Abraham v. Intermountain Health Care Inc.

461 F.3d 1249, 2006 U.S. App. LEXIS 22658, 2006 WL 2556357
CourtCourt of Appeals for the Tenth Circuit
DecidedSeptember 6, 2006
Docket05-4043
StatusPublished
Cited by31 cases

This text of 461 F.3d 1249 (Abraham v. Intermountain Health Care Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Abraham v. Intermountain Health Care Inc., 461 F.3d 1249, 2006 U.S. App. LEXIS 22658, 2006 WL 2556357 (10th Cir. 2006).

Opinion

TACHA, Chief Circuit Judge.

This appeal is the result of certain Utah optometrists’ decade-long effort to become panel providers for the largest managed health care company in the state. In 2001, the optometrists ultimately filed suit against Intermountain Health Care, Inc. (“IHC”) and others, alleging that IHC’s exclusion of optometrists from its network of providers violates §§ 1 and 2 of the Sherman Act. The District Court granted summary judgment in favor of the Defendants on all claims. We take jurisdiction under 28 U.S.C. § 1291 and AFFIRM.

I. BACKGROUND

A. The Parties and Players

1. The Plaintiffs

The Plaintiffs are forty-nine optometrists who practice along Utah’s Wasatch Front 1 and their affiliated professional organizations, as well as Standard Optical Company, an eye clinic on the Wasatch Front that employs optometrists. Optometrists sell optical hardware, such as glasses and contact lenses, and have been permitted under Utah law to perform the full scope of non-surgical eye care (“NSEC”) since 1991. All optometrists who are parties to this suit are therapeutic optometrists, which means they are authorized to prescribe prescription drugs in addition to performing NSEC and selling hardware.

2. The Defendants

We begin with IHC, the largest managed care company-in Utah. IHC began as an nonprofit association of hospitals in 1975. In the mid-1980s IHC vertically integrated its hospitals and began to offer prepaid health services from IHC facilities *1254 and physicians through managed care organizations. IHC’s health service products — also called managed care plans — are provided through IHC’s wholly-owned subsidiary, IHC Health Plans, Inc. In the mid-1990s, IHC added a physicians’ division and formed IHC Health Services, Inc. That entity operates health care facilities and directly employs physicians and other health care providers. IHC and its affiliates now own and operate nineteen acute care hospitals and six surgical centers in Utah. Nine of these hospitals and five of these surgical centers are located on the Wasatch Front.

The Defendants also include two ophthalmologists — Corey A. Miller, M.D. and David A. Brodstein, M.D. — and then-respective professional corporations. Like optometrists, ophthalmologists sell optical hardware and perform the full scope of NSEC. They therefore compete with optometrists for the sale of these goods and services. Unlike optometrists, however, ophthalmologists are licensed physicians and are authorized in Utah to perform surgical eye care (“SEC”) in addition to NSEC. Accordingly, ophthalmologists frequently have staff privileges at hospitals, which enables them to use the hospital to perform eye surgery. 2

Though not a party to this action, Eye Network of Utah (“ENU”) figures prominently in this case. ENU is a network of vision care providers; its membership comprises exclusively ophthalmologists under contract with an IHC managed care plan. Dr. Miller and Dr. Brodstein were managers of ENU during the period relevant to this appeal. The members of ENU, as well as all of IHC’s panel ophthalmologists, are horizontally positioned competitors with respect to each other (in the provision of SEC and NSEC and in the sale of optical hardware) and with respect to optometrists (in the provision of NSEC and the sale of optical hardware).

B. Background, Facts

IHC administers four managed care plans that furnish health care services, including SEC and NSEC, to an enrollee in exchange for periodic prepaid premiums. The plans seek to limit costs (and therefore premiums) by: (1) designating the individual health care providers (“panel providers”) from whom enrollees may seek treatment; and (2) managing access to and the type of care enrollees may obtain. IHC then reimburses panel providers for services provided to enrollees. Because panel providers accept lower payments for their services to IHC enrollees in exchange for increased patient volumes directed to them as a panel provider, costs may decline and premiums may decrease when provider panels become smaller and more exclusive. Therefore, IHC limits the number of health care providers with whom it contracts. 3 These contracts are governed by written agreements, and all IHC’s panel providers — whether physicians like ophthalmologists or so-called “ancillary providers” like optometrists— sign the same agreement.

IHC’s presence in the market for managed care — that is, the market for managed care plans — is significant, estimated *1255 by some to consist of sixty percent of total managed care plan enrollees on the Wasatch Front. Although IHC’s enrollees may patronize a health care provider who is not an IHC panel provider, plan benefits will generally not be paid when the enroll-ee does so. As such, IHC’s panel providers only theoretically compete with non-panel providers because the practicalities of life dissuade most IHC enrollees from obtaining health services from non-panel providers. See Abraham v. Intermountain Health Care, Inc., 394 F.Supp.2d 1312, 1318 (D.Utah 2005).

Besides IHC’s presence in the market for managed care plans, it also has a significant presence in the market for hospital and surgical facilities on the Wasatch Front. It controls approximately 51% to 55% of that market. Although IHC has employed some physicians directly, for the most part health care is provided only through its managed care subsidiaries.

With one exception, all of IHC’s panel providers of eye care on the Wasatch Front are ophthalmologists. In contrast, all competing managed care companies on the Wasatch Front have both ophthalmologists and optometrists on the list of available providers of NSEC. Indeed, all the optometrists in this case serve on IHC’s competitors’ panels. Not surprisingly, then, optometrists on the Wasatch Front have for more than a decade entreated IHC to list them as providers on its managed care plans. In fact, in 1995 there were several indications that IHC intended to include optometrists on its provider panels, as they typically charge approximately twenty percent less for NSEC than do ophthalmologists. Ultimately, however, no optometrists were paneled. IHC’s director of provider relations explained that whenever IHC tries to add optometrists to its provider panels, the ophthalmologists “write all kinds of letters and- [make] phone calls and raise such a stink” that IHC decides not to do it each time it is proposed.

The crux of the Plaintiffs’ claims is the existence of an agreement between IHC and its panel ophthalmologists designed to preserve for ophthalmologists' the exclusive ability to provide NSEC to an estimated sixty percent of the region’s managed care enrollees while simultaneously increasing IHC’s dominance in the market for the provision of hospital and surgical facilities.

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Bluebook (online)
461 F.3d 1249, 2006 U.S. App. LEXIS 22658, 2006 WL 2556357, Counsel Stack Legal Research, https://law.counselstack.com/opinion/abraham-v-intermountain-health-care-inc-ca10-2006.