Medical Diagnostic Laboratories, LLC v. Health Care Service Corp., 050619 FED10, 17-6189

Docket Nº:17-6189
Opinion Judge:Allison H. Eid, Circuit Judge
Party Name:MEDICAL DIAGNOSTIC LABORATORIES, LLC, Plaintiff - Appellant, v. HEALTH CARE SERVICE CORPORATION, a Mutual Legal Reserve Company d/b/a BLUE CROSS BLUE SHIELD OF OKLAHOMA, Defendant-Appellee.
Judge Panel:Before MORITZ, MURPHY, and EID, Circuit Judges
Case Date:May 06, 2019
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit




No. 17-6189

United States Court of Appeals, Tenth Circuit

May 6, 2019

D.C. No. 5:16-CV-00902-D, (W.D. Okla.)

Before MORITZ, MURPHY, and EID, Circuit Judges


Allison H. Eid, Circuit Judge

Plaintiff-Appellant Medical Diagnostic Laboratories, LLC (MDL) sued Blue Cross Blue Shield of Oklahoma (Blue Cross), an unincorporated division of Health Care Service Corporation (HCSC), in diversity, asserting state law tort claims for tortious interference with prospective economic advantage and defamation, and seeking injunctive relief. The district court granted Blue Cross's motion to dismiss the case under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. MDL appealed the dismissal of the complaint, asserting that the allegations were sufficient to survive a motion to dismiss. We agree with the district court and now affirm.


MDL is a New Jersey limited liability company whose principal place of business is located in New Jersey. Compl. ¶¶ 6-7. HCSC (which does business as Blue Cross Blue Shield) is an Illinois corporation whose principal place of business is in Illinois. Id. ¶ 8. MDL provides diagnostic laboratory testing services, specializing in unique, patented and patent-pending testing services for gynecological diseases. Id. ¶ 11.

HCSC administers "health care insurance plans across the country." Id. ¶ 19. Each HCSC division "maintains a 'network' of healthcare providers with which [it] has contracts generally known as 'provider agreements.'" Id. ¶ 22. After "a healthcare provider enters into a 'provider agreement . . . the provider becomes what is known colloquially as 'in-network.'" Id. ¶ 23. "In-network" providers allow HCSC's divisions to pay discounted rates for services provided to patients who have HCSC insurance plans. Id. ¶ 24. Blue Cross is the company's Oklahoma division. Id. ¶ 21-22.

MDL alleged that providers have incentives to enter into provider agreements because HCSC "control[s] significant portions of the healthcare market" in the regions in which it operates and "is able to direct significant amounts of business to providers that are 'in-network.'" Id. ¶ 25. MDL alleged that Blue Cross "controls approximately 61% of the private health care market in Oklahoma." Id. ¶ 26.

Blue Cross has two in-network laboratories in Oklahoma: Diagnostic Laboratory of Oklahoma (DLO) and Regional Medical Laboratory Inc. (RML). Id. ¶ 27. As alleged by MDL, neither of these in-network laboratories offers the "unique, patented, and proprietary testing that MDL offers," making their testing services less effective and more expensive than those offered by MDL. Id. ¶ 28.

MDL attached to its complaint approximately fifty letters from in-network Blue Cross member-providers to Blue Cross recommending that MDL become an in-network provider. Id. ¶ 29. Those letters stated that MDL offers unique clinical laboratory testing that assists the medical provider in making diagnoses of certain gynecological diseases. Blue Cross has taken no action to make MDL an in-network laboratory service provider in Oklahoma, although MDL alleged it is currently an in-network provider with HCSC in its Illinois and Texas divisions. Id. ¶ 31.

Blue Cross sent a letter to the member-providers in response to their provider letters of recommendation (the Response Letter). The Response Letter first notes that Blue Cross "periodically reviews out-of-network utilization." Aplt. App. at 20. Then the letter refers specifically to the letters of recommendation: "According to your correspondence, you are currently or are considering utilizing Medical Diagnostic Laboratory which is an out-of-network laboratory." Id. The letter goes on to state that DLO and RML, Blue Cross's in-network laboratories, "are able to provide the specific services outlined in [the recommendation] letter." Id. The letter then reproduces the text from Article II, Section 2.8 of the provider BlueChoice PPO contract. Id. at 21. Further, the letter requests that member-providers abide by the BlueChoice PPO contract, specifically that, pursuant to Article II, Section 2.8: Physician is required to refer his or her BlueChoice...

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