American Chiropractic Ass'n v. Trigon Healthcare

• Decision Date: 25 April 2003
• Docket Number: No. 1:00CV00113.,1:00CV00113.
• Parties: AMERICAN CHIROPRACTIC ASSOCIATION, et al., Plaintiffs, v. TRIGON HEALTHCARE, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Virginia

Page 461

258 F.Supp.2d 461

AMERICAN CHIROPRACTIC ASSOCIATION, et al., Plaintiffs, v. TRIGON HEALTHCARE, INC., et al., Defendants.

No. 1:00CV00113.

United States District Court, W.D. Virginia, Abingdon Division.

April 25, 2003.

George P. McAndrews, McAndrews, Held & Malloy, Ltd., Chicago, Illinois, for Plaintiffs.

Howard Feller, McGuireWoods LLP, Richmond, Virginia, for Defendants.

OPINION

JONES, District Judge.

American Chiropractic Association, Inc., Virginia Chiropractic Association, Inc., and certain individual doctors and patients of chiropractic medicine filed this action against health insurer Trigon Healthcare, Inc., and affiliated companies ("Trigon") claiming anticompetitive activities harmful to chiropractic medicine. Following discovery, Trigon has moved for summary judgment. For the reasons set forth in this opinion, I find that there are no genuine issues of material fact remaining for trial and that Trigon is entitled to judgment in its favor.

I

Chiropractic is a recognized branch of the healing arts, and chiropractic treatment is widely utilized by consumers of medical services, mainly for neuromusculoskeletal disorders such as back pain, neck pain, and headaches. Such disorders affect a large proportion of the American adult population.¹ Trigon is a health care insurer that does business as Trigon Blue Cross Blue Shield and was formerly known as Blue Cross and Blue Shield of Virginia.² Until 1991 Trigon was a not-for-profit entity, but thereafter became a for-profit, publically owned corporation, in the business of offering individual and group healthcare plans to its subscribers. It is currently "the largest managed healthcare company in Virginia."³

The core claim made in this case is that Trigon has intentionally prevented or discouraged its subscribers from utilizing chiropractic at the behest of physicians. In the plaintiffs' words, the purpose of this conspiracy was "to prevent the transfer of insurance dollars from medical doctors to chiropractors."⁴ More specifically, the plaintiffs contend that Trigon's anticompetitive conduct included the issuance of a clinical practice guideline on the treatment of low back pain; the continuation of a $500 reimbursement cap on spinal manipulations; the reduction in the payment rate for services other than spinal manipulations; the "leveling" of payments for manipulations of multiple regions of the spine; suggesting to competing providers—osteopaths and physical therapists—ways to avoid payment limitations; and negotiation with medical doctors rather than chiropractors over reimbursement terms. The legal foundations for the plaintiffs' claims are the anticonspiracy provisions of the Sherman Act, 15 U.S.C.A. § 1 (West 1997) (Count I), the Virginia Civil Conspiracy Act, Va.Code Ann. §§ 18.2-499, -500 (Michie 1996) (Count V), and the common law (Count VII); the antimonopolization"provision of the Sherman Act, 15 U.S.C.A. § 2 (West 1997) (Count II); tortious interference with business expectancies (Count IV); and breach of contract (Count VI).⁵ The court has jurisdiction pursuant to 28 U.S.C.A. §§ 1331, 1337(a), and 1367(a) (West 1993 & Supp.2002).

Following extensive discovery, Trigon has moved for summary judgment. The issues have been briefed and argued and the motion is ripe for decision.

II

Summary judgment is appropriate when there is "no genuine issue of material fact," given the parties' burdens of proof at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see Fed.R.Civ.P. 56(c). In determining whether the moving party has shown that there is no genuine issue of material fact, a court must assess the factual evidence and all inferences to be drawn therefrom in the light most favorable to the non-moving party. See Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir.1985).

Rule 56 "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, All U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is not "a disfavored procedural shortcut," but an important mechanism for weeding out "claims and defenses [that] have no factual basis." Id. at 327, 106 S.Ct. 2548.

It is equally well established that summary judgment is appropriate in cases alleging an antitrust conspiracy and indeed is required when the plaintiff fails to offer "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). "`[T]he very nature of antitrust litigation encourages summary disposition of such cases when permissible.'" Oksanen v. Page Mem'l Hosp., 945 F.2d 696, 708 (4th Cir. 1991) (quoting Collins v. Associated Pathologists, Ltd., 844 F.2d 473, 475 (7th Cir.1988)).

