LIFEWATCH SERVICES, INC. v. HIGHMARK, INC. et al

Filing 112

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE EDUARDO C. ROBRENO ON 04/03/2017. 04/03/2017 ENTERED AND COPIES E-MAILED.(nds)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
LIFEWATCH SERVICES, INC.,
Plaintiff,
v.
HIGHMARK, INC., et al.,
Defendants.

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CIVIL ACTION
NO. 12-5146

M E M O R A N D U M
EDUARDO C. ROBRENO, J.

April 3, 2017

This is an antitrust action alleging a nationwide
conspiracy amongst Blue Cross and Blue Shield Association and
the administrators of several separately owned, locally operated
Blue Cross and Blue Shield Plans to deny insurance coverage for
certain mobile cardiac outpatient telemetry devices produced by
Plaintiff LifeWatch 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 Telemetry
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).
2

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 case, 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
“LifeWatch 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;

3

Blue Cross Blue Shield of South Carolina; and Blue Cross Blue
Shield of Minnesota (collectively with the Association,
“Defendants”).1 Id. ¶¶ 13-16.
C.

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 MCOT devices and services. See id. ¶¶ 58, 46. LifeWatch alleges that “[t]here 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
1

Former Defendant Highmark, Inc. was dismissed from
this action on June 9, 2016, following its settlement of all
claims with LifeWatch. See ECF Nos. 96, 98. LifeWatch has not
sued any other administrators in this case, but it notes that
“[u]nsued co-conspirators include other Blue Plans.” TAC ¶ 18.
4

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 MCOT 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

2

Id. ¶ 61. In light of this

LifeWatch cites numerous published studies supporting
its claims that “there is reliable evidence that telemetry is
superior to event monitoring technology and that telemetry
provides more effective detection of infrequent cardiac
arrhythmias than other monitoring devices.” Id. ¶ 36 (internal
quotation marks omitted); see also id. ¶¶ 35, 37-41, 45
(summarizing specific scientific reports on telemetry).
LifeWatch also cites a 2010 American Heart Association
5

alleged inconsistency, LifeWatch believes that the Blue Plans
have continuously denied coverage for MCOT 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. ¶ 63. 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
anticompetitive effects, including reduction in the quality of
patients’ cardiac monitoring; deprivation of the benefit to
patients of quality competition; reduction of the output of MCOT
services in the relevant markets; and inhibition of research and
development, innovation, and future competition to improve the
quality of MCOT services. See id. ¶¶ 75-80.

literature review of available outpatient cardiac-monitoring
devices, including a decision tree for physicians showing that
“telemetry is the only choice for one palpitation situation and
one syncope situation and is a preferred choice for two other
situations.” Id. ¶ 42; see also id. ¶ 43 (further explaining the
recommendations in the 2010 American Heart Association
literature review).
6

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. LifeWatch
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.
II.

PROCEDURAL HISTORY
The motion presently before the Court arrived along a

circuitous route. LifeWatch filed its initial complaint in this
Court on September 10, 2012. ECF No. 1. It was not until August
6, 2015, that Defendants filed a motion to dismiss under Federal
Rule of Civil Procedure 12(b)(6).3 ECF No. 48. After the parties

3

In the interim period, the case was transferred into
and then back out of a multidistrict litigation (“MDL”). On
November 9, 2012, Defendant Blue Cross notified the Court that
it had filed a Notice of Related Action tagging this action as
related to certain cases pending transfer to create an MDL
styled as In re Blue Cross & Blue Shield Antitrust Litig., MDL2406. ECF No. 32. Subsequently, on December 13, 2012, the
Judicial Panel on Multidistrict Litigation (the “Panel”) issued
a conditional order transferring this case to an MDL in the
Northern District of Alabama. See ECF No. 34 at 2. As a result,
on December 20, 2012, the Court approved a stipulation for
temporary stay of proceedings in this case. Id. On February 13,
2013, the Court approved and signed a second stipulation by the
parties to continue the temporary stay. ECF No. 43.
LifeWatch initially opposed transfer and moved to
vacate the conditional transfer order, arguing that this action
7

