Supreme Court Denies Bid to Revive Atrium Health Antitrust Case

Dec. 6, 2021, 2:35 PM

The U.S. Supreme Court declined Monday to consider reviving antitrust litigation against Atrium Health over claims that the multistate public hospital system has outgrown its original classification as a “local” government unit with statutory immunity against antitrust damages.

The justices said they won’t review a ruling by a federal appeals court in Richmond, Va., which rejected a proposed class action challenging Atrium’s alleged practice of exploiting its market dominance to prohibit insurers from “steering” patients toward inexpensive health care.

The U.S. Court of Appeals for the Fourth Circuit held in March that Atrium remains a “local” government subdivision covered by the Local Government Antitrust Act of 1984, despite its significant growth across several states since it received that designation when it was chartered.

Questions like “how much growth is too much” for a local government unit involve “complex policy considerations,” a three-judge panel wrote at the time. “Navigating these considerations is the work of lawmakers, not judges.”

“Since Congress did not include those limitations, we decline to impose them,” the Fourth Circuit panel said.

The patient leading the case asked the Supreme Court in August to revive his claims. The antitrust immunity statute surely wasn’t meant to cover “a multibillion-dollar ‘hospital authority’ that operates in multiple states in a manner indistinguishable from private hospitals,” the filing argued.

The Supreme Court has warned judges “not to get lost in contextless contemplation of the words of a definition,” the petition said. “A multibillion-dollar firm with far-flung operations throughout multiple states is not a ‘local government.’”

The Fourth Circuit’s ruling also created “a square split with the Tenth Circuit,” which reached the opposite conclusion in a case involving “an Oklahoma health care entity of a remarkably similar character,” according to the petition.

Atrium fired back in late October, urging the justices not to hear the dispute. The antitrust immunity law incorporates state law definitions of “local government,” and the top court in North Carolina—where Atrium is based—has held expressly that it qualifies, the health system argued.

The notion that states or cities would confer “this type of nationwide exemption on any entity they choose,” such as a for-profit bank, is based on far-fetched speculation, according to Atrium’s brief.

The suit offers “a solution in search of a problem, a purely hypothetical problem that the Fourth Circuit explicitly declined to address,” the brief said. It also argued that any differences between the Fourth and Tenth Circuit rulings cited by the petition were the result of fact-specific distinctions.

Atrium is represented by Womble Bond Dickinson (US) LLP, Boies Schiller Flexner LLP, and Bradley Arant Boult Cummings LLP. The patient is represented by Goldstein & Russell PC and Berry Law PLLC.

The case is Benitez v. Charlotte-Mecklenburg Hosp. Auth., U.S., No. 21-271, cert. denied 12/6/21.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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