Cole's Wexford Hotel, Inc. v. Highmark, Inc.

• Decision Date: 15 August 2017
• Docket Number: Civil Action No. 10-1609
• Parties: COLE'S WEXFORD HOTEL, INC., on its own behalf and on behalf of all others similarly situated Plaintiffs, v. HIGHMARK, INC., Defendant.
• Court: U.S. District Court — Western District of Pennsylvania

COLE'S WEXFORD HOTEL, INC., on its own behalfand on behalf of all others similarly situated Plaintiffs, v. HIGHMARK, INC., Defendant.

Civil Action No. 10-1609

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

August 15, 2017

OPINION

CONTI, Chief District Judge

I. Introduction

Pending before the court in this antitrust action is a motion for summary judgment (ECF No. 455) filed by defendant Highmark, Inc. ("Highmark"). According to Highmark, the undisputed facts of this case show that the injury complained about by plaintiff Cole's Wexford Hotel, Inc. ("Cole's Wexford") on its own behalf and on behalf of all others similarly situated "is the direct result of Highmark's constitutionally protected right to petition Pennsylvania legislative and regulatory bodies to be permitted to offer small group health plans through its affiliate,...[Highmark Health Insurance Company ("HHIC")], and the strictly qualified approvals that Highmark received from those governmental entities to offer those small group plans." (ECF No. 455 at 1.) Highmark argues that—under those circumstances—the court should grant summary judgment in its favor because Cole's Wexford's claims are barred by the Noerr-Pennington doctrine. (Id. (citing United Mine Workers v. Pennington, 381 U.S. 657 (1965); E. Rr. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961).) Highmark argues that even if Cole's Wexford's claims are not barred by the Noerr-Pennington doctrine, the undisputed facts of this case show that "the filed rate doctrine prevents Cole's Wexford from recovering damages from July 1, 2010 through June 30, 2011." (ECF No. 455 at 1-2 (citing McCray v. Fid. Nat'l Title Ins. Co., 682 F.3d 229 (3d Cir. 2012).)

Based upon the court's review of Highmark's motion for summary judgment, the parties' submissions related to that motion, and the applicable law, Highmark is not entitled to summary judgment. First, Cole's Wexford in the third amended complaint does not allege that any of Highmark's constitutionally-protected conduct caused its injury. Under those circumstances, the Noerr-Pennington doctrine does not provide Highmark immunity from Cole's Wexford's antitrust claims. Second, the record does not show that the Pennsylvania Insurance Department ("PID") had ratemaking authority with respect to the rates HHIC charged to Cole's Wexford during the relevant timeframe. The filed rate doctrine, therefore, does not apply to bar Cole's Wexford's antitrust claims because using those rates to calculate damages will not infringe upon the ratemaking authority of the PID. For those reasons, which are explained fully in this opinion, Highmark's motion for summary judgment will be denied.

II. Procedural History

This contentious and litigious case has been pending for nearly seven years. The court set forth detailed recitations of the procedural history of this case in at least three other opinions resolving dispositive motions. (ECF Nos. 240, 284, 301.) The court in this opinionwill set forth only the procedural history pertinent to the resolution of the motion for summary judgment (ECF No. 455).

On October 1, 2014, Cole's Wexford filed a third amended complaint against Highmark and then-defendant UPMC.¹ (ECF No. 286.) Cole's Wexford set forth the following counts against Highmark:

- Count I—Violations of Section 1 of the Sherman Act, 15 U.S.C. § 1;

- Count II—Conspiracy to Monopolize in Violation of Section 2 of the Sherman Act, 15 U.S.C. § 2;

- Count IV—Willful Acquisition and Maintenance of a Monopoly in the Relevant Market for Private Health Insurance in Violation of Section 2 of the Sherman Act, 15 U.S.C. § 2; and

- Count VI-Willful Attempted Monopolization in Violation of Section 2 of the Sherman Act, 15 U.S.C. § 2.

(ECF No. 286.) Highmark and UPMC each filed a motion to dismiss the third amended complaint. (ECF Nos. 288, 290.) On September 1, 2015, the court denied the motion to dismiss filed by Highmark and granted in part and denied in part the motion to dismiss filed by UPMC. (ECF Nos. 301, 302.) The court permitted all claims against Highmark to proceed and denied the request to strike the class allegations from the third amended complaint. (ECF No. 301 at 61.) On November 16, 2015, Highmark filed an answer to the third amended complaint. (ECF No. 314.)

On August 22, 2016, Highmark filed a motion for hearing and scheduling order for its motion for summary judgment. (ECF No. 424.) The court directed the parties to meet and confer with the special master appointed in this case to oversee, among other things, discovery, in order to develop a discovery plan with respect to Highmark's proposed motion for summary judgment. On November 17, 2016, Cole's Wexford and Highmark filed a joint notice of a proposed discovery schedule for summary judgment briefing. (ECF No. 449.)