stipulated to several extensions, LifeWatch filed its response
to the motion to dismiss on September 24, 2015, ECF No. 61, and
Defendants moved for leave to file a reply brief in further
support of their motion to dismiss, ECF No. 64.
During late 2015 and early 2016, the Court entertained
a series of motions regarding a request by Plaintiff’s former
counsel to withdraw from the case. See ECF Nos. 69-85. These
proceedings, which included a hearing held on November 3, 2015,
ECF No. 77, ultimately resulted in the substitution of new
counsel for Plaintiff, who filed an unopposed motion for leave
to file a third amended complaint on February 16, 2016, ECF No.
87. The Court granted LifeWatch leave to file a third amended
complaint on February 17, 2016.4 ECF No. 89.
LifeWatch filed its third amended complaint on
February 25, 2016, ECF No. 90, and it is this complaint that
differs from the other centralized actions in that it focuses on
an alleged conspiracy to deny insurance coverage for certain
life-saving medical technologies, whereas the conspiracy alleged
in the MDL proceedings dealt with the allegedly improper
allocation of insurance markets. See ECF No. 46. The Panel was
not persuaded by this argument and found instead that this case
would benefit from the framework provided by the centralized
proceedings for discovery and motion practice. See id.
Accordingly, the Panel issued a transfer order on April 1, 2013.
See id. ECF No. 46. On July 7, 2015, pursuant to the advisement
of the transferee court, the Panel issued a conditional remand
order, thereby sending the case back to this Court. ECF No. 47.
The case was formally reopened that same day.
4

On February 17, 2016, the Court denied as moot both
the motion to dismiss and motion for leave to file a reply
brief. ECF No. 88.
8

Defendants now seek to dismiss.5 The Court held a hearing on the
motion on December 19, 2016, ECF No. 110, and grants that motion
today.
III. MOTION TO DISMISS
Defendants provide four independent reasons why the
Court should dismiss LifeWatch’s third amended complaint under
Rule 12(b)(6): first, LifeWatch “lacks antitrust standing”;
second, “there are no direct factual allegations of an
agreement”; third, “LifeWatch has not alleged the
anticompetitive effects in a relevant product and geographic
market necessary to state a claim under the Sherman Act”; and,
finally, “Blue [P]lans’ telemetry monitor insurance coverage
decisions are immune from antitrust challenge under the
McCarran-Ferguson Act.” Mot. Dismiss. at 2-3, ECF No. 95; see
also Mot. Dismiss Mem. at 9, ECF No. 95-2.
A.

Legal Standard
A party may move to dismiss a complaint for failure to

state a claim upon which relief can be granted. Fed. R. Civ. P.
12(b)(6). When considering such a motion, the Court must “accept
as true all allegations in the complaint and all reasonable

5

After being granted an extension, Defendants timely
filed a motion to dismiss the third amended complaint on May 31,
2016. ECF No. 95. On June 30, 2016, LifeWatch filed a response
in opposition to Defendants’ motion to dismiss. ECF No. 100.
9

inferences that can be drawn therefrom, and view them in the
light most favorable to the non-moving party.” DeBenedictis v.
Merrill Lynch & Co., 492 F.3d 209, 215 (3d Cir. 2007) (quoting
Rocks v. City of Phila., 868 F.2d 644, 645 (3d Cir. 1989)). To
withstand a motion to dismiss, the complaint’s “[f]actual
allegations must be enough to raise a right to relief above the
speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). This “requires more than labels and conclusions, and
a formulaic recitation of the elements of a cause of action will
not do.”6 Id.
To survive a motion to dismiss, the pleadings must
contain sufficient factual allegations to state a facially
plausible claim for relief. See Gelman v. State Farm Mut. Auto.
Ins. Co., 583 F.3d 187, 190 (3d Cir. 2009). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

