Human Resources Institute of Norfolk, Inc. v. Blue Cross

484 F. Supp. 520, 1980 U.S. Dist. LEXIS 9009
CourtDistrict Court, E.D. Virginia
DecidedFebruary 8, 1980
DocketCiv. A. 78-0528-R
StatusPublished
Cited by10 cases

This text of 484 F. Supp. 520 (Human Resources Institute of Norfolk, Inc. v. Blue Cross) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Human Resources Institute of Norfolk, Inc. v. Blue Cross, 484 F. Supp. 520, 1980 U.S. Dist. LEXIS 9009 (E.D. Va. 1980).

Opinion

MEMORANDUM

MERHIGE, District Judge.

Plaintiff, a proprietary psychiatric hospital serving the Norfolk, Virginia, area, brings this action against Blue Cross of Virginia (“BCV”) and The Blue Cross Association (“BCA”), alleging a concerted effort by defendants to force plaintiff either out of the health care business or into becoming a participating hospital in the Blue Cross system, in violation of, inter alia, the Sherman Antitrust Act. Plaintiff is one of two hospitals in central and eastern Virginia which is not a Blue Cross participating hospital. As such, plaintiff is reimbursed for inpatient psychiatric care of Blue Cross subscribers only up to. limited amounts established by BCV. BCV is a non-profit Virginia corporation which contracts with subscribers to provide prepaid hospital services. BCA is a non-profit Illinois corporation which owns and administers the “Blue Cross” service mark and trade name license and provides other services to the various state and local plans in the Blue Cross system.

Plaintiff, Human Resource Institute of Norfolk, Inc., (“HRI”), alleges that defendants have conspired to monopolize the business of providing prepaid hospital and related service plans in restraint of trade in violation of Sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 1px solid var(--green-border)">2. The complaint includes pendent state law claims based upon (1) an alleged combination and agreement by defendants to willfully injure HRI in its reputation in violation of Va.Code § 18.2 — 499, (2) allegedly slanderous remarks made by BCV concerning HRI, (3) BCV’s alleged breach of its contract with HRI, and (4) an alleged violation by BCV and BCA of Virginia’s Unfair Trade Practices Act, Va.Code § 38.1-49, et seq. The Court’s jurisdiction is invoked under Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 15/26" style="color:var(--green);border-bottom:1px solid var(--green-border)">26, and under 28 U.S.C. §§ 1331(a) and 1337. HRI incorrectly cites the diversity of citizenship between BCA and itself as providing diversity jurisdiction under 28 U.S.C. § 1332(a). Diversity jurisdiction is unavailable here due to the lack of diversity between BCV, a Virginia corporation, and HRI, a Delaware corporation whose principal place of business is Virginia. See Bowman v. White, 388 F.2d 756, 760 (4th Cir. 1968).

*522 I. MOTIONS

BCA has moved for summary judgment in its favor on all counts of the complaint. To the end that the Court may determine the legal sufficiency of plaintiff’s claims in the face of BCA’s motion, the Court must review the allegations of plaintiff’s complaint. As heretofore noted, HRI alleges that the defendants have combined in an effort to force HRI out of business or into the status of a Blue Cross participating hospital. In furtherance of this alleged conspiracy, BCV, movant’s codefendant, so it is contended, has refused to process, promptly and properly, claims submitted by HRI for reimbursement for covered hospital services. In addition, HRI contends that BCV has refused to reimburse HRI for covered inpatient psychiatric services rendered to Blue Cross subscribers and has demanded repayment from plaintiff of $3,000,000 paid to HRI for what BCV claims were noncovered services rendered to Blue Cross subscribers. Pursuant to this so called “baseless” demand for repayment, BCV has instituted litigation in state court on such claims. BCV is also alleged to have uttered defamatory statements concerning the quality of psychiatric care provided by plaintiff, in an effort to injure plaintiff’s business. Finally, BCV has reduced the coverage for nonparticipating hospitals from 80% to 50% of charges. Although movant BCA did not take any of the aforementioned action, HRI alleges that:

Defendant BCA has agreed to, encouraged and assisted in the acts and practices of Defendant Blue Cross of Virginia . by, among other things, establishing policies and goals supporting said acts and practices. 1

BCA’s motion for summary judgment challenges the evidentiary support for HRI’s assertion that BCA assisted codefendant BCV in the manner suggested above.

BCA filed its motion for summary judgment under Rule 56(b) after some eight months of discovery and supported the same with affidavits from two of its vice presidents who detail at length the interrelationships between BCA and its codefendant, BCV. Further documentary support for BCA’s motion consists of an appendix of relevant exhibits and a supporting brief. As grounds for judgment in its favor, movant argues that there is no genuine issue of material fact and that the record demonstrates that BCA has not participated in any of the acts complained of nor has it been a party to any combination of conspiracy to commit such acts. In addition, BCA asserts that HRI lacks standing to assert a private cause of action in Count VI under the Virginia Unfair Trade Practices Act, Va.Code § 38.1-49, et seq.; that BCA has not and, in any event, is not in any position to attempt to monopolize the market for inpatient psychiatric hospital services or for prepaid hospital service plans in violation of § 2 of the Sherman Act as alleged in Count II; and that HRI is barred from recovering on claims governed by the Government-Wide Service Benefit Program, 5 U.S.C. § 8901, et seq., for failure to exhaust its administrative remedies. 2

In response, HRI has filed a brief in opposition, with supporting affidavit and exhibits, and a motion to strike portion of the two affidavits supporting BCA’s motion on grounds of noncompliance with the requirements of Rule 56(e), F.R.C.P. Plaintiff argues that BCA’s motion is premature due to, what it describes as, the relatively short period of discovery, pointing out that during the fifteen months since this suit was first instituted, discovery has been stayed for nearly half that period. Further, HRI asserts that BCA’s failure to file an *523 answer to the complaint until five months prior to the instant motion for summary judgment, has prevented any effective discovery by plaintiff until that time.

While HRI contends that the prematurity of BCA’s motion requires its denial, it argues further that the limited discovery conducted thus far has revealed genuine issues of material fact tying BCA with BCV, and others, in a conspiracy and combination as alleged in the complaint.

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Bluebook (online)
484 F. Supp. 520, 1980 U.S. Dist. LEXIS 9009, Counsel Stack Legal Research, https://law.counselstack.com/opinion/human-resources-institute-of-norfolk-inc-v-blue-cross-vaed-1980.