IN THE SUPREME COURT OF IOWA No. 16–0364
Filed April 21, 2017
Amended July 17, 2017
BRADLEY A. CHICOINE, DR. BRADLEY A. CHICOINE, D.C., P.C., MARK A. NILES, NILES CHIROPRACTIC, INC., ROD R. REBARCAK, and BEN WINECOFF, on Behalf of Themselves and Those Like Situated,
Appellants,
and
STEVEN A. MUELLER, BRADLEY J. BROWN, MARK A. KRUSE, KEVIN D. MILLER, and LARRY E. PHIPPS, on Behalf of Themselves and Those Like Situated,
vs.
WELLMARK, INC. d/b/a WELLMARK BLUE CROSS AND BLUE SHIELD OF IOWA, an Iowa Corporation, and WELLMARK HEALTH PLAN OF IOWA, INC., an Iowa Corporation,
Appellees.
Appeal from the Iowa District Court for Polk County, Michael D. Huppert, Judge.
A district court indefinitely stayed state antitrust proceedings in
favor of further proceedings in federal multidistrict antitrust litigation.
RULING ON MOTION VACATED; REMANDED WITH DIRECTIONS.
Glenn L. Norris of Hawkins & Norris, P.C., Des Moines, and
Steven P. Wandro and Kara M. Simons of Wandro & Associates, P.C.,
Des Moines, for appellants. 2
Hayward L. Draper, Ryan G. Koopmans, and John T. Clendenin
(until withdrawal) of Nyemaster Goode, P.C., Des Moines, for appellees. 3
HECHT, Justice.
Thirteen Iowa chiropractors filed this class-action lawsuit against
Iowa’s largest health insurer alleging it conspired with nonparty
competitors to fix prices, allocate markets, and engage in other
anticompetitive conduct in Iowa in violation of the Iowa Competition Law.
See Iowa Code ch. 553 (2015). The Iowa chiropractors allege that this
anticompetitive conduct has had the purpose and effect of driving down
chiropractor reimbursements to discriminatorily low levels.
On the defendants’ motion, and over the plaintiffs’ objection, the
district court stayed the case in its entirety pending further proceedings
in federal multidistrict litigation (MDL) in Alabama brought under the
federal antitrust laws. See 15 U.S.C. §§ 1, 4 (2012). The Alabama MDL
includes physicians, hospitals, and other healthcare providers from
around the country as plaintiffs. As in the present case, the plaintiffs
allege conspiracies by the insurers to fix prices and allocate markets.
However, the MDL complaint alleges that the conspiracies have had the
effect of driving down all healthcare provider reimbursements to
artificially low levels. One of the plaintiffs in the Alabama MDL is an
Iowa chiropractor and one of the defendants is Iowa’s largest health
insurer.
On interlocutory review, we conclude the district court abused its
discretion in staying the Iowa litigation pending further proceedings in
the Alabama MDL. Resolution of the Alabama MDL, which is still in
bellwether pretrial proceedings, could take years, and although there is
some overlap between the two cases, there are also considerable
differences in the issues they present. Accordingly, we vacate the order
staying this action and remand for further proceedings. 4
I. Background Facts and Proceedings.
The plaintiffs are Iowa chiropractors who treat patients enrolled in
health insurance plans offered or administered by the defendants,
Wellmark, Inc. d/b/a Wellmark Blue Cross and Blue Shield of Iowa and
Wellmark Health Plan of Iowa, Inc. (collectively, Wellmark). Wellmark is
an Iowa health insurance corporation and a member of the national Blue
Cross and Blue Shield Association (BCBSA), a federation of over thirty-
five independent Blue Cross and Blue Shield (BCBS) affiliates known as
the Blues.
Wellmark contracts with the plaintiffs and other healthcare
providers who agree to provide services to BCBS subscribers at or under
a discounted fee in exchange for being added to Wellmark’s network of
preferred providers. Wellmark shares this fee schedule and provider
network with the self-funded employee plans it administers in exchange
for a fee and with the other BCBS affiliates in exchange for their
promises to not use the BCBS trademark in Iowa and to share their own
fee schedules and provider networks with Wellmark’s subscribers (the
BlueCard® Program) seeking medical services in other states. See
Mueller v. Wellmark (Mueller II), 861 N.W.2d 563, 566–67 (Iowa 2015).