6

Particularly within the antitrust context, the Third
Circuit has interpreted Twombly as teaching that “allegations of
conspiracy are deficient if there are ‘obvious alternative
explanation[s]’ for the facts alleged.” In re Ins. Brokerage
Antitrust Litig., 618 F.3d 300, 322-23 (3d Cir. 2010) (quoting
Twombly, 550 U.S. at 567). Nevertheless, “it is inappropriate to
apply Twombly’s plausibility standard with extra bite in
antitrust and other complex cases.” West Penn Allegheny Health
Sys., Inc. v. UPMC, 627 F.3d 85, 98 (3d Cir. 2010).
10

A plaintiff is entitled to all reasonable inferences
from the facts alleged. Papasan v. Allain, 478 U.S. 265, 286
(1986) (cited with approval by Twombly, 550 U.S. at 555). Legal
conclusions, however, are not entitled to deference, and a court
is “not bound to accept as true a legal conclusion couched as a
factual allegation.” Id. In deciding a Rule 12(b)(6) motion, a
court limits its inquiry to the facts alleged in the complaint
and its attachments, matters of public record, and undisputedly
authentic documents, insofar as any claims are based upon these
documents. See Jordan v. Fox, Rothschild, O’Brien & Frankel, 20
F.3d 1250, 1261 (3d Cir. 1994); Pension Benefit Guar. Corp. v.
White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).
B.

Discussion
Defendants argue in their motion to dismiss that

“LifeWatch has not alleged injury of the type the antitrust laws
were intended to prevent.” Mot. Dismiss Mem. at 10. They contend
that “[t]he gravamen of LifeWatch’s complaint is that it
suffered harm to its own business in the form of lost profits as
a result of Blue [P]lan decisions not to cover telemetry
monitors,” but this “cannot constitute antitrust injury” because
“harm to an individual is not harm to competition.” Id. (citing
TAC ¶¶ 6, 88, 96). “Moreover,” Defendants argue, “any alleged
reduction in output, quality, or choice has not resulted from

11

any alleged ‘competition-reducing’ conduct by Blue [P]lans,
which treat all telemetry monitor providers equally.” Id. at 11
(quoting Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328,
344 (1990)).
LifeWatch responds that Defendants “reduce competition
by using their oligopsony power when they refuse to purchase
telemetry products,” Opp. at 13, ECF No. 101-1 (citing TAC ¶ 5),
and further that “[a] concerted refusal to buy telemetry devices
prevents sales of the main product LifeWatch produces,” id. at
16. LifeWatch connects the alleged violation to the alleged
injury by arguing that “denying sales to LifeWatch--its injury-is the means by which Defendants seek to achieve their
anticompetitive end: colluding to deny coverage to subscribers.”
Id. at 12-13.
Accepting the facts alleged in the complaint as true,
and even assuming in favor of LifeWatch that the Uniformity Rule
exists and constitutes a conspiracy amongst Blue Plans to deny
coverage for telemetry devices, the Court finds that this
alleged conspiracy does not violate antitrust law.7

7

This is not to be confused with a finding that
LifeWatch has suffered no antitrust injury, which is “an issue
that only comes into play as and when it appears that all the
elements of liability have been adequately alleged”:
If a plaintiff tries to make an antitrust case by
alleging that the defendant spat in the street, it
would be ridiculous for the court to respond, “Now I
12

