UPMC countersues AG, seeks to join antitrust case against Blues plans

Updated at 11:45 am ET, Feb. 22

UPMC is staging legal battles on several fronts against Blue Cross and Blue Shield insurers.

The Pittsburgh-based integrated delivery system filed a motion Thursday to join a multi-state antitrust lawsuit accusing dozens of Blues plans of illegally impeding competition by refusing to compete with one another. The issue has become especially relevant to the Pittsburgh-based academic health system because it will go out of network with Highmark Health—a Blues plan—once a consent decree between the two expires in June. UPMC wants to contract with Blues plans other than Highmark in the areas it serves, but Blues policies prevent UPMC from doing so.

"The UPMC Hospitals treat thousands of patients who are members of Blues other than Highmark," UPMC wrote in its court filing. "These non-Highmark Blues patients represent a significant portion of the UPMC Hospitals' Blues patients."

UPMC also filed suit against Pennsylvania Attorney General Josh Shapiro Thursday in Middle District Federal Court, the latest development in its yearslong public split with Highmark. Earlier this month, Pennsylvania's attorney general filed a court petition seeking to require the health system to fairly negotiate with Highmark and other health plans by modifying the consent decree between UPMC and Highmark.

In addition to asking the Commonwealth Court to reject Shapiro's petition, UPMC's lawsuit argues his action violates federal laws overseeing Medicare Advantage, Employee Retirement Income Security Act-qualified group plans, the Sherman Act and an antitrust provision in the Affordable Care Act.

In its complaint, UPMC wrote that Shapiro is seizing on the unfounded idea that all not-for-profit healthcare providers and insurers must contract with any counterparty who asks.

"But Attorney General Shapiro now asserts, pursuant to what he calls his own 'vast authority,' the ability to override the current federal and state system and impose his own rules," the complaint says.

Shapiro's motion, according to the complaint, also violates the U.S. Constitution by imposing his requirements "through backroom threats with no legal process."

In its motion for preliminary injunction in the Blues antitrust case, UPMC said that it has sought to resolve the issue outside of court, but hasn't been successful. The health system said it offered to accept the same rates it received for services through its contract with Highmark, without having to pay Highmark's BlueCard Program fees, said Joe Whatley, an attorney with Whatley Kallas in Birmingham, Ala., who serves as co-lead counsel for the provider plaintiffs.

"It's saying to the other Blues: 'We'll take the same rates that Highmark has imposed on us and you don't even have to pay Highmark's BlueCard fees,' " he said. "It'll save you money."

The case already includes as plaintiffs providers that accept Blues plans, but Whatley said having UPMC file an injunction could help nudge the case to trial faster.

"We're having issues where the Blues are trying to push the trial date off until some time in 2021 or 2022," he said. "We're trying to get to trial much earlier than that."

In its filing, UPMC wrote that it has been injured by the Blues' antitrust violations in the same manner as the other plaintiffs, but unlike the others, "the UPMC Hospitals will face acute reputational damage, and potential civil fines stemming from a new lawsuit filed by the Pennsylvania Attorney General predicated, in part, on UPMC's inability to secure in-network contracts with the non-Highmark Blues."

A federal appeals court in December upheld an earlier ruling that found the Blues' policy against competing with one another, and their agreement to limit competition on non-Blues branded products, is a per se violation of the Sherman Antitrust Act.

Whatley said he has been trying to get the Blues to reach a settlement in the case, but that hasn't happened yet.

"Nothing would make us happier than to do that," he said.

The Blue Cross and Blue Shield Association did not respond to a request seeking comment, and UPMC declined to comment beyond its court filings.

In a related letter to the attorney general's office, UPMC's legal counsel outlined why Shapiro's petition to modify the consent decree isn't legal or supported by evidence.

UPMC's legal counsel also sent a letter to Shapiro's office Thursday that said the office admitted it doesn't have authority to force UPMC to contract with Highmark in 2014 testimony before a Pennsylvania House of Representatives committee defending the consent decree, which concluded "there is no statutory basis to make UPMC and Highmark contract with each other."

Further, UPMC's letter says the core allegations in Shapiro's petition were resolved through the consent decree, which "comprehensively addressed the wind-down and eventual termination of the UPMC/Highmark relationship" and released any and all claims by the attorney general's office and other agencies against UPMC for violations of any laws or regulations.