MultiPlan Defense Amid Price-Fixing Scrutiny Gets Boost in Court

A California court’s dismissal of a price-fixing case against data analytics company MultiPlan Corp. is poised to bolster the firm’s defense as it battles lawsuits from health systems and other providers raising similar antitrust claims—and intense scrutiny from US lawmakers.

The California Superior Court, San Francisco County shut down claims earlier this month from a bankruptcy liquidator for Verity Health System of California Inc., saying out-of-network reimbursement rates aren’t a price that can be fixed in violation of antitrust law. The ruling comes as US legislators, including Sen. Amy Klobuchar (D-Minn.), call on the Justice Department and Federal Trade Commission to investigate MultiPlan, which is accused of suppressing payments to health providers that have led to higher patient bills.

The VHS liquidator sued in 2021, claiming MultiPlan’s algorithmic repricing tools caused health plans to underpay hospitals operated by Verity, which filed for bankruptcy in 2018. Some antitrust experts say the allegations remain valid and that the decision is likely to be appealed.

For now, MultiPlan can point to the ruling, which relies on legal analysis in similar cases decided in federal courts, to argue the company didn’t engage in collusion as it confronts a slew of cases consolidated in Illinois federal court, antitrust attorneys say. Those suits allege the company engaged in a conspiracy with other health insurers such as Aetna Inc. and Humana Inc.

“It’s a theory that just doesn’t have legs,” said David Cross, a partner in Goodwin Procter LLP’s antitrust and competition practice. “There’s nothing here that violates the antitrust laws.”

A MultiPlan spokesperson said in a statement the company was pleased with the court’s decision.

“We have consistently stated that these lawsuits are without merit and would ultimately increase prices for patients and employers,” the spokesperson said.

As the litigation in Illinois proceeds, the DOJ and FTC are cracking down on collusion and algorithmic price-fixing within the health-care space.

MultiPlan uses algorithms to provide repricing and other services to health insurers. Plaintiffs in various cases claim its repricing tools generate a reimbursement amount that is far lower than the insurance payor would otherwise pay on the claim.

Positive Momentum

The state court opinion isn’t binding authority but it could be considered by the federal judge presiding over the multidistrict litigation in Illinois, said Ken Racowski, a litigation attorney at Holland & Knight LLP, which has defended clients in other algorithmic price-fixing suits.

“If I was on the defendant side, I would be encouraged by having a win under your belt and something that you can cite,” Racowski said. “You can be sure MultiPlan and the defendants will feature this decision from the California court front and center, and try to argue that it is persuasive.”

The ruling provides positive momentum for the company, especially given that the court didn’t give the plaintiffs leave to amend the allegations, Cross said.

“Oftentimes courts will give multiple times to amend,” Cross said. “Here, the judge is saying, ‘There is no set of pleadings that could survive because you’re trying to shove something into the antitrust framework that doesn’t fit.’”

Insufficient Claims

The ruling’s significance lies in its finding that the VHS liquidator failed to establish that a product or service regarding out-of-network reimbursement could be subject of an antitrust violation.

“Defendants argue that price-fixing liability cannot attach here in the absence of a discreet product (or service) that can be bought and the price of which can be fixed through an unlawful agreement,” the California court said in its ruling. “The court agrees.”

The ruling by Superior Court Judge Anne-Christine Massullo is grounded off the application of law in three federal cases involving an analysis of Section 1 of the Sherman Act that didn’t get past the motion to dismiss stage, including one that alleged Aetna Inc. and other insurers suppressed reimbursements.

“She used the cases to say, ‘I’m not doing something new here.’ She’s not confronting a novel theory,” Cross said.

Appeal on the Horizon

Attorneys for the liquidator couldn’t immediately be reached for comment. But the plaintiffs are likely to appeal because their arguments remain valid, said Christine Bartholomew, a law professor at the University at Buffalo.

“If you have a reimbursement plan that has an impact on price, that is reached by collusion, assuming that’s all true, that’s a Section 1 violation,” she said.

David Balto, an antitrust attorney and former policy director at the FTC, said the California court applied too high a standard in dismissing the case, adding that this ruling is “hardly the last chapter” in the litigation.

“Plaintiffs typically receive a fair amount of leeway in the interpretation of facts,” Balto said. “MultiPlan’s victory may be very short-lived after it goes to the court of appeals.”

MultiPlan is represented by Sheppard Mullin and Phelps Dunbar LLP. VHS Liquidating Trust is represented by Bartko.

The case is VHS Liquidating Trust v. MultiPlan, Cal. Super. Ct., No. CGC21594966, 8/9/24.