LifeWatch describes “the alleged violation” as “the
Uniformity Rule’s buyer-side reduction of competition for
telemetry.” Opp. at 16. It explains that, “[i]n the United
States healthcare market, where insurers serve as the primary
purchasers of healthcare and monitors have no alternative uses,
disfavored suppliers are unable to replace sales lost due to the
Uniformity Rule.” Id. at 14. LifeWatch’s argument, in essence,
is that Defendants have behaved illegally by agreeing with one
another, as potential buyers of telemetry devices, not to buy
telemetry devices, regardless of vendor.
To evaluate whether this agreement is actually
illegal, it is necessary to examine the purpose of the antitrust
laws. The purpose of the Sherman Act is to “protect the public
from the failure of the market.” Spectrum Sports, Inc. v.
McQuillan, 506 U.S. 447, 458 (1993); see also 15 U.S.C. § 1
(“Every contract, combination in the form of trust or otherwise,

know that spitting in the street is not an antitrust
violation. But suppose it were. What would be the
anticompetitive effect of spitting in the street, and
has this plaintiff demonstrated any such effect?” To
try to answer a question in that form is to undertake
a fool’s errand.
Ronald W. Davis, Standing on Shaky Ground: The Strangely Elusive
Doctrine of Antitrust Injury, 70 Antitrust L.J. 697, 732 (2003).
The Court doubts that LifeWatch can establish antitrust
standing. The Court need not fully flesh out this analysis or
actually decide this question, however, because it finds that
LifeWatch has failed to adequately plead an antitrust violation
in the first place.
13

or conspiracy, in restraint of trade or commerce among the
several States, or with foreign nations, is declared to be
illegal.” (emphasis added)). The Supreme Court has recognized
that “[t]he history of the Sherman Act as contained in the
legislative proceedings is emphatic in its support for the
conclusion that ‘business competition’ was the problem
considered and that the act was designed to prevent restraints
of trade which had a significant effect on such competition.”
Apex Hosiery Co. v. Leader, 310 U.S. 469, 493 n.15 (1940); see
also William H. Page, The Scope of Liability for Antitrust
Violations, 37 Stan. L. Rev. 1445, 1451 (1985) (“[M]ost
commentators now agree that the purpose of the substantive
[antitrust] law is to maximize economic efficiency, or consumer
welfare, by the preservation of competitive markets.”).
Accordingly, “[t]he law directs itself not against conduct which
is competitive, even severely so, but against conduct which
unfairly tends to destroy competition itself.” Spectrum Sports,
Inc., 506 U.S. at 458; see also Brunswick Corp. v. Pueblo BowlO-Mat, Inc., 429 U.S. 477, 488 (1977) (explaining that antitrust
laws “were enacted for ‘the protection of competition not
competitors’” (quoting Brown Shoe Co. v. United States, 370 U.S.
294, 320 (1962))).
LifeWatch relies primarily on two cases: West Penn
Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85 (3d Cir. 2010),
14

and Blue Shield of Virginia v. McCready, 457 U.S. 465 (1982). In
West Penn, the second-largest hospital system in Pittsburgh
(“West Penn”) brought a lawsuit under the Sherman Act and
applicable state law against Pittsburgh’s dominant hospital
system (“UPMC”) and health insurer (“Highmark”) for having
conspired to insulate one another from competition. See 627 F.3d
at 91-92. Specifically, West Penn alleged that UPMC and Highmark
had “form[ed] a conspiracy to protect one another from
competition,” under which “the dominant hospital system used its
power in the provider market to insulate the health insurer from
competition, and in exchange the insurer used its power in the
insurance market to strengthen the hospital system and to weaken
the plaintiff.” Id. at 91. In finding that the district court
had erred in dismissing the Sherman Act claims, the Third
Circuit emphasized West Penn’s allegation that “Highmark paid
West Penn depressed reimbursement rates, not as a result of
independent decisionmaking, but pursuant to a conspiracy with
UPMC, under which UPMC insulated Highmark from competition in
return for Highmark’s taking steps to hobble West Penn.” Id. at
104 (emphasis added).
In McCready, the defendant insurer, Blue Shield (“Blue
Shield”), provided coverage for psychiatrists providing
psychotherapy but denied it for psychologists performing the
same services:
15

