New Mexico Oncology & Hematology Consultants, Ltd. v. Presbyterian Healthcare Services
54 F. Supp. 3d 1189
D.N.M.2014Background
- Plaintiff New Mexico Oncology and Hematology Consultants, Ltd. (NMOHC) is an independent comprehensive oncology provider in Albuquerque; Defendants Presbyterian Healthcare Services (Presbyterian Hospital) and Presbyterian Network, Inc. (PHP) are affiliated hospital and insurer entities with substantial market presence.
- NMOHC alleges Defendants used market power in private health insurance and hospital inpatient services to harm NMOHC in the comprehensive oncology market by lowering reimbursement rates, threatening contract termination, cutting referrals, requiring patients to buy drugs at Presbyterian’s pharmacy (a 340B-related “mandate”), and entering exclusive arrangements with other insurers.
- Claims in the Second Amended Complaint: federal Sherman Act § 2 monopolization and attempted monopolization; New Mexico Antitrust Act equivalents; tortious interference (existing and prospective relations); injurious falsehood; unfair competition (common law); and a RICO claim based on alleged misuse of 340B drug purchases and related misrepresentations.
- Defendants moved to dismiss under Rule 12(b)(6), arguing lack of antitrust standing/monopoly power, no anticompetitive conduct for attempted monopolization, improper basis for tortious interference and injurious falsehood, preemption/limits for unfair competition, and lack of RICO standing and mail/wire fraud predicates.
- The Court denied dismissal of the Sherman Act and NMAA monopolization and attempted-monopolization claims, and tortious interference and unfair competition claims; it dismissed injurious falsehood (for failing to plead special damages) and dismissed RICO (for lack of proximate cause/standing).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing for Sherman Act §2 monopolization/monopsony claims | NMOHC: although not insurer, it is a perceived competitor (via Presbyterian affiliation) and a seller injured by monopsonist PHP’s reimbursement conduct; injury is "inextricably intertwined" with anticompetitive conduct | Defendants: plaintiff is not a participant in the allegedly restrained market; lacks antitrust standing | Held: NMOHC has antitrust standing (Tenth Circuit Reazin framework applies); plaintiff adequately alleges perceived-competitor and seller (monopsony) injuries |
| Monopoly/monopsony power and maintenance (§2) | NMOHC: alleges market shares, concentrated market, barriers to entry, multimarket leverage, exclusive dealing with United, predatory/reduced reimbursement and refusals to deal | Defendants: market shares below categorical thresholds and discounting/reimbursement are lawful unilateral conduct | Held: allegations (46% share, exclusive arrangements, barriers, predatory bidding/refusal to deal) are sufficient at pleading stage to plausibly allege possession and maintenance of monopoly/monopsony power |
| Attempted monopolization in comprehensive oncology | NMOHC: alleges predatory conduct (lowered reimbursement, referral-limiting, mandate) and dangerous probability of success given concentrated market and multimarket leverage | Defendants: insufficient anticompetitive acts alleged and no dangerous probability (market share too low) | Held: allegations satisfy elements (anticompetitive conduct, specific intent, dangerous probability) to survive 12(b)(6) |
| RICO claim based on 340B drug scheme and misrepresentations | NMOHC: defendants misrepresented compliance with 340B program to pharmaceutical companies, providers, and consumers, forming mail/wire fraud predicate and proximately causing NMOHC’s losses | Defendants: no proximate cause; direct victims are pharma companies or government; reliance absent or the mandate is an intervening cause | Held: RICO dismissed for lack of standing/proximate cause — alleged fraud on third parties was indirect, intervening mandate breaks causation; plaintiffs lack requisite directness/reliance |
Key Cases Cited
- Reazin v. Blue Cross & Blue Shield, 899 F.2d 951 (10th Cir. 1990) (Tenth Circuit framework on antitrust standing, market power factors, and multimarket analysis)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standards; conclusory allegations insufficient)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007) (pleading: draw inferences in plaintiff’s favor)
- Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451 (1992) (monopolization requires possession and exclusionary maintenance of power)
- Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985) (refusal to deal can be exclusionary conduct)
- U.S. v. Grinnell Corp., 384 U.S. 563 (1966) (definition of monopolization: willful maintenance through exclusionary conduct)
- Verizon Comm’ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) (limits on duty to deal; unilateral conduct generally not actionable absent anticompetitive exclusion)
- BancOklahoma Mortgage Corp. v. Capital Title Co., 194 F.3d 1089 (10th Cir. 1999) (elements of mail/wire fraud as RICO predicates require reliance/right to rely)
- Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) (proximate-cause limitation for RICO; indirect competitive injuries insufficient)
- Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (2008) (RICO proximate-cause discussion; reliance often necessary and direct relation required)