Court tosses NorthBay's antitrust suit against Kaiser once and for all

Kaiser Permanente
In a final judgement, a Northern California district judge said NorthBay couldn't cite examples of patient steering. (Ted Eytan/CC BY-SA 2.0)

A Northern California district court has once again dismissed an antitrust complaint against Kaiser Permanente, ruling the Bay Area health system had not sufficiently justified allegations of patient steering.

This week's ruling, by U.S. District Judge Laurel Beeler, marks the third time the court has dismissed claims brought by NorthBay Healthcare against the Kaiser Foundation Health Plan. After allowing NorthBay to amend its original complaint twice, the judge tossed the case for good, ruling that the complaint "fails to plead that NorthBay suffered antitrust injury, an essential element of its antitrust claims."

"Given that NorthBay has had three chances to plead an antitrust claim and has three times failed to do so, the court holds that further amendment would be futile," the court said in its ruling (PDF).

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Although Kaiser Foundation Health Plan, Kaiser Foundation Hospitals and Permanente Medical Group all operate under the brand "Kaiser Permanente," they are separate legal entities and are therefore not technically vertically integrated. Still, NorthBay alleged that Kaiser facilities improperly coordinated to steer trauma patients with Kaiser insurance away from NorthBay facilities and instead directed uninsured patients to the Bay Area health system.

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NorthBay also alleged Kaiser transferred acute care patients between Kaiser hospitals even when NorthBay hospitals were closer and had more openings. 

However, the court noted that for each of these allegations, NorthBay could only cite at most one patient case, and sometimes provided no examples at all. 

NorthBay also complained that Kaiser had terminated a 2010 agreement that guaranteed payment rates for services provided by NorthBay—since then, it received reimbursement rates from Kaiser health insurance at less than half the previous rate. 

While that is understandably frustrating, the court said that rate reduction is not unlawful.

"Antitrust injury has four essential elements—'(1) unlawful conduct, (2) causing an injury to the plaintiff, (3) that flows from that which makes the conduct unlawful, … and (4) that is of the type the antitrust laws were intended to prevent,'" the court explained. "'Plaintiffs sometimes forget that the antitrust injury analysis must begin with the identification of the defendant's specific unlawful conduct,'" the court continued, citing a previous case.

In response to the dismissal, NorthBay said it continues to believe it has a strong case and plans to continue its legal battle in a different court.

"The Court’s order ignored NorthBay Healthcare’s well-pleaded allegations and it improperly drew inferences in favor of the Kaiser defendants," said Steve Huddleston, NorthBay's vice president of public affairs, in a statement emailed to FierceHealthcare. "In that regard, NorthBay will appeal the dismissal order and we look forward to presenting its case on the merits."

Meanwhile, Kaiser told FierceHealthcare it was glad the court had vindicated its reimbursement policy.

"We are very pleased that, for the third and final time, the court granted our motion to dismiss the baseless claims made by NorthBay Healthcare. Kaiser Permanente is committed to affordable health care and that includes paying a fair and reasonable rate for emergency services provided to our members by other hospitals, consistent with California law," Vincent Staupe, spokesperson for Kaiser, said in an email.

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