West Penn Allegheny Health System, Inc. v. UPMC
2010 U.S. App. LEXIS 24347
| 3rd Cir. | 2010Background
- West Penn Allegheny Health System (West Penn) sues UPMC (dominant hospital) and Highmark (dominant insurer) in Allegheny County for Sherman Act §1 and §2 violations and state-law claims; market shares: UPMC ~55% hospital services, West Penn <23%, Highmark 60–80% health-insurance market.
- Alleged pre-conspiracy: Highmark funded West Penn merger to preserve competition; UPMC opposed merger and sought to undercut West Penn.
- Conspiracy period: alleged 1998–2007 truce in which UPMC protected Highmark from insurer competition and, in exchange, Highmark supported UPMC and weakened West Penn; resulting actions include refusals to enter competitive provider agreements, shrinking UPMC Health Plan, high premiums, and grants/support to UPMC.
- Highmark’s conduct: supracompetitive reimbursements to UPMC, large facility grant/loan, elimination of Community Blue (low-cost plan), endorsement of UPMC Mercy acquisition, and information-leak strategies against West Penn.
- UPMC unilateral conduct: physician recruitment from West Penn, pressuring community hospitals to funnel referrals to UPMC, and false statements about West Penn finances to investors; together with the alleged conspiracy, these actions allegedly harmed West Penn.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the complaint adequately pleads an agreement | West Penn pleads direct evidence of agreement (2002–2005 meetings, retaliation threats) | District Court required more than non-conclusory allegations | Yes, allegations suffice to plead agreement |
| Whether the conspiracy caused antitrust injury | Conspiracy caused higher premiums and suppressed West Penn output | Injury must flow from anti-competitive effects in the restrained market | Yes, antitrust injury shown through monopsony-like effects on reimbursements |
| Whether the conspiracy claims are time-barred | Continuing violation doctrine permits timely claims for acts in limitations period | Zenith accrual should bar claims not tied to ongoing act | No; Zenith applied to allow timely claims for acts within period |
| Whether West Penn adequately pleads an attempted monopolization | Anticompetitive hiring, coercive hospital referrals, and false statements show intent and conduct | Need clearer, isolated anticompetitive conduct demonstrating dangerous probability | Yes, complaint plausibly alleges anticompetitive conduct sufficient for attempt |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (Supreme Court 2007) (plausibility pleading standard applied to antitrust)
- Brown Univ. v. Brown Univ., 5 F.3d 658 (3d Cir. 1993) (antitrust injury and restraint analysis)
- Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (Supreme Court 1968) (continuing violation accrual in antitrust)
- Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144 (3d Cir. 1993) (continuing-violation accrual in antitrust)
- Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (Supreme Court 1971) (accrual for continuing antitrust violations)
- Toledo Mack Sales & Serv., Inc. v. Mack Trucks, Inc., 530 F.3d 204 (3d Cir. 2008) (extrinsic evidence and pleading standards in complex cases)
- Gordon v. Lewistown Hosp., 423 F.3d 184 (3d Cir. 2005) (agreement requirement in antitrust conspiracy)
- Areeda & Hovenkamp, Antitrust Law ¶ 339 (3d ed. 2007) (antitrust injury and monopsony considerations)