PREMIER COMP SOLUTIONS, LLC v. UPMC HEALTH NETWORK, INC. et al

Filing 48

MEMORANDUM OPINION & ORDER denying Defendants' Motions to Dismiss [26 & 29]. Defendants shall answer the Amended Complaint within twenty-one (21) days of the date of this Order. The Court's Case Management Order shall follow. Signed by Judge David S. Cercone on 2/18/16. (jmc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
PREMIER COMP SOLUTIONS LLC,
Plaintiff,
v.
UPMC., a Pennsylvania non-profit non-stock
corporation, UPMC BENEFIT
MANAGEMENT SERVICES, INC.,
d/b/a UPMC WORKPARTNERS,
UPMC HEALTH BENEFITS, INC.,
d/b/a UPMC WORKPARTNERS, and,
MCMC, LLC a wholly-owned subsidiary
of York Risk Management,
Defendants.

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2:15cv703
Electronic Filing

MEMORANDUM OPINION
February 18, 2016
I.

INTRODUCTION
Plaintiff, Premier Comp Solutions, LLC (“Premier” or “Plaintiff”) initiated this action by

filing a seven (7) count Complaint against Defendants, UPMC (“UPMC”), UPMC Benefit
Management Services, Inc. (“UPMC-BMS”), UPMC Health Benefits, Inc.1 (“UPMC-HB”)
(collectively the “UPMC Defendants”), and MCMC, LLC (“MCMC”) (collectively the
“Defendants”) alleging violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 et
seq., violation of Section 12 of the Clayton Act, 15 U.S.C. § 22, and common law Unfair
Competition. Premier contends, inter alia, that the Defendants conspired to drive Premier from
the market in workers’ compensation cost containment services. The UPMC Defendants and
MCMC have filed separate Motions to Dismiss, Premier has responded and the matter is now
before the Court.
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Both UPMC-BMS and UPMC-HB do business as UPMC WorkPartners (“WorkPartners”).
Amended Complaint (“Am. Compl.”) ¶¶ 17 & 18.

II.

STATEMENT OF THE CASE
Premier provides cost containment services to workers’ compensation insurers and third

party administrative (“TPA”) service providers in twenty-one (21) states including Pennsylvania.
Am. Compl. ¶¶ 20, 21 & 25. The services provided by Premier include:
(1)

Panel Development – Premier develops customized panel listings of
healthcare providers to be used by employees with work-related injuries or
illnesses. The panels are posted at the employer’s workplace and are
comprised of healthcare providers who are geographically located near the
workplace;

(2)

Injury Management- Premier provides the injured workers with assistance
in scheduling appointments for medical treatment with panel providers,
and provides the employer and claims adjuster with information regarding
diagnosis, treatment and work status;

(3)

Medical Bill Review – Medical Bill Review and Repricing (“Repricing”)
includes reviewing the provider’s documentation to assure it supports the
billed charges, reducing the provider’s bills to the amounts allowed under
the appropriate state’s workers’ compensation fee schedules. Premier
reprices the provider’s bills and generates Explanation of Reimbursement
(“EOR”) forms which reflect the provider’s billed charges, workers’
compensation fee schedule reductions, medical review reductions,
Preferred Provider Organization (“PPO”) discounts and amounts payable
to the provider.

(4)

Physical Therapy and Diagnostic Network Access – Premier is a party to
direct discount contracts with several healthcare providers who render
services in the fields of physical therapy and MRI/CT, which allows
Premier to offer discounts below the mandated workers’ compensation fee
schedules to its clients for such services.

Am. Comp. ¶ 28. Premier also has Preferred Provider Organization (“PPO”) network access
contracts with the Coventry Health Care (“Coventry”) network and the Prime Health Services
(“Prime”) network which allows Premier to obtain PPO discounts for its repricing clients on
medical services rendered by network providers. Am. Compl. ¶¶ 21, 23 & 24.

