N.M. Oncology & Hematology Consultants, Ltd. v. Presbyterian Healthcare Servs.

• Decision Date: 05 April 2021
• Docket Number: No. 19-2210 & 20-2024,19-2210 & 20-2024
• Citation: 994 F.3d 1166
• Parties: NEW MEXICO ONCOLOGY AND HEMATOLOGY CONSULTANTS, LTD., Plaintiff - Appellant/Cross-Appellee, v. PRESBYTERIAN HEALTHCARE SERVICES; Presbyterian Network, Inc. ; Presbyterian Health Plans, Inc.; Presbyterian Insurance, Co., Inc., Defendants - Appellees/Cross-Appellants. Community Oncology Alliance; American Medical Association; American Hospital Association, Amici Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

994 F.3d 1166

NEW MEXICO ONCOLOGY AND HEMATOLOGY CONSULTANTS, LTD., Plaintiff - Appellant/Cross-Appellee,

v. PRESBYTERIAN HEALTHCARE SERVICES; Presbyterian Network, Inc. ; Presbyterian Health Plans, Inc.; Presbyterian Insurance, Co., Inc., Defendants - Appellees/Cross-Appellants.Community Oncology Alliance; American Medical Association; American Hospital Association, Amici Curiae.

No. 19-2210 & 20-2024

United States Court of Appeals, Tenth Circuit.

FILED April 5, 2021

George M. Sanders, Law Offices of George M. Sanders, Chicago, Illinois (Thomas Bacon, Law Offices of George M. Sanders, Chicago, Illinois, and Alice Lorenz, Lorenz Law, Albuquerque, New Mexico, with him on the briefs), for Plaintiff - Appellant/Cross - Appellee.

Jeffrey A. LeVee, Jones Day, Los Angeles, California (Kelly M. Ozurovich, Jones Day, Los Angeles, California, Kate Wallace, Jones Day, Boston, Massachusetts, Edward Ricco, Charles K. Purcell and Bruce D. Hall, Rodey, Dickason, Sloan, Akin & Robb, P.A., Albuquerque, New Mexico, with him on the briefs), for Defendants - Appellees/Cross - Appellants.

Leonard A. Nelson and Kyle A. Palazzolo, American Medical Association, Chicago, Illinois, file an Amici Curiae brief for American Medical Association.

Jeremy A Rist, Blank Rome LLP, Philadelphia, Pennsylvania, filed an Amici Curiae brief for Community Oncology Alliance, Inc.

Douglas Ross and David Maas, Davis Wright Tremaine LLP, filed an Amici Curiae brief for American Hospital Association.

Before MATHESON, KELLY, and EID, Circuit Judges.

KELLY, Circuit Judge.

Plaintiff-Appellant New Mexico Oncology Hematology Consultants Ltd. (NMOHC) appeals from the district court's grant of summary judgment to Defendants-Appellees Presbyterian Healthcare Services (PHS), Presbyterian Network, Inc., Presbyterian Insurance Co., and Presbyterian Health Plans, Inc. (PHP) (collectively, Defendants) on NMOHC's Sherman Act, Section 2, monopolization and attempted monopolization claims. N.M. Oncology v. Presbyterian Healthcare Servs., 418 F. Supp. 3d 826 (D.N.M. 2019). Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

Background

NMOHC is a physician practice that owns and operates the New Mexico Cancer Center (NMCC) in Albuquerque. PHS is a not-for-profit integrated healthcare system that participates in multiple markets, including the private health insurance market, the oncology market, and the inpatient hospital services market. PHS employs many physicians, who are referred to collectively as the Presbyterian Medical Group (PMG). PHS also controls PHP which operates, on a for-profit basis, and sells health insurance products, including commercial health insurance to employers and individuals, Medicare Advantage plans to seniors, and Medicaid plans. NMOHC is an in-network provider for PHP.

The NMCC opened in 2002 and NMOHC and PHP entered into a five-year provider agreement. At the expiration of the five-year term, the agreement would move into evergreen status and renew on an annual basis if PHP and NMOHC did not enter into a new agreement. In 2007, PHS opened its own oncology program and began to compete with NMOHC. Around the same time, NMOHC and PHP began negotiating a new provider agreement, however, the negotiations stalled as PHP demanded a $3 million reduction in PHP's payments. NMOHC and PHP remain under the terms of the original provider agreement.

NMOHC's claims on appeal center around three alleged anticompetitive practices that PHS implemented: (1) the "Mandate;" (2) an alleged joint venture between PHP and Radiology Associates of Albuquerque (RAA); and (3) PHS's policies concerning physician referrals.¹ The Mandate was a benefit change that PHP implemented on its Medicare Advantage plans. Pursuant to the Mandate, PHP would cover certain chemotherapy support drugs covered under Medicare Part B — drugs administered to address side effects from chemotherapy agents, such as nausea — only if they were purchased from the Presbyterian Specialty Care Pharmacy. To administer the drugs at the NMCC, NMOHC would have to accept shipments of the drugs from the Presbyterian Pharmacy at the NMCC, a process NMOHC calls "white bagging," which it refused to do. NMOHC refused to accept these drugs on the grounds that its doctors did not know the sources of the medication, did not know if the Presbyterian pharmacy was appropriately handling the drugs, and did not know the timing of when the Presbyterian pharmacy would make any shipment.

