Two Health Insurers Win Round in Antitrust Case

     (CN) – A federal judge in Chicago ruled for two major health insurers in an antitrust and fraud lawsuit brought by Omnicare, the nation’s largest pharmacy provider for seniors.




     Omnicare challenged an $8.8 billion merger between UnitedHealth Group and PacifiCare Health Systems, claiming their ambivalent Medicare “Part D” pharmacy contract negotiations with Omnicare were part of a plan to defraud the pharmaceutical provider.
     Omnicare filed suit in Kentucky, and the case was transferred to Chicago Federal Court. The Illinois court denied the insurers’ motion to dismiss the complaint in September 2008, holding that Omnicare had “pleaded facts which plausibly suggest that the merger agreement constituted a contract, combination, or conspiracy between UnitedHealth and PacifiCare.”
     Omnicare originally negotiated pharmacy contracts with both UnitedHealth and PacifiCare prior to their Medicare “Part D” certifications, which require insurers to demonstrate an ability to provide pharmacy services to people in long-term care facilities. A contract with Omnicare would offer such proof.
     PacifiCare, through its subsidiary RxSolutions, broke off negotiations with Omnicare a week after signing the parties’ merger and obtained its certification without Omnicare. PacifiCare later resumed contract talks and obtained a better deal than UnitedHealth. Once the merger was complete, UnitedHealth was free to abandon its own deal with Omnicare and take advantage of the better terms in PacifiCare’s contract.
     According to PacifiCare, the deal-breaker lay in Omnicare’s inflexibility over its “patient protections” provisions, which provide certain benefits to enrollees. PacifiCare called the provisions untenable and said they potentially violate regulations. UnitedHealth cited the same concerns for its eventual withdrawal.
     Because Omnicare would not agree to a contract without the provisions, PacifiCare halted negotiations.
     Omnicare claimed that PacifiCare’s termination was part of its secret agreement with UnitedHealth to secure more favorable rates for the merged parties. Omnicare alleged that the parties violated antitrust law by “conspir[ing] to coordinate their negotiations with Omnicare in order to … fix and depress the prices paid.” Omnicare further claimed that the defendants conspired to defraud Omnicare, fraudulently misrepresented their intentions to Omnicare and were unjustly enriched.
     U.S. District Judge Rebecca Pallmeyer agreed with the defendants that Omnicare has not presented sufficient evidence to establish a “genuine issue of material fact” that the defendants engaged in a conspiracy in restraint of trade, that their post-merger intentions were set up by false statements or conspiracy to commit fraud, or that the parties were unjustly enriched by their actions.
     According to Pallmeyer, merger documents and communications revealed insufficient evidence for Omnicare to avoid summary judgment for the defendants. Omnicare’s evidence shows the defendants’ actions are “at least as consistent with their independent action … as it is with an unlawful agreement,” Pallmeyer wrote, adding that Omnicare failed to show that the defendants had coordinated their actions. Pallmeyer granted the defendants’ motion for summary judgment.

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