McCready charges Blue Shield with a purposefully
anticompetitive scheme. She seeks to recover as
damages the sums lost to her as the consequence of
Blue Shield’s attempt to pursue that scheme. She
alleges that Blue Shield sought to induce its
subscribers
into
selecting
psychiatrists
over
psychologists for the psychotherapeutic services they
required, and that the heart of its scheme was the
offer of a Hobson’s choice to its subscribers. Those
subscribers were compelled to choose between visiting
a
psychologist
and
forfeiting
reimbursement,
or
receiving reimbursement by forgoing treatment by the
practitioner of their choice.
Id. at 483 (footnotes omitted). The Supreme Court upheld the
antitrust standing of a plaintiff patient (“McCready”) claiming
that certain Blue Shield plans had engaged in an unlawful
conspiracy with a group of psychiatrists “to exclude and boycott
clinical psychologists from receiving compensation under the
Blue Shield plans.” 457 U.S. at 469 (internal quotation marks
omitted).
Both West Penn and McCready are distinguishable from
the present case. The conspiracy in West Penn was, in fact, such
a clear antitrust violation that its conspirators acknowledged
“candidly” that it was “probably illegal.” West Penn, 627 F.3d
at 94 (internal quotation marks omitted). Similarly, McCready
involved a “purposefully anticompetitive scheme” that forced a
“Hobson’s choice” on its subscribers, including the plaintiff,
McCready. McCready, 457 U.S. at 483. Critical to the Court’s
finding was the fact that “the damages [the plaintiff] claimed
were occasioned by the loss of consumer choice, a value
16

protected by the antitrust rule she invoked.” Ronald W. Davis,
Standing on Shaky Ground: The Strangely Elusive Doctrine of
Antitrust Injury, 70 Antitrust L.J. 697, 711–12 (2003) (emphasis
added).
Here, although LifeWatch alleges that the Blue Plans
have a conspiracy in the form of the “Uniformity Rule,”
LifeWatch does not allege that this conspiracy was undertaken to
insulate any Blue Plan from competition in return for another
Blue Plan taking steps to “hobble” LifeWatch (or any other
telemetry provider, for that matter), nor to unfairly restrain
competition in any other manner. Whereas the conspiracy at issue
in West Penn was undertaken between two parties “to protect one
another from competition,” id. at 91, no such similar allegation
has been made or could be made here.8

8

In their reply, Defendants distinguish both West Penn
and McCready on the basis that those cases involved alleged
conspiracies with the respective plaintiffs’ competitors,
whereas here, “LifeWatch does not allege that Defendants
conspired with a LifeWatch competitor to reduce competition
among telemetry providers,” and “Defendants did not conspire
with LifeWatch competitors to boycott LifeWatch.” Reply Mem. at
6-7, ECF No. 102-1. The Court agrees with Defendants’
observation, but cautions that “[t]he availability of [an
antitrust] remedy to some person who claims its benefit is not a
question of the specific intent of the conspirators” and “cannot
reasonably be restricted to those competitors whom the
conspirators hoped to eliminate from the market.” McCready, 457
U.S. at 479; see also Ronald W. Davis, Standing on Shaky Ground,
70 Antitrust L.J. at 761 (opining that the Third Circuit has
been “misled” by Supreme Court precedent into promoting “a flat
rule limiting antitrust injury only to customers or
competitors”).
17

Here, subscribers face no similar “Hobson’s choice” because the
Blue Plans do not cover any telemetry device supplied by any
provider.
Even assuming (without deciding) that LifeWatch has
adequately pled that some Blue Plans have conspired to deny
coverage for telemetry devices,9 and even assuming (without
deciding) that LifeWatch has adequately pled that it has
suffered lost sales and thus lost profits as a result of this
conspiracy, the Court finds that LifeWatch cannot show that the
conspiracy was undertaken to cause any “restraints of trade
which [have] a significant effect on [business] competition.”10

9

LifeWatch does not allege that all Blue Plans have
participated in the alleged conspiracy. See infra n.12.
10

