Bristow Endeavor Healthcare, LLC v. Blue Cross & Blue Shield Ass'n

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT May 31, 2017
_________________________________
Elisabeth A. Shumaker
Clerk of Court
BRISTOW ENDEAVOR HEALTHCARE,
LLC,
Plaintiff - Appellant,
v. No. 16-5149
(D.C. No. 4:16-CV-00057-CVE-PJC)
BLUE CROSS AND BLUE SHIELD (N.D. Okla.)
ASSOCIATION; HEALTH CARE
SERVICE CORPORATION,
Defendants - Appellees,
and
AHS HILLCREST HEALTHCARE
SYSTEM, LLC; AHS HILLCREST
MEDICAL CENTER, LLC; AHS
MEDICAL HOLDINGS LLC; ARDENT
HEALTH PARTNERS, LLC; ARDENT
MEDICAL SERVICES, INC.,
Defendants.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before LUCERO, McKAY, and HARTZ, Circuit Judges.
_________________________________
Bristow Endeavor Healthcare, LLC, (“Bristow”) appeals a district court order
granting motions to dismiss filed by Blue Cross and Blue Shield Association
*
This order and judgment is not binding precedent, except under the doctrines
of law of the case, res judicata, and collateral estoppel. It may be cited, however, for
its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
(“BCBSA”) and Health Care Service Corporation (“HCSC”). Exercising jurisdiction
under 28 U.S.C. § 1291, we affirm.
I
Bristow is a healthcare company that operates three facilities in northeast
Oklahoma: Bristow Medical Center (“BMC”), Cimarron Healthcare Center
(“Cimarron”), and the Center for Orthopaedic Reconstruction and Excellence
(“CORE”). BCBSA is a federation of independent Blue Cross and Blue Shield
companies, including HCSC, which does business as Blue Cross Blue Shield of
Oklahoma. Bristow alleges that HCSC exercises market dominance in the northeast
Oklahoma market, with at least 64% of the market for health insurers.
BMC is an in-network provider with HCSC. In-network providers receive
contractually set payments for healthcare services offered to individuals with HCSC
plans. In 2013, Bristow requested that Cimarron be added to the existing in-network
provider agreement with BMC. Following negotiations, the parties agreed to add
Cimarron and adopt a blended rate for reimbursement payments to both facilities. In
March 2014, Bristow and HCSC executed a BlueTraditional Network Participating
Hospital Agreement (the “Provider Agreement”), which applied to both BMC and
Cimarron. Bristow states that it had an “implicit understanding” that the Provider
Agreement would also include all future Bristow entities. However, the Provider
Agreement specifically states that additional entities may be added only with the
consent of HCSC.
2
In March 2015, Bristow requested that HCSC add Bristow’s new facility,
CORE, to the Provider Agreement. HCSC sent Bristow a credentialing application
for CORE. After requesting additional information, HCSC informed Bristow that it
would not agree to add CORE to the Provider Agreement, but it offered to enter into
a separate agreement with the facility. The parties continued discussions through
December 2015 but did not reach an agreement.
Bristow alleges that HCSC refused to grant CORE in-network status as a result
of a conspiracy to restrain trade with Hillcrest Healthcare System (“Hillcrest”) and
Ardent Health Services (“Ardent”). Hillcrest operates several healthcare facilities in
northeast Oklahoma and is Bristow’s largest competitor. Ardent owns Hillcrest.
Bristow alleges that Hillcrest and its affiliated companies exercise market dominance
in the northeast Oklahoma market. But Bristow merely characterizes Hillcrest’s
market share as “high” without any particular factual allegations. Bristow also
alleges that HCSC reimburses Hillcrest at higher rates than those offered to BMC and
Cimarron. It claims that the purpose of the conspiracy is to prevent CORE from fully
competing with Hillcrest in the northeast Oklahoma healthcare market, thereby
allowing Hillcrest to maintain and expand its market share in that area.
In support of its conspiracy claim, Bristow alleges that representatives of Tulsa
Spine & Specialty Hospital (“Tulsa Spine”), a Hillcrest facility, met with
representatives of Hillcrest and Ardent on a weekly basis between 2011 and 2015 to
“discuss affairs, including CORE.” In the summer of 2014, Tulsa Spine hired a
private investigator to look into individuals involved in the start-up of CORE.
3
Bristow further alleges, on information and belief, that HCSC participated in some of
these meetings and related phone calls, during which it discussed ways to prevent
CORE from becoming an in-network provider.
Bristow provides two particular allegations in support of its claim of
conspiracy. First, it alleges, on information and belief, that a “representative of Blue
Cross Blue Shield”1 told a Bristow representative CORE was being denied a contract
for “CORE’s own protection” and that “if Hillcrest tried to open a facility in Bristow,
we [Blue Cross Blue Shield] would ‘protect you [Bristow].’”2 Second, Bristow
claims that sometime between December 2014 and January 2015, Eddie Gwock, an
Ardent representative, told Tulsa Spine that “he could leverage his relationship with
Blue Cross Blue Shield to keep CORE out of the network.” Gwock “also reported
that he spoke with Blue Cross Blue Shield, and in connection with the ‘strategic
initiative’ between Blue Cross Blue Shield, [Ardent, and Hillcrest], Blue Cross Blue
Shield would be able to keep CORE out of network.”