A. Prior Iowa Chiropractic Litigation. Wellmark’s involvement
in the BlueCard® Program and its arrangements with self-funded
employee plans have been challenged by Iowa chiropractors in related
chiropractic litigation that has come before our court four times. See
Abbas v. Iowa Ins. Div., 893 N.W.2d 879 (Iowa 2017); Wellmark, Inc. v.
Iowa Dist. Ct., 890 N.W.2d 636 (Iowa 2017); Mueller II, 861 N.W.2d 563;
Mueller v. Wellmark, Inc. (Mueller I), 818 N.W.2d 244 (Iowa 2012). For a
brief summary of those cases, see Wellmark, Inc., 890 N.W.2d at 638–42. 5
B. Chicoine Petition. On October 5, 2015, the plaintiffs filed a
class-action petition alleging Wellmark violated section 553.4 of the Iowa
Competition Law under the rule of reason. See Iowa Code § 553.4 (“A
contract, combination, or conspiracy between two or more persons shall
not restrain or monopolize trade or commerce in a relevant market.”). 1
The petition alleges Wellmark entered a combination or conspiracy with
potential competitors—the other BCBS affiliates and self-funded
employee plans Wellmark administers—to restrain trade, commerce, and
competition in the sale and purchase of healthcare services in Iowa. The
plaintiffs argue this alleged conduct violates the Iowa Competition Law
under the rule of reason because “the anticompetitive consequences of
such conspiracy or conspiracies outweigh any procompetitive benefits.”
The alleged restraints include agreements to
(a) . . . artificially fix a lower price for chiropractic services and to limit or exclude chiropractic coverage from health plans offered by other potential competitors for chiropractic services in Iowa[;]
(b) . . . allocate territories and not to compete with each other in those allocated territories[;]
(c) impose maximum fee schedules to which chiropractors must agree with defendants, their co-conspirators, and with each other in order to provide diagnostic and treatment services for their patients in Iowa;
(d) prescribe fees for chiropractic services which are discriminatory to doctors of chiropractic in relation to the
1Five of the named plaintiffs in this case, led by Steven A. Mueller, D.C., previously challenged Wellmark’s preferred-provider arrangements as constituting a per se violation of section 553.4 of the Iowa Competition Law. See Mueller II, 861 N.W.2d at 574–75 (affirming summary judgment in favor of Wellmark on the plaintiffs’ per se liability claim); Mueller I, 818 N.W.2d at 264. The Mueller plaintiffs contend this lawsuit asserting a rule-of-reason claim is a continuation of Mueller I, commenced in May 2008. See Iowa Code § 614.10 (“If, after the commencement of an action, the plaintiff, for any cause except negligence in its prosecution, fails therein, and a new one is brought within six months thereafter, the second shall, for the purposes herein contemplated, be held a continuation of the first.”). 6 fees for other health care practitioners for the same or similar services;
(e) prescribe limitations upon and make optional the coverage of diagnostic and treatment services of chiropractors while not imposing the same standards and practices to the coverage of diagnostic and treatment services of other practitioners of health care in Iowa licensed under the chapters of Title IV, subtitle 3, of the Code of Iowa [Chapters 147 through 158];
(f) historically enter into a contract, combination and conspiracy in restraint of trade or commerce in Iowa with health care providers other than chiropractors to first boycott and then later discriminate against the diagnostic and treatment services to members provided by Iowa chiropractors[.]
The petition also challenges Wellmark’s attempt to implement plans and
policies for itself and its alleged coconspirators under which
(g) . . . subscriber-patients who elected to seek chiropractic treatment would be covered for only three treatment procedures per visit to a doctor of chiropractic regardless of the acuity, severity, or nature of the patient’s condition or the number of her complaints;
(h) . . . subscriber-patients and those persons who were employees of self-funded entities administered by Wellmark . . . would be required to seek preapproval . . . before any chiropractic services would be paid, which policy solely related to chiropractic services and to no other services of any other health care practitioner licensed by the state of Iowa;
(i) . . . Iowa chiropractors only are subject to a capitated payment system whereby chiropractors are paid at [a] rate less than 50% of the rate payable for PPO services, while all other Iowa licensed practitioners covered by WHPI are paid pursuant to a schedule derived from the PPO payment schedules with a 7-9% discount.