2

UPMC-BMS, doing business as WorkPartners, provides TPA and other services related
to workers’ compensation claims to insured and uninsured employers. Am. Comp. ¶ 17. In
2010, UPMC-HB, also doing business as WorkPartners, was approved as a workers’
compensation insurance carrier in Pennsylvania and began to sell workers’ compensation
insurance, as well as to provide other related services, to employers in Pennsylvania. Am. Comp.
¶¶ 18 & 55.
MCMC, a wholly-owned subsidiary of York Risk Services Group (“York”), and with the
exception of WorkPartner’s TPA clients Allegheny County, the Port Authority, the City of
Pittsburgh and the Pennsylvania Turnpike Commission, has always provided repricing services
for WorkPartners and UPMC-HB. Am. Comp. ¶¶ 19 & 32. Premier alleges that MCMC
provides repricing services to WorkPartners’ and UPMC-HB’s self-insured employers under the
provisions of a 2009 contract which requires MCMC to pay WorkPartners a percentage of the
access fee which MCMC charges UPMC-HB and the self-insured employers for access to the
UPMC preferred provider network. Am. Comp. ¶ 99. This kickback arrangement increases the
medical costs incurred by WorkPartners’ and UPMC-HB’s self-insured employers. Id.
In April of 2006, Premier entered into a Medical Review and Repricing Agreement (the
“Repricing Agreement”) with WorkPartners under which it agreed to review and reprice medical
bills submitted by WorkPartners in accordance with the Pennsylvania Workers’ Compensation
Act (the “Act”). Am. Comp. ¶¶ 52 & 53, and Exhibit 1. The Repricing Agreement was to
remain in effect “until terminated by either party. . . at any time, provided that at least 30 days
advance notice is given.” Am. Comp. Exhibit 1, p. 3. The parties to the Repricing Agreement,
further agreed to:
. . . hold in confidence any information obtained by relating to the business of the
other and agrees to instruct its agents, employees, representatives, and
independent contractors to keep all such information strictly confidential. Each
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party agrees that it will not directly or indirectly disclose, communicate, divulge,
furnish to or use for the benefit of itself, or any other person, firm or corporation,
any of the trade secrets, designs, improvements, inventions, data, information, or
know-how, belonging to the other which may be communicated to it or which it
may learn by virtue of its activities under this Agreement.
Am. Comp. ¶ 54, and Exhibit 1.
UPMC-HB’s workers’ compensation insurance policies were sold through insurance
brokers, many of whom sell workers’ compensation policies on behalf of other insurance
companies. Am. Comp. ¶ 57. Many of the insurance brokers and carriers recommend that their
insured employer clients use Premier’s cost containment services. Am. Comp. ¶¶ 57 & 58.
In August of 2010, Premier began providing cost containment services to WorkPartners,
including panel development, appointment scheduling, injury management, and physical therapy
(“PT”) and diagnostic (“MRI/CT”) network services for employers who were insured by UPMCHB. Am. Comp. ¶ 29. Premier alleges that WorkPartners, as a competitor of Premier, continued
to develop its own panels for UPMC-HB’s insureds located in close proximity to UPMC’s
hospitals and physician practices. Am. Comp. ¶¶ 29-31. In July of 2012, WorkPartners and
UPMC-HB decided to use Premier’s PT and MRI/CT network for the majority of their other
employer clients and insureds. Am. Comp. ¶ 60. Accordingly, Premier was required to provide
WorkPartners and UPMC-HB with its then current listing of PT and MRI/CT network providers
and to update the list when necessary. Id.
In February, 2014, WorkPartners asked Premier to provide it with an “excel extract . . .
with our employer clients and the providers that are listed on their panels.” Am. Comp. ¶ 62;
Exhibit 2. WorkPartners also requested that Premier perform an extensive medical bill review
and repricing test audit to determine whether Premier or MCMC, UPMC-HB’s repricing vendor
at that time, provided the best service and the most savings. Am. Comp. ¶ 64. The audit also

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included a review of all the services that Premier provided. Am. Comp. ¶ 65. Premier complied
with WorkPartners’ requests.
After Premier submitted the results of its repricing audit, WorkPartners made several
inquiries regarding certain features of the audit results, including detailed explanations and
supporting documentation showing why Premier denied payment for certain medical services
that MCMC had allowed payment. Am. Comp. ¶ 67. Premier, however, expressed its
reservations about providing responses to WorkPartners’ inquiries as it was concerned the
information would be provided to MCMC in order to improve MCMC’s bill review
performance. Am. Comp. ¶ 68. WorkPartners informed Premier that it had formed an evaluation
committee to review and analyze the results of the repricing audit, and to issue a report with its
findings and recommendations to its senior management personnel. Premier was assured that if it
did well on the repricing audit, it had a great opportunity to get UPMC-HB’s repricing business.
Am. Comp. ¶ 69. Premier was later informed that its performance was superior to MCMC’s on
virtually every measure of competence, and that an 18 page business case study report had been
issued to WorkPartners’ senior management recommending that Premier be awarded the
repricing medical bill review business for UPMC-HB. Am. Comp. ¶ 70.
On May 23, 2014, WorkPartners requested that Premier update the panel provider data
base and that such update be in the form of an Excel spreadsheet. Am. Comp. ¶ 75; Exhibit 3.
WorkPartners then requested that Premier provide it with the tax IDs and telephone numbers for
each provider listed in the spreadsheet. Am. Comp. ¶ 77. Premier provided the Excel spreadsheet
and the other requested information. Am. Comp. ¶¶ 76 & 78. In October of 2014, WorkPartners
requested additional information from Premier’s panel provider database, including a “unique
identifier” for each employer, each panel and each provider. Am. Comp. ¶ 82; Exhibit 5. Again,
Premier complied with the request, providing a spreadsheet containing Premier’s unique keys for
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the employers, the panels and the providers for the panels which Premier developed and
managed for WorkPartners and UPMC-HB. Am. Comp. ¶ 83.
In November of 2014, after receiving all of Premier’s medical provider data,
WorkPartners advised Premier that MCMC, and not Premier, would receive the UPMC-HB
repricing contract. Am. Comp. ¶ 87. Premier was also informed that UPMC-HB decided to
begin using Align Network (“Align”) for all of its insureds’ new panel development, PT and
MRI/CT services. Id. WorkPartners refused to give Premier a reason for its decisions. Id.
Premier alleges that one of the reasons WorkPartners decided to use MCMC as its repricing
vendor was because WorkPartners would have lost the PPO access revenue MCMC kicked back
to it if it chose Premier. Am. Comp. ¶ 99.
Premier contends that WorkPartners not only used the information from Premier’s
repricing test audit for its own benefit, it also shared it with MCMC in order to improve
MCMC’s bill review and repricing competence. Am. Comp. ¶ 89. Further, while WorkPartners
was requesting Premier’s panel provider data base, UPMC-HB was using the information to
develop panels in-house and/or was referring its requests for panel development to MCMC
and/or Align2. Am. Comp. ¶ 90. In fact, WorkPartners admitted that Align had been doing panel
development for UPMC-HB since August 27, 2014. Am. Comp. ¶ 92.
Despite WorkPartners’ decision to use MCMC and Align as set forth above, it sent
Premier a proposed Master Services Agreement (“MSA”) on February 17, 2015, seeking to have
Premier become one of its medical bill repricing and panel generation vendors. Am. Comp. ¶ 93.
Premier determined that the MSA would have effectively required it to give WorkPartners all of

