Connecticut Ass'n of Clinical Laboratories v. Connecticut Blue Cross, Inc.

• Court: Connecticut Superior Court
• Writing for the Court: LEVINE
• Citation: Connecticut Ass'n of Clinical Laboratories v. Connecticut Blue Cross, Inc., 324 A.2d 288, 31 Conn.Supp. 110 (Conn. Super. 1973)
• Decision Date: 18 October 1973
• Docket Number: No. 150720,150720
• Parties: , 1973-2 Trade Cases P 74,765 The CONNECTICUT ASSOCIATION OF CLINICAL LABORATORIES et al. v. CONNECTICUT BLUE CROSS, INC., et al.

Page 288

324 A.2d 288

31 Conn.Supp. 110, 1973-2 Trade Cases P 74,765

The CONNECTICUT ASSOCIATION OF CLINICAL LABORATORIES et al. v. CONNECTICUT BLUE CROSS, INC., et al.

No. 150720.

Superior Court of Connecticut, Fairfield County, at Bridgeport.

Oct. 18, 1973.

Zeldes, Needle & Cooper, Bridgeport, for named plaintiff.

Murtha, Cullina, Richter & Pinney, Hartford, for named defendant.

Beach & Calder, Bristol, for defendant Bristol Hospital.

LEVINE, Judge.

The plaintiffs in this action, three private medical testing laboratories and an association of private clinical laboratories, all of which are licensed to practice in this state and are hereinafter referred to as 'laboratories,' have brought suit against Connecticut Blue Cross, Inc., a hospital service corporation as defined in § 33-157(a) of the General Statutes, and three general service hospitals located in this state.

Blue Cross is a nonprofit-sharing corporation organized for the purpose of establishing, maintaining and operating a plan whereby comprehensive health care, including inpatient and outpatient hospital care provided and billed by an approved hospital, may be provided at the expense of the corporation to its subscribers. Blue Cross contracts with its subscribers to pay for specified medical services performed by hospitals at rates which vary depending on the particular contract purchased. All contracts and the rates thereof are subject to approval of the state insurance commissioner. Blue Cross contracts with general hospitals, including the defendant hospitals, in order to perform its obligations to its subscribers; these contracts provide for acceptance of Blue Cross subscribers as patients, and the hospitals receive payment from Blue Cross for services provided in accordance with a schedule of payments agreed to by Blue Cross and the hospitals. Blue Cross contracts obligate it to pay for, among other specified services, laboratory tests performed by the hospital while the patient is lodged at the hospital as an inpatient. An outpatient who has laboratory tests performed on him at a hospital or a private laboratory is not covered under any contract.

As a result, hospitals receive what are known as 'Blue Cross admissions'; subscribers who would not be hospitalized for medical reasons are sent to the hospitals as inpatients so that they may be covered for the ancillary service of laboratory tests. Blue Cross claims that this results in payment for the hospital room in addition to the laboratory tests and causes additional unwarranted costs. Blue Cross has provided for certain ancillary outpatient treatments in some of its contracts but, as has been pointed out, not for outpatient laboratory tests.

In order to attempt to solve the Blue Cross admissions problem, Blue Cross and the three defendant hospitals entered into an agreement for a pilot, or test, program of sixty days' duration, to begin October 19, 1973. This program would allow outpatients whom any doctor sends to the three defendant hospitals for laboratory tests to be covered by the patients' Blue Cross contract, but would not provide coverage for the same test at a private laboratory. The purpose of the pilot program is for the hospitals, doctors, and Blue Cross to evaluate all the data produced to see if any money is saved and if the service is well performed. Included in money savings would be a lessening or complete elimination of Blue Cross admissions, and that would include a lessening or elimination of patients who, admitted to the hospitals for medical reasons, require laboratory tests and are kept at the hospital for these tests but otherwise could be discharged.

It is this pilot program with the three defendant hospitals that the plaintiff private laboratories seek to enjoin temporarily and permanently. This court is concerned only with the temporary injunction requested, and the hearing which it held was solely on that aspect.