The plaintiffs seek certification of a class comprised of all similarly
situated chiropractors who were either Iowa citizens (1) on the date the
petition was filed or (2) “at all times during their Iowa licensure as
doctors of chiropractic after May 20, 2004, which is four years prior to 7
the filing of the Plaintiffs’ First [Amended Petition] in [Mueller I, 818
N.W.2d 244].”
C. Motion to Stay. In December 2015, Wellmark filed a motion
to stay proceedings in favor of multidistrict litigation pending in the
United States District Court for the Northern District of Alabama. See In
re Blue Cross Blue Shield Antitrust Litigation, MDL No. 2406, No. 2:13–cv–
20000 (N.D. Ala. 2012) [hereinafter MDL No. 2406]. MDL No. 2406
consolidated for pretrial purposes a significant number of federal
antitrust cases brought by various healthcare providers and health
insurance subscribers against the BCBSA and at least one affiliate.
Wellmark asserted a stay was appropriate because MDL No. 2406 was
filed first, had advanced farther, concerned the same putative class, and
involved common issues and parties. Wellmark also argued a stay would
be consistent with principles of comity, give the Iowa court the benefit of
federal judicial expertise, save significant resources by eliminating
duplicative efforts, and help avoid inconsistent interpretations of the
Iowa Competition Law and the Federal Sherman Act.
MDL No. 2406 has two master class-action complaints, a provider
complaint and a subscriber complaint. Only the provider complaint is
relevant to this case. The most recent version of the provider complaint
available in the record on appeal was filed in MDL No. 2406 on
November 25, 2014, by medical suppliers and healthcare providers,
including Iowa chiropractor Joseph Ferezy, D.C. d/b/a Ferezy Clinic of
Chiropractic and Neurology (FCCN). The provider complaint alleges
Wellmark, the other BCBS affiliates, and the BCBSA conspired to
allocate markets, fix prices, and boycott providers outside each affiliate’s
allocated market in violation of Section 1 of the Sherman Act under
per se, quick-look, or rule-of-reason analyses. The plaintiffs ask the 8
federal court to certify a class of healthcare providers and a subclass of
plaintiffs for Iowa that includes all Iowa chiropractors who provided
insured services within four years of the filing of the action, with Joseph
Ferezy as representative for the subclass of Iowa chiropractors.
With respect to Iowa chiropractor Joseph Ferezy’s claims, the
complaint states,
During the relevant time period, FCCN provided medically necessary, covered services to patients insured by Wellmark, Inc. d/b/a Wellmark Blue Cross and Blue Shield of Iowa (“Wellmark”) or who are included in employee benefit plans administered by Wellmark pursuant to his in-network contract with Wellmark, and billed Wellmark for the same. FCCN was paid less for those services than he would have been but for Defendants’ anticompetitive conduct and has been injured by Defendants’ conduct as a result thereof. On information and belief, FCCN has also provided medically necessary, covered services to other Blue Cross and Blue Shield Plan members through national programs, has billed for same, and has been paid less for those services than he would have been but for Defendants’ anticompetitive conduct.
Corrected Consolidated Second Amended Provider Complaint, MDL
No. 2406, No. 2:13–cv–20000, EFC No. 236, at *29, ¶51 (N.D. Ala. filed
Nov. 25, 2014).
On October 30, 2015, the court in MDL No. 2406 issued a
scheduling order adopting a bellwether approach to streamlining MDL
No. 2406. See Order, MDL No. 2406, No. 2:13–cv–20000, EFC No. 469
(N.D. Ala. filed Oct. 30, 2015). The court stayed all but the two cases
filed in its district until January 2018—American Electric Motor Services,
Inc. v. Blue Cross & Blue Shield of Alabama, Case No. 2:12-cv-02169, a
subscriber case, and Conway v. Blue Cross & Blue Shield of Alabama,
Case No. 2:12-cv-02532, a provider case (collectively, the bellwether
cases). Id. at 5. The court then set an accelerated schedule for pretrial 9
proceedings in the two bellwether cases to occur throughout 2017. 2 Id.
at 5–6. A pretrial conference would occur no sooner than January 2018,
with a trial date for the two bellwether cases to be set by separate order.