Bristow filed suit against HCSC, BCBSA, Ardent, Hillcrest, and related
entities advancing four claims: (1) violation of § 1 of the Sherman Act, 15 U.S.C
§ 1; (2) state law conspiracy in violation of Okla. Stat. tit. 79, § 203(A); (3) attempt
to monopolize in violation of Okla. Stat. tit. 79, § 203(B); and (4) tortious
interference with business relations. The district court granted motions to dismiss
1
In the complaint, Bristow uses “Blue Cross Blue Shield” to refer collectively
to HCSC and BCBSA.
2
BMC is located in Bristow, Oklahoma.
4
filed by HCSC and BCBSA. Bristow then voluntarily dismissed its claims against
the remaining defendants with prejudice and filed a timely appeal.
II
We review a Fed. R. Civ. P. 12(b)(6) dismissal de novo, accepting as true all
well-pled factual allegations in the complaint and viewing them in the light most
favorable to the plaintiff. Smith v. United States, 561 F.3d 1090, 1098 (10th Cir.
2009). “To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). A claim is facially plausible if the plaintiff has pled
“factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. A complaint that “tenders naked
assertions devoid of further factual enhancement” is insufficient. Id. (quotations and
alteration omitted). Further, if a complaint alleges “facts that are merely consistent
with a defendant’s liability, it stops short of the line between possibility and
plausibility of entitlement to relief.” Id. (quotations omitted).
A
Section 1 of the Sherman Act makes it illegal to engage in a “conspiracy[ ] in
restraint of trade or commerce.” 15 U.S.C. § 1. The Act “does not prohibit [all]
unreasonable restraints of trade . . . but only restraints effected by a contract,
combination, or conspiracy.” Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752,
775 (1984). The “crucial question is whether the challenged anticompetitive conduct
5
stems from independent decision or from an agreement, tacit or express.” Twombly,
550 U.S. at 553 (quotations and alteration omitted). To prevail on a § 1 claim, a
plaintiff “must include evidence tending to exclude the possibility of independent
action.” Id. at 554. A “naked assertion of conspiracy in a § 1 complaint . . . gets the
complaint close to stating a claim, but without some further factual enhancement it
stops short of the line between possibility and plausibility.” Id. at 557.
When a defendant asserts complex claims against multiple defendants, it is
“particularly important” to “make clear exactly who is alleged to have done what to
whom, to provide each individual with fair notice as to the basis of the claims against
him or her, as distinguished from collective allegations.” Kan. Penn Gaming, LLC v.
Collins, 656 F.3d 1210, 1215 (10th Cir. 2011) (emphases omitted). “The Twombly
Court was particularly critical of complaints that mentioned no specific time, place,
or person involved in the alleged conspiracies.” Robbins v. Okla. ex rel. Dep’t of
Human Servs., 519 F.3d 1242, 1248 (10th Cir. 2008) (quotation omitted).
Although it is a reasonably close question, we agree with the district court that
the complaint does not plausibly allege a conspiracy with respect to HCSC and
BCBSA. An inference of conspiracy is impermissible if the defendants “had no
rational economic motive to conspire, and if their conduct is consistent with other,
equally plausible explanations.” Matsushita Elec. Indus., Co. v. Zenith Radio Corp.,
475 U.S. 574, 596 (1986). As the district court explained, Hillcrest and Ardent may
have been motivated to undermine Bristow as a direct competitor, but HCSC—a
purchaser of healthcare services—would be acting directly against its own interest if
6
it agreed to reduce competition in the healthcare provider market, particularly in light
of Bristow’s allegation that HCSC pays Hillcrest higher reimbursement rates.
The complaint does not advance any reason HCSC would agree to act against
its self-interest and it does not identify any benefit that HCSC obtained from Hillcrest
or Ardent as part of the alleged conspiracy. A complaint is insufficient if the alleged
“behavior was as likely to have been the result of legal, unilateral action as the
product of illicit collusion.” Kan. Penn Gaming, 656 F.3d at 1214; see also
Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761 (1984) (noting that a
company “generally has a right to deal, or refuse to deal, with whomever it likes, as
long as it does so independently”). On appeal, Bristow suggests that HCSC acted at
the behest of Hillcrest because it needed to maintain Hillcrest’s business. But the
complaint does not contain any particularized allegations permitting an inference that
Hillcrest possessed market power such that it could compel HCSC to act against its
own interest. See Buccaneer Energy (USA) Inc. v. Gunnison Energy Corp., 846 F.3d
1297, 1312 (10th Cir. 2017) (a plaintiff can show market power by “pointing to the
defendant’s share of the relevant market and perhaps barriers to entry” (quotation and
alteration omitted)).
