LifeWatch Services, Inc. v. Highmark, Inc.

248 F. Supp. 3d 641, 2017 WL 1230824, 2017 U.S. Dist. LEXIS 50176
CourtDistrict Court, E.D. Pennsylvania
DecidedApril 3, 2017
DocketCIVIL ACTION NO. 12-5146
StatusPublished
Cited by2 cases

This text of 248 F. Supp. 3d 641 (LifeWatch Services, Inc. v. Highmark, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
LifeWatch Services, Inc. v. Highmark, Inc., 248 F. Supp. 3d 641, 2017 WL 1230824, 2017 U.S. Dist. LEXIS 50176 (E.D. Pa. 2017).

Opinion

MEMORANDUM

EDUARDO C. ROBRENO, JUDGE.

This is an antitrust action alleging a nationwide conspiracy amongst Blue Cross and Blue Shield Association and the administrators of several separately owned, [642]*642locally operated Blue Cross and Blue Shield Plans to deny insurance coverage for certain mobile cardiac outpatient telemetry devices produced by Plaintiff Life-Watch Services, Inc. The defendants have moved collectively to dismiss the currently operative complaint in this case. For the reasons that follow, the Court will grant the motion.

I. FACTUAL BACKGROUND

A. Mobile Cardiac Outpatient Teleme-⅛

A mobile cardiac outpatient telemetry (“MCOT”) device is one of several types of arrhythmia monitoring devices that a physician may prescribe to remotely record a patient’s electrocardiograph (“EKG”), which displays a patient’s heartbeat patterns to enable physician diagnosis. See Third Amended Compl. ¶¶29, 33, ECF No. 90 (hereinafter “TAC”). In general, four different types of arrhythmia monitoring devices may be used for EKG testing: (1) Ambulatory holter electrocardiography devices (also known as Holter monitors), (2) ambulatory event monitors, (3) insertable monitors, and' (4) telemetry monitors (also known as MCOT devices). See id.

According to Plaintiff LifeWatch Services, Inc. (“LifeWatch”), MCOT devices offer several advantages over other types of arrhythmia monitoring devices, including an ability to “record both normal and abnormal heart activity ... and ... transmit all of the data promptly,” “store all of the cardiac data during the time when the patient wears the monitor, resulting in more'data collection,” and “detect certain arrhythmias based on user-definable input formulae.” Id. ¶ 33(a)-(c). Additionally,' MCOT devices “do[] not require a patient’s intervention to either capture or transmit data on an arrhythmia,” and thus “the time from recording to transmission and subsequent physician notification and intervention is significantly reduced” as compared to other devices. Id. ¶ 33(d)-(e). These features arguably make telemetry superior to all other types of' monitoring, particularly for low-risk patients experiencing infrequent arrhythmias. Id. ¶ 34(c),

B. The Parties

LifeWatch, a Delaware corporation headquartered in Rosemont, Illinois, is “one of the two largest sellers of telemetry monitors.” Id. ¶ 11. Their specific product at issue in this cáse, originally marketed as the “Lifestar Ambulatory Cardiac Telemetry” and later renamed the “LifeWatch MCT 3-Lead,” is referred to by the parties as “ACT.” Id. LifeWatch has two patient-monitoring facilities for .privately insured patients, one in Philadelphia and the other near Chicago, from which “Life-Watch personnel'analyze data transmitted from LifeWatch’s devices, which are mostly ACT devices,” Id.

Blue Cross and Blue Shield Association (the “Association”) is a national federation of thirty-six health insurance plans (the “Blue Plans”) that, though each separately owned, are all licensed by-the Association to use the Blue Cross, name. Id. ¶ 1. The Association is the largest commercial health insurer in the United States. Id. ¶ 3. It provides insurance coverage to approximately 105 million Americans, or roughly fifty percent of all commercially insured individuals in the United States. Id. ¶ 12. In. addition to the Association, Defendants in this case include the following parties, all of which are administrators of various Blue Plans: Blue Cross; WellPoint, Inc.; Horizon Blue Cross Blue Shield of New Jersey; Blue Cross Blue Shield of South Carolina; and Blue Cross Blue Shield of Minnesota (collectively with the Association, “Defendants”).1 Id. ¶¶ 13-16.

