iOn September 27, Chief Judge Joy Flowers Conti (W.D. Pa.) dismissed antitrust claims against University of Pittsburgh Medical Center (UPMC) and Highmark Blue Cross Blue Shield (Highmark), finding that the claims asserted by plaintiff, Royal Mile Company, and the class it sought to represent, were barred by the Filed Rate Doctrine.
Plaintiff’s claims centered on the contention that UPMC, the largest health system in Western Pennsylvania, and Highmark, its largest insurer, had conspired to restrain competition in the markets for both healthcare services and health insurance in the region. Specifically, plaintiff, on behalf of an alleged class of adversely impacted insureds, claimed that the defendants had agreed to permit UPMC to dominate the hospital market, passing on inflated charges to Highmark that were then passed on to insureds in the form of higher insurance premiums.
Seeking to have the claim dismissed on a preliminary motion, the defendants argued that because the plaintiff was ultimately challenging the insurance rates they had paid, and Highmark’s rates had been approved by the Pennsylvania Insurance Department, the Filed Rate Doctrine barred plaintiff’s claim. In addressing defendants’ motion, Judge Conti observed that the Filed Rate Doctrine, which is rooted in the Supreme Court’s Keogh decision in 1922, “bars antitrust suits based on rates that have been filed and approved by federal and state agencies.” Plaintiff, anticipating this argument, maintained that the group rates it paid were not expressly approved by the Insurance Department; instead, with respect to group insurance rates, the Pennsylvania Insurance Department only approves rates within a 15% range, leaving a degree of discretion to the insurer with respect to the actual rates to be charged. Thus, plaintiff argued, the Filed Rate Doctrine should not bar the claim.
Judge Conti, after a thorough review of the applicable Filed Rate Doctrine precedent, rejected plaintiff’s argument, holding that plaintiff ultimately was seeking to have the Court determine what the rates would or should have been absent the alleged conspiracy, and thus the claim was barred by the Filed Rate Doctrine. Judge Conti did, however, grant plaintiff leave to file an amend complaint, which plaintiff did in late October.
Assuming that plaintiff’s amended complaint does not lead to a materially different ruling on the Filed Rate Doctrine issue, Judge Conti’s decision is likely to embraced by health insurers all across the country when defending similar rate-related claims. And, given that the rationale for the Filed Rate Doctrine has been repeatedly questioned over the last several years (including by the Antitrust Modernization Commission in 2007), the Royal Mile decision is likely to reignite the debate about whether the Filed Rate Doctrine should be modified or eliminated. Stay tuned.