Bristow relies heavily on the statements attributed to Gwock. Although those
statements make a conspiracy possible, we agree with the district court that they are
insufficient. Gwock claimed that he could leverage his relationship with HCSC to
keep CORE out of network, and he later reported that CORE would indeed not join
the HCSC network. But there are no allegations detailing who Gwock dealt with at
7
HCSC, what was agreed to, or why HCSC agreed to harm itself. In light of HCSC’s
rational economic motives not to engage in this type of agreement, we think such
particularity is necessary. See Matsushita Elec. Indus., 475 U.S. at 596-97.
In addition to Gwock’s statement, Bristow highlights the comments of an
unidentified representative of either HCSC or BCBSA, who stated that CORE was
denied in-network status for its “own protection” and indicated that Bristow would
similarly be protected if Hillcrest attempted to open a facility in areas where Bristow
operates. Assuming that these statements evince a preference by HCSC to limit its
network by geographical sub-regions, it does not suggest coordination between
HCSC and Hillcrest. To the contrary, the unidentified representative apparently
offered to “protect” Bristow unilaterally, without any proposed agreement with
Bristow. If HCSC was willing to take unilateral action to “protect” Bristow, it may
well have done so with respect to Hillcrest. See Twombly, 550 U.S. at 554 (a
plaintiff “must include evidence tending to exclude the possibility of independent
action”). Absent plausible allegations that HCSC or BCBSA conspired to restrain
trade, Bristow’s § 1 Sherman Act and state law conspiracy claims were properly
dismissed.3
3
The district court concluded Bristow’s state law conspiracy claim failed for
the same reasons as its Sherman Act claim. Bristow does not contest that conclusion
on appeal. See Green Country Food Mkt., Inc. v. Bottling Grp., LLC, 371 F.3d 1275,
1281 (10th Cir. 2004) (“The Oklahoma Antitrust Reform Act is construed in
accordance with federal antitrust law.”); see also Okla. Stat. tit. 79, § 212 (“The
provisions of this act shall be interpreted in a manner consistent with Federal
Antitrust Law 15 U.S.C., Section 1 et seq. . . . .”).
8
B
Under Oklahoma law, “[i]t is unlawful for any person to monopolize, attempt
to monopolize, or conspire to monopolize any part of trade or commerce.” Okla.
Stat. tit. 79, § 203(B). Bristow asserts a claim for attempted monopolization, which
requires proof of: “(1) relevant market (including geographic market and relevant
product market); (2) dangerous probability of success in monopolizing the relevant
market; (3) specific intent to monopolize; and (4) conduct in furtherance of such an
attempt.” TV Commc’ns Network, Inc. v. Turner Network Television, Inc., 964 F.2d
1022, 1025 (10th Cir. 1992).
In its complaint, Bristow alleges that Hillcrest and Ardent, with the assistance
of HCSC and BCBSA “are attempting to monopolize or conspiring to monopolize the
market for inpatient and outpatient healthcare services in the Northeast
Oklahoma/Tulsa area.” Bristow cites to the allegation that HCSC has a 64% share of
the health insurance market in northeast Oklahoma, but the complaint does not allege
attempted monopolization of the health insurance market. Instead, it alleges
attempted monopolization of the market to deliver healthcare services to patients.
And although the complaint summarily asserts that Hillcrest “exercises market
dominance,” it does not contain any well-pled allegations to support that assertion.
See Iqbal, 556 U.S. at 678 (holding “naked assertions devoid of further factual
enhancement” are insufficient (quotations and alteration omitted)). Accordingly the
complaint fails to plausibly allege a dangerous probability that the healthcare market
in northeast Oklahoma would be monopolized.
9
Bristow also suggests that HCSC, as a purchaser of healthcare services, may
be exercising monopsony buying power. But we agree with the district court that this
monopsony theory was not fairly pled in the complaint. See Maldonado v. City of
Altus, 433 F.3d 1294, 1314 (10th Cir. 2006) (declining to consider a theory that did
not appear in the complaint), overruled on other grounds as recognized by Metzler v.
Fed. Home Loan Bank of Topeka, 464 F.3d 1164, 1171 n.2 (10th Cir. 2006).
C
Lastly, Bristow appeals the dismissal of its claim for tortious interference with
a business relation. To prevail on such a claim, a plaintiff must show:
“1) interference with a business or contractual right; 2) malicious and wrongful
interference that is neither justified, privileged, nor excusable; and 3) damage
proximately sustained as a result of the interference.” Tuffy’s, Inc. v. City of Okla.
City, 212 P.3d 1158, 1165 (Okla. 2009).
The complaint alleges that Bristow, BMC, Cimarron, and CORE “all had
business and contractual rights,” and that through tortious conduct “described at
length therein, the Defendants have interfered with said business and contractual
rights.” We agree with the district court that this claim presents nothing more than “a
formulaic recitation of the elements of a cause of action,” which the Court rejected in
Iqbal. 556 U.S. at 678. It does not identify what contracts or relationships HCSC or
BCBSA might have harmed, and accordingly does not provide those parties with
sufficient notice to defend against this claim.
10
III
For the foregoing reasons, the judgment of the district court is AFFIRMED.
Entered for the Court
Carlos F. Lucero
Circuit Judge
11