Amended June 5, 2015 Steven A. Mueller, Bradley J. Brown, Mark A. Kruse, Kevin D. Miller, and Larry E. Phipps, on Behalf of Themselves and Those Like Situated v. Wellmark, Inc. D/B/A Wellmark Blue Cross and Blue Shield of Iowa, an Iowa Corporation, and Wellmark Health Plan of Iowa, Inc., an Iowa Corporation
861 N.W.2d 563
| Iowa | 2015Background
- Wellmark, the Iowa BCBS licensee, contracts with health-care providers at negotiated reimbursement rates and offers its network and claims-administration services to (a) self-insured Iowa employers that hire Wellmark to administer plans and (b) out-of-state BCBS affiliates via the BlueCard® reciprocal program.
- A class of Iowa chiropractors sued Wellmark alleging violations of Iowa Competition Law § 553.4 (analogous to Sherman Act § 1), claiming conspiracies to fix maximum reimbursement rates for chiropractic services.
- On remand from this Court’s earlier opinion (Mueller v. Wellmark, 818 N.W.2d 244 (Iowa 2012)), plaintiffs stipulated they pursued only a per se antitrust theory (not rule of reason).
- The district court granted summary judgment for Wellmark, ruling the arrangements were not per se price-fixing but subject to rule-of-reason analysis; the Iowa Supreme Court reviewed de novo.
- The Court held Wellmark’s arrangements resemble joint ventures or cooperative purchasing/administration (integration of services, efficiencies, impracticality of individual negotiations) rather than naked horizontal price fixing, so per se treatment is inappropriate.
- Because plaintiffs limited their claim to per se liability, the Court affirmed summary judgment for Wellmark while preserving the possibility of a rule-of-reason challenge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wellmark’s contracts with self-insured employers to provide a provider network and rates are per se price-fixing under Iowa § 553.4 | These arrangements function as horizontal price-fixing (maximum rates) that depress provider pay and are per se unlawful | The arrangements are part of a bundled administrative service / joint purchasing-like venture with efficiencies; not naked price-fixing | Not per se; subject to rule of reason; summary judgment for Wellmark affirmed |
| Whether Wellmark’s participation in the BlueCard® reciprocal network with out-of-state BCBS affiliates is per se price-fixing | Reciprocal sharing of in-state networks/ rates is an agreement among buyers to fix prices for in-state services | The BlueCard® reciprocal arrangement is a practical mechanism for multi-state coverage and efficiencies, not a horizontal price-fixing conspiracy | Not per se; subject to rule of reason; summary judgment for Wellmark affirmed |
| Whether monopsony concerns (buyers conspiring to depress supplier prices) mandate per se treatment | Monopsony-like conspiracies to depress reimbursements to providers are as harmful as monopolisitic price-fixing and should be per se illegal | Monopsony concerns do not transform integrated administrative/network arrangements into naked price-fixing; efficiencies exist | Monopsony theory does not compel per se classification here; rule of reason governs |
| Whether precedent or enforcement guidance mandates per se treatment for cooperative purchasing/administration arrangements in health care | Plaintiffs rely on enforcement guidance and cases condemning naked price schedules (e.g., Maricopa) | Defendants rely on cases distinguishing integrated ventures and cooperative purchasing from per se price-fixing | Court follows line distinguishing naked price-fixing from ancillary/integrated arrangements; per se inapplicable |
Key Cases Cited
- Texaco Inc. v. Dagher, 547 U.S. 1 (2006) (joint venture pricing may not be per se unlawful)
- Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1 (1979) (blanket licensing and integrated ventures not subject to per se rule)
- Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219 (1948) (buyers’ agreement to depress prices can be unlawful)
- Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284 (1985) (cooperative purchasing arrangements can have procompetitive efficiencies; per se inapplicable)
- Arizona v. Maricopa County Med. Soc’y, 457 U.S. 332 (1982) (naked professional fee schedules can be per se illegal)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (per se rule applies only to restraints with predictable anticompetitive effects)
- Mueller v. Wellmark, Inc., 818 N.W.2d 244 (Iowa 2012) (prior appellate ruling clarifying state-action and preserving antitrust review of rates)