Under General Statutes § 35-34, which governs actions for injunctive relief under the Connecticut Anti-Trust Act, such proceedings are governed by 'the rules and principles governing the granting of injunctive relief.' As to temporary injunctions, it has been stated that no action may be taken unless 'it is very clear that the plaintiff is without legal right.' Olcott v. Pendleton, 128 Conn. 292, 295, 22 A.2d 633, 635. 'The issuance of an injunction is the exercise of an extraordinary power which rests within the sound discretion of the court, and the justiciable interest which entitles one to seek redress in an action for injunctive relief is at least one founded on the imminence of substantial and irreparable injury.' Scoville v. Ronalter, 162 Conn, 67, 74, 291 A.2d 222, 226. "An injunction is a harsh remedy'; Leo Foundation v. Cabelus, 151 Conn. 655, 657, 201 A.2d 654, 655, and when an equitable injunction is the specific relief claimed, it is incumbent upon the party seeking relief to allege facts showing irreparable damage and the lack of an adequate remedy at law.' Stocker v. Waterbury,154 Conn. 446, 449, 226 A.2d 514, 516; Coyle v. Housing Authority, 151 Conn. 421, 424, 198 A.2d 709. 'The remedy by injunction is 'summary, peculiar and extraordinary.' An injunction 'ought not to be issued except for the prevention of great and irreparable mischief.' It 'is not ex debito justiciae for any injury threatened or done to the estate or rights of a person, but the granting of it must always rest in sound discretion governed by the nature of the case." Hine v. Stephens, 33 Conn. 497, 504. It follows from these cases that the requirements for a temporary injunction are (1) establishing a legal right, which involves a determination of the probability of the plaintiff's succeeding on the merits and that there is no other adequate remedy at law; and (2) the imminence of a substantial and irreparable injury to the plaintiff, considered together with the effect of a temporary injunction on the plaintiff and the defendant. 'Where an injury is of such a nature that it cannot be adequately compensated in damages, or cannot be measured by any pecuniary standard, it is irreparable. 'Whether damages are to be viewed by a court of equity 'as irreparable' or not depends more upon the nature of the right which is injuriously affected than upon the pecuniary measure of the loss suffered." New London v. Perkins, 87 Conn. 229, 235, 87 A. 724, 726; Robertson v. Lewie, 77 Conn. 345, 346, 59 A. 409.

The plaintiffs allege in their complaint that the proposed pilot program is a violation of the Connecticut Anti-Trust Act, chapter 624 of the General Statutes in that it is a primary and secondary boycott of the private laboratories. This chapter was enacted in 1971 as Public Act No. 608, and consequently there is little Connecticut authority with respect to its interpretation. The act is modeled after the federal Sherman Anti-Trust Act, 26 Stat. 209, as amended, 15 U.S.C. §§ 1-7 (1970), and therefore decisions interpreting that act are of aid on the issues considered herein. The section on which the plaintiffs rely is General Statutes § 35-28, which reads in part: '(E)very contract, combination, or conspiracy is unlawful when the same are for the purpose, or have the effect, of: . . . (d) refusing to deal, or coercing, persuading, or inducing third parties to refuse to deal with another person.' The plaintiffs' claim is that coverage of outpatient laboratory tests at the three hospitals, only, would persuade or induce Blue Cross subscribers to deal with the hospitals and not with the plaintiffs; that the pilot program of sixty days' duration is therefore a violation of the antitrust chapter which constitutes a secondary boycott; and that it is also a primary boycott in that no such contract or pilot program with the private laboratories has been agreed to. The federal act reads in part: 'Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade . . . is declared to be illegal . . ..' 15 U.S.C. § 1. The Connecticut act is more precise in that it prohibits any contract, combination or conspiracy the effect of which is to induce third parties not to deal. The Connecticut act in effect has codefied the federal cases interpreting the Sherman Anti-Trust Act.

The evidence indicates that Blue Cross has 49 percent of the people of Connecticut as subscribers, the remaining portion of the population being covered by governmental programs and commercial insurance companies, with a very small percentage being uninsured. This pilot program could not be made permanent unless the rate for it was agreed to by the thirty-eight private hospitals in Connecticut who contract with Blue Cross, and unless that rate and, in fact, the inclusion of the service in the contract were thereafter approved by the insurance commissioner. Fifty percent of Blue Cross subcribers have the Connecticut Medical Service century contract, which presently provides coverage for outpatient laboratory tests. It is interesting to note that CMS does not cover outpatient hospital laboratory tests. Insurance companies' contracts and government programs also provide coverage for outpatient laboratory tests. The negotiations with the hospitals by Blue Cross for the pilot program were on a voluntary basis, for the hospitals to accept or reject, and the doctors who refer patients for laboratory tests have not been contracted with at all by anyone. It appears that doctors develop habits as to where their patients are referred for the tests, as a result of which they repeat to a great extent such referrals.

The plaintiffs in argument on the temporary injunction limited their claim to one of secondary boycott and claimed a per se violation. 'Section 5 (General Statutes § 35-28(d)) of the Act has no specific counterpart in the federal antitrust laws. It is a codification of what have come to be known as 'per se' violations of the Sherman Act, notably § 1. Generally...