After careful review of the summary judgment record, I find that the intracorporate immunity doctrine bars the majority of the plaintiffs' conspiracy allegations in this case because Trigon, as a matter of law, cannot conspire with its employees and agents. For the remainder of the plaintiffs' allegations, Trigon's sworn denials of conspiracy, the affidavits, and the deposition testimony establish that Trigon acted unilaterally and that there is no basis for any inference of a conspiracy. Accordingly, summary judgment is warranted on the antitrust conspiracy claims.

A

Section 1 of the Sherman Act prohibits unreasonable restraints of trade effected by "contract, combination ... or conspiracy." 15 U.S.C.A. § 1. "It is incontestable that `concerted action' in restraint of trade lies at the heart of a Sherman Act section 1 violation." Va. Vermiculite, Ltd. v. Historic Green Springs, Inc., 307 F.3d 277, 280 (4th Cir.2002). "The Sherman Act distinguishes between concerted and independent action." Advanced Health-Care Servs., Inc. v. Radford Cmty. Hosp., 910 F.2d 139, 145 (4th Cir.1990). Thus, unless the plaintiffs can prove that Trigon conspired with one or more other persons, Trigon's policies and practices regarding chiropractors cannot be a violation of section 1 of the Sherman Act.

"The doctrine of intracorporate immunity holds that because at least two persons must be present to form a conspiracy, a corporation cannot conspire with itself." Am. Chiropractic Ass'n v. Trigon Healthcare, Inc., 151 F.Supp.2d at 731. A corporation cannot conspire with its employees or agents because "[t]he officers of a single firm are not separate economic actors pursuing separate economic interests, so agreements among them do not suddenly bring together economic power that was previously pursuing divergent goals." Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 769, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984).

There is a limited exception to the general rule that a corporation cannot conspire with its employees or agents when these individuals have "an independent personal stake in achieving the corporation's illegal objective." Oksanen, 945 F.2d at 705.

The plaintiffs have identified the primary coconspirators with Trigon as the medical doctors who served on Trigon's Managed Care Advisory Panel, the medical associations with which they were affiliated, the Medical Society of Virginia, and osteopaths and physical therapists.⁶ In one of their principal arguments, the plaintiffs claim that the doctors on the Managed Care Advisory Panel helped establish a clinical practice guideline on the treatment of low back pain that de-emphasized the importance of spinal manipulation.

Despite these allegations, the summary judgment record shows that the independent personal stake exception is inapplicable and that intracorporate immunity bars the bulk of the conspiracy claims. In the first place, the Trigon employees who are alleged to be conspirators were full-time officers and employees of Trigon, did not engage in the private practice of medicine, always acted in Trigon's best interest, and did not obtain any personal benefit from Trigon's decisions regarding chiropractors.

Second, the plaintiffs have not presented any evidence to show that any of the Trigon panel members competed with them for the treatment of neuromusculoskeletal disorders. At most, the plaintiffs showed that some of the doctor members were designated by their professional organizations.⁷ The plaintiffs' contention that other members of these entitles may compete with doctors of chiropractic is unavailing absent evidence that Trigon's agents—the members of the Managed Care Advisory Panel—derived some direct economic benefit from the alleged illegal conduct. See Oksanen, 945 F.2d at 705.

Finally, it is established in the record that the Managed Care Advisory Panel had no decision making authority, but acted in an advisory capacity to Trigon. As such, its members could not control Trigon's decisions. See id. ("`To give advice when asked by the decisionmaker is not equivalent to being the decisionmaker itself.'") (quoting Penn. Dental Ass'n v. Medical Serv. Ass'n, 745 F.2d 248, 259 (3d Cir. 1984)).

B

The plaintiffs' remaining allegations are that Trigon conspired with the BCBSA and the professional organizations that had representatives on the Managed Care Advisory Panel to restrict access to chiropractors. However, the record demonstrates that no conspiracy existed.

The Supreme Court has declared that to establish the existence of concerted action, a plaintiff must prove that two or more persons possessed "a unity of purpose or a common design and understanding, or a meeting of minds in an unlawful arrangement." Am. Tobacco Co. v. United States, 328 U.S. 781, 810, 66 S.Ct. 1125, 90 L.Ed. 1575 (1946). "[T]here must be direct or circumstantial evidence that reasonably tends to prove that [the parties] had a...