Id. at 6.
D. Subsequent Proceedings. The plaintiffs resisted Wellmark’s
motion to stay this action in December 2015, asking the court to
conclude under standards established in First Midwest Corp. v. Corporate
Finance Associates that a stay is unwarranted. See 663 N.W.2d 888, 891
(Iowa 2003). Wellmark replied, and the district court held a hearing in
January 2016. On January 28, 2016, the district court stayed the case
“in favor of further proceedings in [MDL No. 2406], until further order of
this court.” We granted the plaintiffs’ application for interlocutory
appeal.
II. Standard of Review.
We review the decision to grant or deny a stay for abuse of
discretion. Id. at 890–91. Reversal is warranted when discretion “is
capriciously exercised or abused.” Id. (quoting Chrysler Credit Corp. v.
Rosenberger, 512 N.W.2d 303, 305 (Iowa 1994)). Discretion is abused
unless the evidence clearly and convincingly shows that the need for a
stay outweighs the potential for harm or prejudice to the other litigants.
See Landis v. N. Am. Co., 299 U.S. 248, 255, 57 S. Ct. 163, 166 (1936)
(“[T]he suppliant for a stay must make out a clear case of hardship or
2The court required factual discovery to be completed by January 13, 2017;
expert reports to be submitted by February 28, 2017 and March 28, 2017, for the plaintiffs and defendants, respectively; expert discovery to be completed by April 28, 2017; class certification and Daubert motions to be submitted by June 1, 2017; and potentially dispositive motions to be submitted by September 7, 2017. Order, MDL No. 2406, No. 2:13-cv-20000, EFC No. 469, at 5–6. The court also set a nonrecord economics day in January 2017 so the parties could educate the court about relevant economic issues. Id. 10
inequity in being required to go forward, if there is even a fair possibility
that the stay for which he prays will work damage to some one else.”);
see also Williford v. Armstrong World Indus., Inc., 715 F.2d 124, 127 (4th
Cir. 1983) (“The party seeking a stay must justify it by clear and
convincing circumstances outweighing potential harm to the party
against whom it is operative.”).
III. Analysis.
The issue on appeal is whether the district court abused its
discretion by staying the plaintiffs’ lawsuit in its entirety pending further
proceedings in MDL No. 2406. We begin by reviewing the law governing
stays.
A “stay” is the temporary postponement of all or part of a judgment
or judicial proceeding by court order. Stay, Black’s Law Dictionary (10th
ed. 2014). 3 The power to grant a stay “is incidental to the power inherent
in every court to control the disposition of the causes on its docket with
economy of time and effort for itself, for counsel, and for litigants.”
Landis, 299 U.S. at 254, 57 S. Ct. at 166; see also Brenton Bros. v. Dorr,
213 Iowa 725, 728, 239 N.W. 808, 809 (1931). District courts have
broad discretion in deciding whether to grant or deny a stay. See First Midwest Corp., 663 N.W.2d at 890. That discretion, however, is not
unbridled. Id.
A district court must act reasonably when deciding whether to stay
a case in favor of a proceeding in another jurisdiction, taking into
3Werecognize three classes of stays: those issued under a court’s common law authority to control the disposition of causes on its docket, those granted pursuant to statute, and those associated with appellate proceedings and certain postjudgment motions. Brenton Bros. v. Dorr, 213 Iowa 725, 728, 239 N.W. 808, 809–10 (1931); see also Iowa R. Civ. P. 1.1006 (permitting a stay pending the resolution of motions for judgment notwithstanding the verdict, for a new trial, or to vacate or modify a judgment). The first class of stay is at issue in this case. 11
account the parties’ competing interests, the consequences of a stay to
the parties, and other relevant considerations. See Landis, 299 U.S. at
254–58, 57 S. Ct. at 166–67. The other relevant considerations include
comity, 4 the desirability of avoiding a multiplicity of forums, whether the foreign litigation is at an advanced or preliminary stage, the likelihood of obtaining complete relief in the foreign jurisdiction, and the possibility that a judgment entered in the foreign jurisdiction will give rise to collateral estoppel or will render the matter before the court res judicata.
