In a case between Stand-Up MRI of the Bronx and CareCore National, a jury in the U.S. District Court for the Eastern District of New York returned a judgment in favor of Stand-Up MRI. CareCore, a specialty benefit management company that has a number of New York state based radiology practice groups among its owners, obtained, through risk-bearing contracts, the exclusive right to assemble a provider network for outpatient radiology services for subscribers of several large insurers and managed care companies operating in downstate New York. Stand-Up MRI alleged that CareCore had a conflict of interest because it is comprised of competing radiologists who control which competitors are admitted into the networks managed by CareCore. The Stand-Up MRI offices claimed that CareCore and its radiologist owners violated the antitrust laws by preventing such radiologists' competitors - the Stand-Up MRI centers - from becoming "in network" providers for Oxford, Aetna, HIP and HealthNet. CareCore pointed to the high quality of its provider network and the significant cost savings that the CareCore network has delivered to the managed care companies and, hence, to insureds. Further, they argued that their network could not function well without ensuring the quality and limiting the number of participating radiologists. Stand-Up MRI, which operates newly developed MRI imaging systems that allow patients to be examined in an upright position, argued that patients covered by these large managed care plans were prevented from receiving upright MRI scans.
The jury found that CareCore had entered into a conspiracy that constituted an unreasonable restraint of trade and that Stand-Up MRI had suffered injury to its business as well as to its prospective business relations. The jury awarded Stand-Up MRI more than $11 million in damages, which are trebled (i.e., multiplied by 3) under federal antitrust law. The total judgment, with costs and attorneys' fees, could be to $40 million. CareCore has indicated that it will appeal the verdict.
Although this case did not involve accountable care organizations ("ACOs") - which are a key feature of the recently adopted federal health reform law (the "Patient Protection and Affordable Care Act" or "PPACA") and are anticipated to provide significant cost savings through collective efficiency initiatives among physicians, hospitals and other health care providers - some commentators already believe that the verdict could have implications for how ACOs are structured and organized under the PPACA. ACOs that acquire significant market share will need to be sensitive to actions that could be construed as anticompetitive. Specifically, ACOs with a significant market share that attempt to create exclusive networks of providers and insurers could subject themselves to scrutiny under the federal and state antitrust and related anti-competition laws. Although it is possible that ACOs may be afforded certain antitrust protections under the ACO regulations scheduled to be released by the federal Centers for Medical and Medicaid Services ("CMS") in early 2011, it is anticipated that such regulations will still apply current antitrust doctrine.
* * *
If you have any questions or comments regarding the CareCore case, please contact us.