NMOHC also alleges that a joint venture between RAA and PHP existed in which PHP enrollees needing breast imaging services were forced to use RAA under their PHP plan. RAA shared office space with PHS-employed breast surgeons and nurse navigators. NMOHC alleges that once a PHP patient was diagnosed with breast cancer, RAA would refer the patient to a PHS breast surgeon and a nurse-navigator would then schedule an appointment for the patient with a PHS oncologist without consulting the patient's physician. Separately, the enhanced referral management program was a PHS program to track PMG physician referrals and encourage internal referrals.

NMOHC filed suit against Defendants in 2012. In its Third Amended Complaint (TAC), it asserted claims under Section 2 of the Sherman Act for monopolization and attempted monopolization. NMOHC also asserted a parallel claim under New Mexico antitrust law,² a RICO claim, and other non-antitrust state law claims. Defendants moved to dismiss NMOHC's Second Amended Complaint at the time under Rule 12(b)(6), but the district court denied the motion. However, the district court has dismissed NMOHC's RICO claim and claim for monopolization of the inpatient hospital services market. See N.M. Oncology & Hematology Consultants, Ltd. v. Presbyterian Healthcare Servs., 169 F. Supp. 3d 1204 (D.N.M. 2016) ; N.M. Oncology & Hematology Consultants, Ltd. v. Presbyterian Healthcare Servs., 54 F. Supp. 3d 1189 (D.N.M. 2014). NMOHC has not appealed either ruling.

In March 2017, Defendants moved for summary judgment on the remaining claims, which the district court granted. N.M. Oncology, 418 F. Supp. 3d at 866. The district court examined whether Defendants possessed monopoly power as regards the monopolization claim or whether there was a dangerous probability of achieving monopoly power insofar as attempted monopolization. It concluded that genuine issues of fact might exist. Id. at 840, 859. But it determined that NMOHC had failed to establish that Defendants engaged in exclusionary conduct. Id. at 841, 860. NMOHC failed to establish that any of Defendants’ unilateral conduct constituted anticompetitive conduct under the Sherman Act. Id. at 847–48. The district court considered the conduct alleged as a "refusal to deal" but none of that conduct demonstrated the requisite willingness to forgo short-term profits for an anticompetitive end. Id. at 850, 854–55, 866. After dismissing the Sherman Act claims, the district court declined to exercise jurisdiction over the remaining state law claims. Id. at 866.

On appeal, NMOHC argues the district court (1) disregarded the testimony of its experts, (2) failed to consider all of the evidence or draw inferences in favor of NMOHC as the non-movant, (3) made factual findings on disputed issues of fact, and (4) made its own market share calculations and ignored Defendants’ monopoly power over Medicare Advantage plans, as well as the consumer harm caused by the Mandate and Defendants’ referral practices. NMOHC argues that it "never framed its antitrust theories as predatory bidding, too low or too high prices, the termination of its provider contract (because the provider contract was not terminated), nor a refusal to deal," yet the district court analyzed the case as if it had. This is belied by NMOHC's presentation which urges the court to combine various antitrust concepts (many of which were not raised directly below) and find sufficient evidence of antitrust violations.

Discussion

We review the district court's grant of summary judgment de novo . Chasteen v. UNISIA JECS Corp., 216 F.3d 1212, 1216 (10th Cir. 2000). Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is material if it can "have an impact on the outcome of the lawsuit" and genuine if "a rational jury could find in favor of the non-moving party based on the evidence presented." Chasteen, 216 F.3d at 1216. To survive a motion for summary judgment, the nonmoving party must show more than "[t]he mere existence of a scintilla of evidence in support of the [nonmoving party's] position ... there must be evidence on which the jury could reasonably find for the [nonmoving party]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). We may also presume that businesses act rationally when we evaluate their conduct. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 595, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

The district court did not err in holding that NMOHC had failed to establish a Sherman Act claim under Section 2 because NMOHC failed to establish that Defendants had engaged in exclusionary or anticompetitive conduct.

The elements of a § 2 monopolization claim are (1) monopoly power in the relevant market; (2) willful acquisition or maintenance of this power through exclusionary conduct; and (3) harm to competition. And the elements of a § 2 attempted monopolization claim are (1) predatory or anticompetitive conduct, (2) a specific intent to monopolize, and (3) a dangerous probability of achieving monopoly power.

Lenox MacLaren Surgical Corp. v. Medtronic, Inc., 847 F.3d 1221, 1231 (10th Cir. 2017) (citation omitted). While monopolization and attempted monopolization claims are distinct, there is sufficient overlap that anticompetitive conduct under either claim can be evaluated together. See Four Corners Nephrology Assocs., P.C. v. Mercy Med....