[643]*643C. Allegations

The thrust of LifeWatch’s complaint is that, despite ample scientific evidence supporting the efficacy of telemetry, Defendants have continuously conspired for years to deny insurance coverage for MOOT devices and services. See id. ¶¶ 5-8, 46-. LifeWatch alleges that “[tjhere is a reason why,- for more than a decade, almost all Blue Plans have uniformly held, year after year, that for all patients and all conditions, telemetry is never ‘medically necessary,”’ despite evidence to the contrary. Id ¶ 56. This reason, according to LifeWatch, is “a horizontal anticompetitive agreement” they refer to as “the Blue Cross ‘Uniformity Rule.’ ” Id.

LifeWatch claims that the “Uniformity Rule” is .an illegal agreement amongst Blue Plans to substantially conform to the terms of a model medical policy providing “directions ... on what claims to deny and what to accept.” Id. ¶ 57. These terms are allegedly set by a “Medical Policy Panel” that meets several times, a year and considers votes by each Blue Plan “as to whether a particular service, procedure, or medical device should be covered.” Id ¶59. LifeWatch alleges that “all Blue Plans agree to adopt all or substantially all of the Association’s coverage decisions, as expressed in the model ‘medical policy,’ ” and that, “[t]o enforce the Uniformity Rule, the Association ‘audits’ each Blue Plan’s medical policies.” Id ¶58. According to LifeWatch, “[i]f an audit finds substantial deviations from the model medical policy,, the Blue Plan can be penalized and risks losing the right to use the Blue Cross name.” Id.

Specifically with regard to MOOT devices, LifeWatch alleges that Defendants “have repeatedly voted on the model medical policy that requires blanket denial of telemetry coverage.” Id. ¶ 60. LifeWatch argues that “this policy is inconsistent with the medical literature; the opinions of the independent experts who specifically rejected [Defendants’] position; and the conclusions of other commercial medical insurers, Medicare; and Medicaid.”2 Id. ¶ 61. In light of this alleged inconsistency, Life-Watch believes that the Blue Plans have continuously denied coverage for MOOT devices “not because of an independent evaluation of the evidence, but pursuant to their horizontal agreement to make consistent coverage denials and refuse to deal in disfavored products, such as telemetry.” Id. '

LifeWatch claims that, as a direct result of Defendants’ “concerted refusal to deal,” LifeWatch “suffers reduced revenue and profits and sees its incentive to innovate diminished.” Id. ¶ 68. LifeWatch alleges further that Defendant has “distorted the outpatient cardiac-monitoring device market and substantially reduced the demand for and output of telemetry.” Id .¶ 87. This distortion, LifeWatch argues, causes anti-competitive effects, including reduction , in the quality of patients’ cardiac monitoring; [644]*644deprivation of the benefit to patients of quality competition; reduction of the output of MOOT services in the relevant markets; and inhibition of research and development, innovation, and future competition to improve the quality of MOOT services. See id. ¶¶ 75-80.

Based on the foregoing facts, LifeWatch brings a single count of conspiracy to restrain trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Id. ¶ 95. Life-Watch seeks a permanent injunction prohibiting Defendants from “entering into, or honoring or enforcing, any agreements that cause them to act in concert in deciding whether to deny or restrict coverage for telemetry” along with treble damages, reasonable costs, and attorneys’ fees. Id. ¶ 98.

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Cite This Page — Counsel Stack

Bluebook (online)
248 F. Supp. 3d 641, 2017 WL 1230824, 2017 U.S. Dist. LEXIS 50176, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lifewatch-services-inc-v-highmark-inc-paed-2017.