(REDACTED) ORDER (1) GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, (2) DENYING IN PART AND DENYING AS MOOT IN PART DEFENDANT'S MOTION TO EXCLUDE PLAINTIFFS' EXPERT, AND (3) DENYING AS MOOT PLAINTIFFS' MOTION TO EXCLUDE DEFENDANT'S EXPERT
Re: ECF Nos. 272, 311-1 (under seal) and 494-2 (redacted version), 409-3 (under seal) and 503 (redacted version)
TABLE OF CONTENTS
INTRODUCTION ............................................................................................................................. 5
BACKGROUND ............................................................................................................................... 7
1. Antitrust and Markets Generally ................................................................................................. 7
1.1 "Market Power" ................................................................................................................. 7
1.2 "Market" ............................................................................................................................ 7
1.3 "Tying" .............................................................................................................................. 8
1.4 Requirement to Define the Relevant Market ..................................................................... 8
1.5 The "Hypothetical Monopolist" Test for Defining a Relevant Geographic Market ......... 9
2. Health-Care Buyers, Sellers, and Markets ................................................................................ 10
2.1 Hospitals Sell Hospital Services to Health Plans ............................................................ 10
2.2 Health Plans Sell Health Insurance to Individuals and Employers ................................. 11
2.3 Hospitals Attract Health-Plan Enrollees .......................................................................... 12
2.4 The Relevant Product Market Is the Market for Hospitals Selling Inpatient Hospital Services to Health Plans .................................................................................................. 13
STATEMENT ................................................................................................................................. 13
1. The Dartmouth Atlas of Health Care and "Hospital Service Areas" ........................................ 15
2. The Candidate Tying Markets ................................................................................................... 17
2.1 The Antioch HSA ............................................................................................................ 18
2.1.1 Overview ............................................................................................................... 18
2.1.2 Knox-Keene Act .................................................................................................... 19
2.1.3 Blue Shield redirection analysis ............................................................................ 20
2.1.4 Other evidence ....................................................................................................... 22
2.2 The Auburn HSA ............................................................................................................. 22
2.2.1 Overview ............................................................................................................... 22
2.2.2 Knox-Keene Act .................................................................................................... 23
2.2.3 Blue Shield redirection analysis ............................................................................ 24
2.2.4 Other evidence ....................................................................................................... 24
2.3 The Crescent City HSA ................................................................................................... 25
2.3.1 Overview ............................................................................................................... 25
2.3.2 Knox-Keene Act .................................................................................................... 26
2.3.3 Blue Shield redirection analysis ............................................................................ 27
2.3.4 Other evidence ....................................................................................................... 27
2.4 The Jackson HSA ............................................................................................................ 28
2.4.1 Overview ............................................................................................................... 28
2.4.2 Knox-Keene Act .................................................................................................... 292.4.3 Blue Shield redirection analysis ............................................................................ 30
2.4.4 Other evidence ....................................................................................................... 30
2.5 The Lakeport HSA .......................................................................................................... 32
2.5.1 Overview ............................................................................................................... 32
2.5.2 Knox-Keene Act .................................................................................................... 33
2.5.3 Blue Shield redirection analysis ............................................................................ 33
2.5.4 Other evidence ....................................................................................................... 34
2.6 The Tracy HSA ................................................................................................................ 35
2.6.1 Overview ............................................................................................................... 35
2.6.2 Blue Shield redirection analysis ............................................................................ 36
2.6.3 Other evidence ....................................................................................................... 36
2.7 The Combined Berkeley-Oakland HSAs ........................................................................ 37
2.7.1 Overview ............................................................................................................... 37
2.7.2 Blue Shield redirection analysis ............................................................................ 39
2.7.3 Other evidence ....................................................................................................... 39
3. The Candidate Tied Markets ..................................................................................................... 40
3.1 The Modesto HSA ........................................................................................................... 41
3.1.1 Overview ............................................................................................................... 41
3.1.2 Dr. Chipty's analyses ............................................................................................. 42
3.2 The Sacramento HSA ...................................................................................................... 43
3.2.1 Overview ............................................................................................................... 43
3.2.2 Dr. Chipty's analyses ............................................................................................. 44
3.3 The San Francisco HSA .................................................................................................. 44
3.3.1 Overview ............................................................................................................... 44
3.3.2 Dr. Chipty's analyses ............................................................................................. 45
3.4 The Santa Rosa HSA ....................................................................................................... 46
3.4.1 Overview ............................................................................................................... 46
3.4.2 Dr. Chipty's analyses ............................................................................................. 47
STANDARD OF REVIEW ............................................................................................................ 47
ANALYSIS ..................................................................................................................................... 48
1. Framing the Issues ..................................................................................................................... 48
1.1 As Applied Here, the Hypothetical-Monopolist Test Focuses on How Health Plans, as Opposed to Patients, Would Respond to a Monopolist Hospital ................................ 49
1.2 At Summary Judgment, the Plaintiffs Do Not Have to Establish Definitively That Their Candidate Markets Are Relevant Geographic Markets or Exclude All Other Possible Geographic Markets .......................................................................................... 52
1.3 At Summary Judgment, There Is No Per Se Requirement for the Plaintiffs to Present Expert Testimony or an Econometric Analysis in Support of Their Candidate Markets ............................................................................................................................ 53
2. Selecting Initial Candidate Markets for the Hypothetical-Monopolist Test ............................. 56
3. The Candidate Tying Markets ................................................................................................... 57
3.1.1 Blue Shield redirection analysis
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