LifeWatch Services, Inc. v. Highmark, Inc.
248 F. Supp. 3d 641
E.D. Pa.2017Background
- Plaintiff LifeWatch Services, Inc. sells mobile cardiac outpatient telemetry (MCOT) devices (ACT) and alleges these devices are clinically superior to other cardiac monitors but cost about three times more.
- Defendants are the Blue Cross and Blue Shield Association and several Blue Plan administrators; LifeWatch alleges a long-standing “Uniformity Rule” under which Blue Plans adopt a model medical policy denying telemetry coverage.
- LifeWatch claims the Uniformity Rule is a horizontal agreement among Blue Plans to refuse to cover MCOT, causing lost sales, reduced innovation, and other anticompetitive effects in outpatient cardiac-monitoring markets.
- LifeWatch brought a single Sherman Act § 1 conspiracy claim seeking injunctive relief and treble damages; the Third Amended Complaint was filed in February 2016.
- Defendants moved to dismiss under Rule 12(b)(6) arguing lack of antitrust standing, insufficient allegations of an agreement, failure to plead anticompetitive effects in a relevant market, and McCarran-Ferguson Act immunity.
- The Court granted the motion and dismissed with prejudice, holding LifeWatch failed to allege an antitrust violation because the alleged buyer-side uniform refusal to purchase telemetry is an exercise of monopsony buying power rather than unlawful conduct under the Sherman Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants’ alleged concerted refusal to cover telemetry violates §1 of the Sherman Act | LifeWatch: Blue Plans conspired (Uniformity Rule) to refuse coverage, reducing purchases and harming competition and innovation among telemetry providers | Defendants: A buyer-side uniform decision not to purchase is lawful monopsony bargaining; harm is to a competitor, not competition | Held: Dismissed — alleged concerted buyer-side refusal is not an antitrust violation here; monopsony exercise lawful and not competition-reducing conduct pleaded |
| Antitrust standing / antitrust injury | LifeWatch: Lost sales and profits from denials are antitrust injury caused by a collusive refusal to deal | Defendants: Plaintiff’s injury is competitive harm to a single firm, not to competition; lacks antitrust injury/standing | Held: Court did not decide standing because it concluded no antitrust violation on the merits |
| Sufficiency of agreement and market-effect allegations | LifeWatch: Pleaded Uniformity Rule, model policy votes, audits, and consistent denials across Blue Plans | Defendants: Allegations are legal conclusions; obvious alternative (cost-based coverage decisions) explains behavior | Held: Even assuming an agreement, the complaint fails to plausibly allege conduct that unfairly destroys competition; alternative explanations (cost/coverage judgments) plausible |
| McCarran-Ferguson Act immunity | LifeWatch: did not rely on McCarran-Ferguson to defeat liability | Defendants: Insurance coverage decisions may be immune from antitrust challenge under McCarran-Ferguson | Held: Court declined to reach McCarran-Ferguson argument after finding no antitrust violation |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for conspiracy allegations)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards; legal conclusions vs. factual allegations)
- West Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85 (3d Cir. 2010) (distinguishable buyer-seller conspiracy that insulated parties from competition)
- Blue Shield of Va. v. McCready, 457 U.S. 465 (1982) (antitrust standing where insurer’s scheme forced a Hobson’s choice on consumers)
- Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (antitrust protects competition, not competitors)
- Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447 (antitrust’s purpose to protect market competition)
- Apex Hosiery Co. v. Leader, 310 U.S. 469 (historical purpose of Sherman Act to prevent restraints on competition)