This is not exactly a failure to show antitrust injury
or antitrust standing, but instead a failure to plead a
necessary component of substantive liability under the Sherman
Act:
When a court concludes that no violation has occurred,
it has no occasion to consider standing . . . . An
increasing number of courts, unfortunately, deny
standing when they really mean that no violation has
occurred. In particular, the antitrust injury element
of standing demands that the plaintiff’s alleged
injury result from the threat to competition that
underlies the alleged violation. A court seeing no
threat to competition in a rule-of-reason case may
then deny that the plaintiff has suffered antitrust
injury and dismiss the suit for lack of standing. Such
a ruling would be erroneous, for the absence of any
threat to competition means that no violation has
18

Apex Hosiery, 310 U.S. at 493 n.15. Instead, LifeWatch claims
only that “[t]he Uniformity Rule reduces market
competition . . . by reducing purchases of telemetry.” Opp. at
15.
Furthermore, even assuming that the Uniformity Rule
(insofar as it exists at all) causes anticompetitive effects,
such effects do not necessarily indicate that antitrust law has
been violated. LifeWatch claims that the Uniformity Rule reduces
competition by reducing purchases of telemetry, and further that
this rule causes “anticompetitive effects in the relevant
markets by distorting the market for outpatient cardiacmonitoring devices and creating an insurance marketplace
unresponsive to consumer demand.” TAC ¶ 94; see also id. ¶¶ 7580 (listing anticompetitive effects, including reduction in the
quality of patients’ cardiac monitoring; deprivation of the
benefit to patients of quality competition; reduction of the
output of MCOT services in the relevant markets; and inhibition
of research and development, innovation and future competition
to improve the quality of MCOT services). Anticompetitive

occurred and that even suit by the government--which
enjoys automatic standing--must be dismissed.
Levine v. Cent. Florida Med. Affiliates, Inc., 72 F.3d 1538,
1545 (11th Cir. 1996), cert. denied, 519 U.S. 820 (1996)
(quoting 2 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law
¶ 360f, at 202–03 (rev. ed. 1995)).
19

effects, however, do not result exclusively from unlawful
conduct. As Defendants correctly state in their reply, “listing
potential [market] inefficiencies cannot meet LifeWatch’s burden
because LifeWatch has not plausibly alleged that those
inefficiencies resulted from conduct that is competitionreducing.” Reply Mem. at 4 (emphasis added).
Defendants’ refusal to cover telemetry devices does
not constitute competition-reducing conduct. As Defendants point
out, “LifeWatch alleges that each Blue [P]lan treats all
telemetry providers equally.” Id. (citing TAC ¶¶ 56-86, 91-97);
see also id. (explaining LifeWatch’s allegation that “either the
Blue [Plan] covers no telemetry monitors or covers all telemetry
monitors”). Because LifeWatch alleges that Defendants treat all
telemetry providers equally, LifeWatch fails to show that this
treatment--concerted or not--violates antitrust laws, which
“were enacted for ‘the protection of competition not
competitors.’”11 Brunswick, 429 U.S. at 488 (quoting Brown Shoe
Co., 370 U.S. at 320).

11

Though LifeWatch briefly mentions (for the first time
in its opposition to Defendants’ motion to dismiss) that the
purported “anticompetitive end” of the Uniformity Rule is
“colluding to deny coverage to subscribers,” Opp. at 12-13,
LifeWatch does not describe how this “collusion” constitutes
“conduct which unfairly tends to destroy competition itself,”
Spectrum Sports, 506 U.S. at 458. It is unclear what competition
the Blue Plans theoretically could seek to unfairly destroy via
the Uniformity Rule: Competition amongst telemetry providers to
sell devices to insurance plans? No, because LifeWatch does not
20

