Federal Judge Leery of|Medical Monopoly Claim


SAN FRANCISCO (CN) – Repeatedly asking an attorney for specific allegations, a federal judge Wednesday seemed weary of a lawsuit that claims Quest Diagnostics monopolizes medical testing in California.
     “It just seems like the same thing to me,” U.S. District Judge William Orrick said of plaintiff Colleen Eastman’s second amended complaint.
     Eastman sued Quest in 2015, accusing it of monopolizing medical testing in Northern California by paying kickbacks to doctors and insurance companies to suppress competition.
     At a Wednesday hearing on Quest’s motion to dismiss the second amended complaint, Orrick told Eastman’s attorney Stephen Berry that the only new allegation seemed to be a theory of tying, by which a monopolist suppresses competition by offering products as a package.
     “I don’t think it works,” Orrick said. “There’s no allegation of the difference in price between the medical providers who refer testing and those who don’t.”
     Orrick asked Berry for numbers to support his client’s case.
     “You’ve only alleged theory and not any fact, and that’s what I’m looking for,” Orrick said.
     The implication of the claims, Berry said, is that “you don’t get the cheese unless you use very sharply discounted rates.”
     “It is alleged plausibly,” Berry said. “I just don’t give you a number.
     “This is not mere fantasy. There are specific facts here.”
     Berry said Quest has a 67 percent share of the medical testing market, and that if its alleged exclusionary practices “contribute to market power, that’s the line.”
     “And, with all respect, Quest is well over that line,” he said.
     Quest attorney Ryan Sandrock said that the “theme” of all of Orrick’s rulings so far is “that there’s not enough to show the impact of alleged exclusionary conduct.”
     “What’s missing in his allegations is any detail about the specific pricing,” Sandrock said.
     “We have a situation where you just say there’s a discount and a discount can be coercive. And a discount can be coercive, but we don’t have a number.”
     Orrick said that Berry would argue that all such information resides with Quest and could be produced through discovery.
     But Sandrock said: “You do not get full discovery into Quest pricing because you have a theory that it potentially could be anticompetitive.”
     Although he seemed inclined to dismiss the complaint again, Orrick did not say how or when he intends to rule.
     Berry practices in Washington, D.C.
     Sandrock is with Sidley Austin in San Francisco.

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