First Midwest Corp., 663 N.W.2d at 891 (quoting 1 Am. Jur. 2d Actions § 78, at 773 (1994)). Other considerations include the relative
convenience of the forums; which action was filed first; the forums’
subject-matter knowledge and expertise; whether the actions were
brought in good faith; and the similarity of “the parties, causes of action,
and issues in the two actions.” E.H. Schopler, Annotation, Stay of Civil
Proceedings Pending Determination of Action in Federal Court in Same
State, 56 A.L.R.2d 335, § 2, Westlaw (database updated April 2017)
(footnotes omitted).
“Where a prior foreign action involves the same parties and the
same issues and is pending before a court capable of doing prompt and complete justice, the court’s discretion may be freely exercised in favor of
a stay.” First Midwest Corp., 663 N.W.2d at 891 (quoting 1 Am. Jur. 2d
Actions § 78, at 773). Conversely, where the parties or issues are
different, a stay will only be justified in rare circumstances. See Landis,
299 U.S. at 255, 57 S. Ct. at 166. A stay may be justified in favor of
another case involving different parties if both cases require “the minute
4“Comity is . . . a principle in accordance with which the courts of one state will
give effect to the laws and judicial decisions of another, not as a matter of right but out of deference and respect.” Jacobsen v. Saner, 247 Iowa 191, 193, 72 N.W.2d 900, 901 (1955). 12
investigation of intercorporate relations, linked in a web of baffling
intricacy” or present “novel problems of far-reaching importance to the
parties or public.” Id. at 256, 57 S. Ct. at 166. Likewise, a stay may be
justified in favor of another case involving different issues of fact and law
if “in all likelihood it will settle many [issues] and simplify them all.” Id.
The seminal case concerning a trial court’s common law authority
to stay a case pendent lite is Landis. In Landis, the Supreme Court held
that the terms of a stay must be moderate in extent and unoppressive in
effect. Id. at 256, 57 S. Ct. at 166. “[A] stay is immoderate and hence
unlawful unless so framed in its inception that its force will be spent
within reasonable limits, so far at least as they are susceptible of
prevision and description.” Id. at 257, 57 S. Ct. at 167. The Court
concluded the trial court abused its discretion by granting a stay pending
the final appellate decision in another case that was still in pretrial
proceedings because the stay would be in effect for years and might
ultimately be of little to no benefit to the stayed case, depending on how
the other case was decided. Id. at 256–57, 57 S. Ct. at 167. The stay did
not become moderate merely “because conceivably the court that made it
may be persuaded at a later time to undo what it has done.” Id. at 257,
57 S. Ct. at 167.
In this case, the only limit the district court placed on the duration
of the stay was that it would remain in effect “until further order of this
court.” Absent the district court’s decision to end the stay, it will
continue in effect through a decision by the district court in the
bellwether cases and any appeal to the United States Court of Appeals
for the Fifth Circuit and United States Supreme Court. Once the
bellwether cases are resolved, the stay could continue while the
nonbellwether cases proceed through the pretrial phase of MDL 13
No. 2406. The stay order concluded a stay was warranted even though
“the eventual trial of the Iowa portion of the MDL action may not come
for several years,” indicating the district court might even consider letting
the stay remain in effect through the remand and trial of the Iowa
portion of the MDL action.