An alternative explanation for the conduct at issue is
that the Blue Plans have simply decided--whether in a concerted
fashion or not--that the benefits of telemetry devices do not
(yet) outweigh their costs. See In re Ins. Brokerage Antitrust
Litig., 618 F.3d 300, 322-23 (3d Cir. 2010) (“[A]llegations of
conspiracy are deficient if there are ‘obvious alternative
explanation[s]’ for the facts alleged.” (quoting Twombly, 550
U.S. at 567)). LifeWatch readily acknowledges that telemetry
devices are about “three times as costly” as other options for
monitoring cardiac arrhythmia, TAC ¶ 7, and further, that “[t]he
conspiracy’s object is to lower the total price paid for
outpatient cardiac monitoring,” TAC ¶ 69. The Court agrees with
Defendants that “[t]he fact that LifeWatch has been unable to
persuade all insurance companies that telemetry is worth ‘three
times’ the cost might reduce LifeWatch’s sales, but it does not
harm competition.”12 Mot. Dismiss Mem. at 23 (emphasis added).

allege that the Blue Plans treat various telemetry providers
differently. Competition amongst insurance plans to purchase
telemetry devices, or to enroll subscribers? No, because
LifeWatch alleges that “the Blue Plans operate as if they were a
single insurance company.” Opp. at 3-4.
12

LifeWatch concedes that it continues to sell telemetry
monitors to “Medicare, Medicaid, and other insurers,” as well as
several Blue Plans not named as defendants in this lawsuit. TAC
¶¶ 46, 82.
21

In light of the foregoing, the Court concludes that
Defendants’ refusal--whether concerted or not--to purchase any
telemetry device--whether produced by LifeWatch or not--is not
an antitrust violation, but rather a legal exercise of
Defendants’ monopsony power.13 See West Penn, 627 F.3d at 103 (“A
firm that has substantial power on the buy side of the market
(i.e., monopsony power) is generally free to bargain
aggressively when negotiating the prices it will pay for goods
and services.”).14 The alleged fact that Defendants’ decisions
have caused LifeWatch’s revenues to “drop[] dramatically,” TAC
¶ 88, does not render Defendants’ behavior illegal under the
Sherman Act.
Because the Court concludes that LifeWatch has failed
to allege an antitrust violation, the Court need not reach
Defendants’ arguments regarding antitrust standing, factual

13

“Monopsony power is
the market.” Weyerhaeuser Co.
Co., 549 U.S. 312, 320 (2007)
L. Harrison, Antitrust Policy
297 (1991)).

market power on the buy side of
v. Ross-Simmons Hardwood Lumber
(citing Roger D. Blair & Jeffrey
and Monopsony, 76 Cornell L. Rev.

14

It is not uncommon for anticompetitive effects to
result from the exercise of monopsony or oligopsony power. See,
e.g., Warren S. Grimes, The Sherman Act’s Unintended Bias
Against Lilliputians, 69 Antitrust L.J. 195, 210 (2001) (“The
very nature of monopsony or oligopsony power is that it tends to
suppress output and reduce quality or choice.”); Maurice E.
Stucke, Looking at the Monopsony in the Mirror, 62 Emory L.J.
1509, 1510 (2013) (“The monopsonist can also reduce the quality
of products it purchases and the amount of innovation that an
otherwise competitive market would foster.”).
22

allegations of an agreement, anticompetitive effects in any
relevant market, or immunity under the McCarran-Ferguson Act.
IV.

CONCLUSION
For the foregoing reasons, the Court will grant the

motion to dismiss with prejudice on the basis that LifeWatch has
failed to allege an antitrust violation.15 The Court declines to
reach any other issues in this case.
An appropriate order follows.

15

The Court declines to grant leave to amend on the
basis that “amendment would be futile.” Lake v. Arnold, 232 F.3d
360, 373 (3d Cir. 2000). Over the past five years, LifeWatch has
amended its complaint three separate times--yet it still has not
alleged any colorable antitrust violation and would not be able
to do so even if the Court granted leave to amend yet again.
23