On January 25, 2017, Highmark filed a motion for summary judgment, a brief in support of the motion, a statement of undisputed material facts, and exhibits in support of the motion. (ECF Nos. 455, 456, 457, 458, 459.)² On February 24, 2017, Cole's Wexford filed a brief in opposition to Highmark's motion, a response to Highmark's statement of undisputed material facts, its own statement of undisputed material facts, and exhibits in support of its response. (ECF Nos. 470, 471, 472, 473.)³ On March 10, 2017, Highmark filed a reply brief in support of its motion for summary judgment. (ECF No. 485.) On March 20, 2017, the parties filed a combined concise statement of material facts. (ECF No. 487.)⁴

III. Factual Background

The factual background is derived from the undisputed evidence of record and the disputed evidence of record viewed in the light most favorable to the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) ("The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.").

A. General Background About the Parties

Highmark is a private, national diversified health care insurer serving members through its businesses in health insurance and through subsidiaries and affiliates which provide health insurance, dental insurance, vision care, and reinsurance. (Combined Concise Statement of Material Facts ("CCSMF") (ECF No. 488) ¶ 1.) Highmark is part of the Highmark Health enterprise, a diversified health and wellness system. (Id. ¶ 2.) Both Highmark and Highmark Health are Pennsylvania nonprofit corporations with principal places of business in Pittsburgh, Pennsylvania. (Id. ¶ 3.) Highmark is an independent licensee of the Blue Cross and Blue Shield Association that offers and administers health insurance benefit plans in Pennsylvania, West Virginia, and Delaware. (Id. ¶ 4.) One of Highmark's Pennsylvania product service areas is the Western Pennsylvania region, which is a 29-county area consisting of Allegheny, Armstrong, Beaver, Bedford, Blair, Butler, Cambria, Cameron, Centre (part), Clarion, Clearfield, Crawford, Elk, Erie, Fayette, Forest, Greene, Huntingdon, Indiana, Jefferson, Lawrence, McKean, Mercer, Potter, Somerset, Venango, Warren, Washington, and Westmoreland counties. (Id. ¶ 5.) Highmark sells health insurance benefit plans to individuals, small groups, and large groups in Western Pennsylvania. (Id. ¶ 6.) Highmark's products include a variety of commercial indemnity and managed care healthinsurance products, along with Medicare supplemental and Medicare Advantage products. (Id.¶ 7.) Highmark's Blue Cross plans operate as Hospital Plans, pursuant to 40 PA. CONS. STAT. §§ 6101-6127. (Id. ¶ 8.) Highmark's Blue Shield plans operate as Professional Health Service Plans, pursuant to 40 PA. CONS. STAT. §§ 6301-6335. (Id. ¶ 9.) HHIC was a "wholly owned Blue-branded subsidiary" of Highmark that was "domiciled and licensed as a life, accident and health insurer in Pennsylvania." (Cashion Decl., Ex. 7 (ECF No. 462-1) at 2; CCSMF (ECF No. 488) pl.'s ¶ 9.)⁵ HHIC was a for-profit company. (Id. at pl.'s ¶ 10.)

Cole's Wexford is a Pennsylvania corporation with its principal place of business located in Wexford, Pennsylvania. (CCSMF (ECF No. 488) ¶ 10.) Cole's Wexford seeks to represent a class of those "who purchased small group health insurance coverage from, or otherwise paid any small group plan premiums or portion thereof to, Highmark Health Insurance Co., or a similar for-profit subsidiary of Highmark Inc., between approximately July 1, 2010 and approximately March 21, 2012." (Id. ¶ 11.) HHIC was Highmark's only subsidiary or affiliate that offered health insurance plans to small groups in Western Pennsylvania and was not subject to express statutory rate-filing requirements during the class period. (Id. ¶ 12.)

From at least 1998 until June 30, 2010, Cole's Wexford purchased small group health insurance from Highmark. (Id. ¶ 13.) From July 1, 2010, through June 30, 2012, Cole's Wexford purchased small group health insurance from HHIC. (Id. ¶ 14.) Cole's Wexford "exited the group health insurance market" beginning on July 1, 2012, and has not purchased small group insurance or insurance from Highmark or HHIC since that date. (Id. ¶ 15.)

B. General Background About the Health Insurance Industry

The PID is an executive agency in the Commonwealth of Pennsylvania that oversees the insurance industry. (CCSMF (ECF No. 488) ¶ 16.) The PID regulated all policies that any insurer issued to individual subscribers in Pennsylvania during all relevant times. (Id. ¶ 17.) Prior to July 1, 2010, the PID regulated all Highmark's health insurance products in Western Pennsylvania, including those offered to small groups, because Highmark operated as a hospital plan corporation and professional health services plan corporation. (Id. ¶ 18.) Highmark was obligated to file base rates or rating formulas with the PID, and Highmark had the ability to charge specific rates within a fifteen percent band around those rate or rating formulas without filing those specific rates with the PID. (Id. ¶ 19; CCSMF ...