and, during the meeting, Mr. Hinton told them that they had two choices: sell to them and become employees or they would pull $30M out of reserves [to hire medical and radiation oncologists] and put them out of business. P. Ex. 1-35; P. Ex. 1-4 at 69. Specifically, Dr. McAneny testified, Mr. Hinton advised that, under PHS's proposal, the physicians at NMOHC would become individual employees of PHS and PHS would acquire NMCC. P. Ex. 1-4 at 70.

         Thereafter, on June 6, 2005, Mr. Reifsteck sent a letter to Dr. McAneny and Dr. Bush containing a “preliminary term sheet, ” that “outlines PHS' current thinking as to elements of a proposed transaction with NMOHC and its physicians.” D. Ex. 2. The term sheet indicates that PHS would “offer employment to physicians associated by NMOHC, ” and indicates that “PHS will commit to capital and other investments in the Presbyterian Oncology Program (not including acquisition consideration payable to NMOHC or compensation amounts payable to NMOHC physicians or other personnel), in the amount of $30 million over the three-year period commencing upon the closing of a transaction [between NMOHC and PHS].” Id.

         By 2009, the volume at the PHS cancer center in both medical oncology and radiation oncology increased significantly; however, PHS realized that both groups were headed toward reaching capacity. P. Ex. 1-163. In order to address its impending capacity constraints and reduce costs for PHP (whose costs of insuring oncology patients of non-PHS providers was higher than its costs of insuring oncology patients of PHS providers) while also effectuating its goal of becoming the “dominant” central New Mexico cancer provider, PHS determined that its best option was to continue, or revisit, its pursuit of an acquisition of NMOHC. Id.; P. Ex. 1-36.

         PHS envisioned a scenario whereby PMG would “assimilate all or most of the NMOHC docs, ” and “the NMOHC facility would become the flagship facility.” P. Ex. 1-163, P. Ex. 1-36. PHS reasoned that NMOHC would be willing to consider an acquisition on these terms because NMOHC was “financially vulnerable” due to several factors, including the fact that “the independent practice of oncology is/has become marginally viable (at best), ” NMOHC had lost its contract with Lovelace Health Plan, and NMOHC had been losing significant business to the PHS cancer center. P. Ex. 1-36. During the period from 2009 to 2010, Dr. Dava Gerard, business manager for the PHS cancer center, met monthly with Dr. McAneny of NMOHC, and reported that Dr. McAneny informed her that “NMOH[C] physician partners voted to consider Pres the #1 choice for a ‘closer relationship' including a partnership/purchase.” Id. Dr. Gerard further reported that Dr. McAneny and she both agreed that “these severe economic times are compromising the sustainability of freestanding facilities which we both agree will unlikely survive the current climate.” P. Ex. 1-164. Dr. Gerard anticipated that the acquisition of NMOHC would result in many additional patients and a significant savings to PHP. P. Ex. 1-36.

         In February 2010, Dr. Gerard and others from PHS met with Dr. McAneny and others from NMOHC. D. Ex. 4. During the meeting NMOHC expressed its continued concerns “about becoming employed physicians and what that means to [PHS] and [NMOHC].” Id.

         Until 2012, NMOHC wished to pursue a collaboration or affiliation with PHS. D. Ex. 4, D. Ex. 3 at 75. Ultimately, however, no agreement was reached, as NMOHC doctors did not want to become employees of PHS. D. Ex. 3 at 75. It was important to NMOHC “to maintain the separateness.” Id. at 142; see also P. Ex. 1-9 at 56-57 (Mr. Hinton testified that “employment was always an option, and that was rejected by Dr. McAneny”).

         In her April 9, 2009 PHS Cancer Service Line Strategic Analysis, Dr. Gerard also proposed alternatives to an NMOHC acquisition, one of which was enhancing the PHS cancer center volume by changes in PHP contracts. P. Ex. 1-36. Similarly, a worksheet entitled “Cost Reduction Initiatives” was circulated internally at PHS that included as an option for reducing oncology costs the termination of PHP's contract with NMOHC and the simultaneous transition of all NMOHC business to PHS and UNM. P. Ex. 1-57. Presentation materials for a PHS July 2011 oncology strategy meeting further demonstrate that PHS was considering various options from a central delivery system (“CDS”) and PHP perspective, to arrive at an “enterprise view.” P. Ex. 1-59. Those options included allowing organic growth by the PHS cancer center, having PHP narrow its network to the PHS cancer center alone, or having PHP narrow its network to the PHS cancer center for capitated patients only.[9]Id. Ms. Cates suggested that instead of having PHP narrow its network, PHS could develop “an intentional PMG internal referral strategy” for capitated patients. P. Ex. 1-89. Ms. Cates' “summary of decisions” from the meeting reflects the decision that the ...


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