As in Landis, the stay in this case serves to prolong the decision-
making process for years without adequately protecting or advancing the
plaintiffs’ interest in receiving a prompt decision. At a minimum, the
stay will last until 2018—the earliest date the bellwether cases could
precede to trial under the current scheduling order in MDL No. 2406. In
all likelihood, the stay could last several years or even a decade or more
as the bellwether cases and the consolidated federal case involving the
Iowa plaintiff move through their trial and appellate stages. Such a
lengthy and indefinite stay violates the plaintiffs’ interest in prompt and
complete justice. Cf. First Midwest Corp., 663 N.W.2d at 891. The stay
does not become moderate simply because the plaintiffs could petition
the court to enter an order ending the stay or because the court could
end the stay sooner of its own accord. See Landis, 299 U.S. at 257, 57
S. Ct. at 167.
Furthermore, any benefit of a decision in MDL No. 2406 advancing
the resolution of this case is uncertain for several reasons. First, if MDL
No. 2406 is resolved under a per se or quick-look theory, it will provide
little or no benefit to the economic and econometric analyses in the Iowa
plaintiffs’ rule-of-reason claim. Second, the federal court in MDL
No. 2406 has adopted a bellwether approach, making it more likely that
the Iowa portion of MDL No. 2406 will settle before trial or even pretrial
proceedings, thus removing many of the potential benefits of a stay in
this case. See In re Chevron U.S.A., Inc., 109 F.3d 1016, 1019 (5th Cir. 14
1997) (“The notion that the trial of some members of a large group of
claimants may provide a basis for enhancing prospects of settlement or
for resolving common issues or claims is a sound one that has achieved
general acceptance by both bench and bar.”). The bellwether cases
involve Alabama plaintiffs, and it is possible that competitive conditions
in Alabama may have no connection to those in Iowa.5
Finally, as the district court found, the plaintiffs raised
approximately “ten detailed specifications of wrongdoing” concerning
Wellmark’s treatment of Iowa chiropractors while MDL No. 2406 focused
on two allegations concerning the BCBSA’s treatment of all healthcare
providers. Although there appears to be an allegation common to both
cases that the BCBSA entities have generally conspired to stay out of
each other’s territories (i.e., Iowa and South Dakota in the case of
Wellmark), the present case alleges discriminatory treatment of
chiropractors instead of artificially low reimbursements for all healthcare
providers. In addition, the present case alleges other anticompetitive
agreements, including between Wellmark and self-insurers. It is unclear
in our view whether any resolution of claims in MDL No. 2406 would
result in the resolution of claims in this action. See Landis, 299 U.S. at
256, 57 S. Ct. at 166 (noting a stay may be justified in favor of a case
with nonidentical issues if “in all likelihood it will settle many and
simplify them all”).
An indefinite delay for uncertain benefits is patently immoderate.
Cf. Univ. of Utah Hosp. & Med. Ctr. v. Twin Falls County, 842 P.2d 689,
692 (Idaho 1992) (finding the stay of an application for medical indigency
5A federal MDL is for pretrial purposes only, and cases are returned to their home district for trial. See 28 U.S.C. § 1407(a). 15
pending a final appellate decision in a disability application to be
patently unreasonable), superseded by statute, 1996 Idaho Sess. Laws
1360, as recognized in St. Luke’s Magic Valley Reg’l Med. Ctr., Ltd. v. Bd.
of Cty. Comm’rs, 237 P.3d 1210, 1215 (Idaho 2010). “Relief so drastic
and unusual overpasses the limits of any reasonable need, at least upon
the showing made when the motion was submitted.” Landis, 299 U.S. at
257, 57 S. Ct. at 167. Under the circumstances, we conclude it was an
abuse of discretion for the district court to stay this litigation.
We disagree with Wellmark’s contention that Iowa Code section
553.2 supports a stay here. 6 Although section 553.2 provides that the
Iowa Competition Law “shall be construed to complement and be
harmonized with” federal antitrust laws, it also directs that it shall not be
construed “in such a way as to constitute a delegation of state authority
to the federal government.” Iowa Code § 553.2. The purpose of section
553.2 is to achieve “a uniform standard of conduct so that businesses
will know what is acceptable conduct and what is not acceptable
conduct.” Comes v. Microsoft Corp., 646 N.W.2d 440, 446 (Iowa 2003).
But attainment of that purpose does not necessarily require an Iowa
state trial court to wait for and then defer to the legal rulings of an Alabama federal trial court in a specific case. Our courts are capable of
applying antitrust precedent.
6Iowa Code section 553.2 provides, This chapter shall be construed to complement and be harmonized with the applied laws of the United States which have the same or similar purpose as this chapter. This construction shall not be made in such a way as to constitute a delegation of state authority to the federal government, but shall be made to achieve uniform application of the state and federal laws prohibiting restraints of economic activity and monopolistic practices. 16
IV. Disposition.
The order of the district court is vacated, and the case is
remanded.
RULING ON MOTION VACATED; REMANDED WITH
DIRECTIONS.
All justices concur except Appel, J., who takes no part.