AAI Asks Supreme Court for Common Sense Limits on Antitrust Exemptions for Local Hospital Monopolies (Benitez v. Charlotte-Mecklenburg Hospital Authority)

AAI has joined with 33 antitrust and health policy scholars in urging the U.S. Supreme Court to grant certiorari to overturn a 4th Circuit decision applying an antitrust exemption for “local government” to a multi-state, multi-billion dollar hospital system accused of antitrust violations by the U.S. and North Carolina Departments of Justice.

In Benitez v. The Charlotte-Mecklenburg Hospital Authority, the plaintiffs sought to recover damages from the Charlotte-Mecklenburg Hospital Authority, doing business as Atrium Health (“Atrium”), for allegedly imposing illegal “anti-steering” provisions in insurer contracts that prevent insurers from encouraging patients to seek treatment at more affordable hospitals.  After the DOJ successfully obtained a consent decree prohibiting Atrium’s use of anti-steering provisions, Atrium argued that it was immune from private damages caused by the anti-steering provisions under the Local Government Antitrust Act of 1984 (LGAA), which shields local governments from private damages for antitrust suits.  Notwithstanding that Atrium is a multi-billion-dollar commercial market participant that operates throughout North Carolina and in neighboring states, with annual revenue several times larger than the entire City of Charlotte, the district court held that it was covered by the LGAA as a “special function governmental unit” akin to a local school district or sanitary district, and the Fourth Circuit affirmed.

In their brief in support of certiorari, AAI and 33 antitrust and health policy scholars argue that the Fourth Circuit’s ruling is inconsistent with the Supreme Court’s state-action jurisprudence, which recognizes that immunities from the antitrust laws are disfavored and delegations of government authority to private market participants are viewed skeptically.  Both the plain meaning of LGAA’s text and clear congressional intent suggest the statute was intended to be interpreted in line with the state-action doctrine and not to be automatically extended to non-local market participants.  The brief also emphasizes the well-documented costs associated with declining competition and increasing concentration in local and regional hospital markets throughout the United States, and the risks that the Fourth Circuit opinion creates a playbook for dominant hospitals to evade financial responsibility for antitrust violations and undermine the goals of the Clayton and Sherman Acts.

The brief was written by Jamie Crooks and Alison Newman of Fairmark Partners, LLP, with assistance from AAI Vice President of Legal Advocacy Randy Stutz, AAI Vice President of Policy Laura Alexander, and AAI Advisory Board Member Barak Richman, who is the Edgar P. and Elizabeth C. Bartlett Professor of Law and Business Administration at Duke University School of Law.