Doctors must accept arbitration in Missouri price-fixing case
A Missouri court of appeals dealt a setback to hundreds of Kansas City-area physicians in their antitrust fight against some of the nation's largest health plans over their payment practices.
The court ruled unanimously that the doctors are required to arbitrate, not litigate, their claims that BlueCross BlueShield of Kansas City and... UnitedHealthcare conspired to hold down physician rates in the area.
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Kansas City Urology Care, Midwest Neurosurgery Associates, Kansas City Ob-gyn Physicians and four other physician practices argued that although the arbitration clauses in their contracts generally covered individual payment quarrels, they did not apply in the case of anticompetitive conduct.
The Western District of the Missouri Court of Appeals disagreed.
In a July opinion, judges found the arbitration provisions broad enough to cover "any dispute that [physicians] had with Blue Cross and UnitedHealthcare, even if the dispute did not involve the contract." The court said the underlying payment contracts were central to the doctors' antitrust claim and that it was unlikely they could prove their case without referring to the agreements specifically covered by the arbitration clauses.
The physicians have no plans to appeal, said their attorney, Robert Horn. The decision sends the class-action suit to arbitration to address the underlying price-fixing claims. No dates for proceedings have been set.
Market power
Doctors fear that the ruling leaves them with little remedy to challenge large insurers over low fees and gives health plans more leverage in contract negotiations.
The arbitration process can be more expensive and burdensome than going to court, particularly in large cases, said Jeffrey S. Howell, general counsel to the Missouri State Medical Assn. "This type of decision gives health plans the ability to use broad [arbitration] clauses in their contracts when they already have so much more bargaining power than physicians do," Howell said. The state medical association, along with the Litigation Center of the American Medical Assn. and State Medical Societies, are monitoring the case.
United and the Blues have a combined market share of approximately 50% in the Kansas City region, according to the MSMA. In their complaint, Kansas City-area doctors alleged that they were paid as much as 30% less than physicians in surrounding cities.
"These are pretty much take-it-or-leave-it contracts," Horn said. Those doctors who didn't contract with one plan or the other and treated Blues or United patients out of network still were forced to accept the insurer's rates, he added.
BlueCross BlueShield of Kansas City denied the price-fixing claims and praised the decision.
"Exploring and resolving differences through arbitration offers a fair and efficient process for all involved," BlueCross spokeswoman Susan M. Johnson said.
United spokesman Greg Thompson declined to comment on the pending case.
The appeals court reversed a 2006 trial court ruling in the doctors' favor.
Jackson County Circuit Judge Charles E. Atwell at that time acknowledged the broad scope of the arbitration clauses. But enforcing such agreements "would be tantamount to granting immunity to these defendants regarding any kind of claim touching upon conspiracy or relief as part of a class action," the 2006 opinion states.
Atwell also pointed to a 2006 Ohio Supreme Court decision allowing a similar physician antitrust case to go forward. Judges in Academy of Medicine of Cincinnati v. Aetna determined that the alleged conspiracy claims could be pursued independent of the physician payment agreements that were covered by arbitration clauses.
The Missouri appeals court rejected that analysis. "Under federal law, arbitrability of a claim does not turn on whether or not the claim can be maintained without referring to the underlying contract, but on whether or not the arbitration clause's scope is broad," Judge Paul M. Spinden wrote. "The physicians assert that they have suffered damages as a result of the conspiracy, which they would not have suffered had they not agreed to the reimbursement contracts."
The appeals court also said its ruling did not affect noncontracted doctors.
The court ruled unanimously that the doctors are required to arbitrate, not litigate, their claims that BlueCross BlueShield of Kansas City and... UnitedHealthcare conspired to hold down physician rates in the area.
* Discuss on SermoDiscuss on Sermo
* Case at a glance
* See related content
* Region: Midwest
* E-mail - Print - Write a letter
Kansas City Urology Care, Midwest Neurosurgery Associates, Kansas City Ob-gyn Physicians and four other physician practices argued that although the arbitration clauses in their contracts generally covered individual payment quarrels, they did not apply in the case of anticompetitive conduct.
The Western District of the Missouri Court of Appeals disagreed.
In a July opinion, judges found the arbitration provisions broad enough to cover "any dispute that [physicians] had with Blue Cross and UnitedHealthcare, even if the dispute did not involve the contract." The court said the underlying payment contracts were central to the doctors' antitrust claim and that it was unlikely they could prove their case without referring to the agreements specifically covered by the arbitration clauses.
The physicians have no plans to appeal, said their attorney, Robert Horn. The decision sends the class-action suit to arbitration to address the underlying price-fixing claims. No dates for proceedings have been set.
Market power
Doctors fear that the ruling leaves them with little remedy to challenge large insurers over low fees and gives health plans more leverage in contract negotiations.
The arbitration process can be more expensive and burdensome than going to court, particularly in large cases, said Jeffrey S. Howell, general counsel to the Missouri State Medical Assn. "This type of decision gives health plans the ability to use broad [arbitration] clauses in their contracts when they already have so much more bargaining power than physicians do," Howell said. The state medical association, along with the Litigation Center of the American Medical Assn. and State Medical Societies, are monitoring the case.
United and the Blues have a combined market share of approximately 50% in the Kansas City region, according to the MSMA. In their complaint, Kansas City-area doctors alleged that they were paid as much as 30% less than physicians in surrounding cities.
"These are pretty much take-it-or-leave-it contracts," Horn said. Those doctors who didn't contract with one plan or the other and treated Blues or United patients out of network still were forced to accept the insurer's rates, he added.
BlueCross BlueShield of Kansas City denied the price-fixing claims and praised the decision.
"Exploring and resolving differences through arbitration offers a fair and efficient process for all involved," BlueCross spokeswoman Susan M. Johnson said.
United spokesman Greg Thompson declined to comment on the pending case.
The appeals court reversed a 2006 trial court ruling in the doctors' favor.
Jackson County Circuit Judge Charles E. Atwell at that time acknowledged the broad scope of the arbitration clauses. But enforcing such agreements "would be tantamount to granting immunity to these defendants regarding any kind of claim touching upon conspiracy or relief as part of a class action," the 2006 opinion states.
Atwell also pointed to a 2006 Ohio Supreme Court decision allowing a similar physician antitrust case to go forward. Judges in Academy of Medicine of Cincinnati v. Aetna determined that the alleged conspiracy claims could be pursued independent of the physician payment agreements that were covered by arbitration clauses.
The Missouri appeals court rejected that analysis. "Under federal law, arbitrability of a claim does not turn on whether or not the claim can be maintained without referring to the underlying contract, but on whether or not the arbitration clause's scope is broad," Judge Paul M. Spinden wrote. "The physicians assert that they have suffered damages as a result of the conspiracy, which they would not have suffered had they not agreed to the reimbursement contracts."
The appeals court also said its ruling did not affect noncontracted doctors.