Sykes v. Health Network Solutions, Inc., 372 N.C. 326

Background

Plaintiffs are licensed North Carolina chiropractors who claim Health Network Solutions, Inc. (HNS) and its individual chiropractor-owners act as an intermediary between chiropractors and payors and control in‑network access and pricing.
HNS contracts separately with insurers/third‑party administrators; participating chiropractors accept negotiated in‑network rates and face termination if their average per‑patient cost exceeds HNS limits.
Plaintiffs allege HNS operates as an unlicensed medical service corporation and a monopsony that reduces chiropractic output and fixes prices, harming chiropractors and patients.
Plaintiffs filed a putative class action alleging declaratory relief, antitrust (price‑fixing, monopsony, monopoly), UDTP (N.C.G.S. § 75‑1.1), civil conspiracy, breach of fiduciary duty, and punitive damages.
The Business Court granted dismissal/partial summary judgment in two stages (Aug. 18, 2017 and Apr. 5, 2018); this appeal affirms dismissal of all claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Antitrust (price‑fixing, monopsony, monopoly)	HNS's exclusive contracts and network rules amount to price‑fixing and monopsony that restrict supply and harm chiropractors/patients	HNS denies unlawful market power or actionable antitrust conduct; challenges market definition and plaintiff's proof	Court equally divided; Business Court dismissal stands but without precedential value
UDTP (N.C.G.S. § 75‑1.1)	HNS engaged in unfair/deceptive practices (unlicensed operations, improper utilization review, misrepresentations) distinct from antitrust conduct	HNS argues learned‑profession exemption applies because defendants are chiropractors and conduct relates to professional services	Majority: UDTP claims dismissed under learned‑profession exemption; concurrence would have preserved non‑professional UDTP allegations
Declaratory relief (Chapter 58 violations/licensure)	Plaintiffs seek declarations that HNS is unlicensed and agreements are unlawful/unenforceable	Defendants argue Chapter 58 confers enforcement on the Commissioner of Insurance, not private parties	Court: No private right of action under the cited Chapter 58 provisions; declaratory claims dismissed
Breach of fiduciary duty / joint venture / agency	Plaintiffs say HNS acted as agent or joint‑venturer, creating fiduciary duties	Defendants point to contract language disclaiming agency/joint venture and say ordinary contractual relations do not create fiduciary duties	Court: No fiduciary relationship as a matter of law; breach claim dismissed

Key Cases Cited

Funderburk v. JPMorgan Chase Bank, N.A., 241 N.C. App. 415, 775 S.E.2d 1 (N.C. Ct. App. 2015) (punitive damages not a freestanding claim)
Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs., LLC, 365 N.C. 520, 723 S.E.2d 744 (N.C. 2012) (standard of review for motions to dismiss and summary judgment)
Christenbury Eye Ctr., P.A. v. Medflow, Inc., 370 N.C. 1, 802 S.E.2d 888 (N.C. 2017) (Rule 12(b)(6) standards)
Wheeless v. Maria Parham Med. Ctr., Inc., 237 N.C. App. 584, 768 S.E.2d 119 (N.C. Ct. App. 2014) (two‑part learned‑profession exemption test)
Reid v. Ayers, 138 N.C. App. 261, 531 S.E.2d 231 (N.C. Ct. App. 2000) (exemption does not cover commercial/entrepreneurial activities separate from core professional services)
Burgess v. Busby, 142 N.C. App. 393, 544 S.E.2d 4 (N.C. Ct. App. 2001) (matters affecting professional services fall within learned‑profession exception)
Shelton v. Duke Univ. Health Sys., Inc., 179 N.C. App. 120, 633 S.E.2d 113 (N.C. Ct. App. 2006) (broad application of learned‑profession exemption to health professions)
Hamlet H.M.A., LLC v. Hernandez, 821 S.E.2d 600 (N.C. Ct. App. 2018) (business negotiations among medical professionals may fall outside learned‑profession exemption)
Cameron v. New Hanover Mem'l Hosp., Inc., 58 N.C. App. 414, 293 S.E.2d 901 (N.C. Ct. App. 1982) (professional judgment matters, e.g., credentialing, fall within exemption)