2

After receiving panel referrals from UPMC-HB on a weekly basis, Premier received no
panel referrals from UPMC-HB after August 27, 2014. Am. Comp. ¶¶ 79-81, 90.
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its trade secret electronic data. Am. Comp. ¶ 94. Premier, therefore, rejected the MSA. Id.
Premier contends that WorkPartners did not require any other vendor, including MCMC and
Align, to execute a vendor contract similar to the MSA. Am. Comp. ¶¶ 95 & 97. Moreover,
Align provides panel development services to WorkPartners’ self-insured employers and to
UPMC-HB’s insured employers without a written agreement, but WorkPartners and UPMC-HB
tell their insureds that they cannot use a Premier managed panel because Premier is not a
contracted vendor of WorkPartners, and therefore, is not considered an approved panel. Am.
Comp. ¶ 98. Premier further alleges that WorkPartners never intended to use its services under
the MSA, but attempted to induce Premier to sign the MSA so WorkPartners would not have to
return the provider panel data base information to Premier, or reveal that it had used the provider
panel data base information improperly. Am. Comp. ¶ 101.
On February 17, 2015, Premier sent an e-mail to WorkPartners requesting that the
electronic data be returned and that WorkPartners provide a certification that none of the data
had been provided to Align or had been otherwise used improperly. Am. Comp. ¶ 103.
WorkPartners did not respond to the email, the electronic data was never returned and no
certification was received. Am. Comp. ¶ 104.
By letter dated March 26, 2015, WorkPartners’ President, David M. Weir (“Weir”),
terminated the 2006 Repricing Agreement with Premier effective April 30, 2015. Am. Comp. ¶
112; Exhibit 8. As a result of the termination of the relationship between Premier and
WorkPartners, Premier and WorkPartners have become competitors, and Defendants have
adversely affected such competition as follows:
(1)

WorkPartners represents to the employees of UPMC-HB’s insured
employers that the amount of their premiums will increase if they do not
use provider panels approve by WorkPartners and/or UPMC-HB;

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(2)

WorkPartners directs that UPMC-HB’s insured employers use the PT
services of Centers for Rehab Services (“CRS”), a company that is one
hundred (100%) percent owned by UPMC;

(3)

WorkPartners directs that UPMC-HB’s insured employers use the MRI
services of UPMC’s own diagnostic testing facilities; and

(4)

WorkPartners mandates that UPMC-HB’s insureds utilize “WorkPartners
approved panels” which include either UPMC-owned PT and MRI
network facilities or include Align PT and One Call diagnostic networks
or a combination thereof.

Am. Comp. ¶¶ 106 & 107.

III.

LEGAL STANDARD FOR MOTION TO DISMISS
A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure

tests the legal sufficiency of a complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993).
Under Rule 8 of the Federal Rules of Civil Procedure, a complaint must contain a “short and
plain statement of the claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2).
A complaint must be dismissed for failure to state a claim if it does not allege “enough facts to
state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
556 (2007); Ashcroft v. Iqbal, 129 S.Ct. 1937, 1960, 173 L. Ed. 2d 868 (May 18, 2009); see also
Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). The Supreme Court explained
that although a court must accept as true all of the factual allegations contained in a complaint,
that requirement does not apply to legal conclusions; therefore, the pleadings must include
factual allegations to support the legal claims asserted. Ashcroft v. Iqbal, 129 S. Ct. at 1949,
1953. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. at 1949 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. at 555).
Further, although the focus in assessing a motion to dismiss is on the allegations set forth in the
pleadings, “matters of public record, orders [and] exhibits attached to the complaint” also may be
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considered. Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994)
(citing 5A WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE, § 1357).
The United States Court of Appeals for the Third Circuit expounded on this standard
stating:
After Iqbal, it is clear that conclusory or “bare-bones” allegations
will no longer survive a motion to dismiss: “threadbare recitals of
the elements of a cause of action, supported by mere conclusory
statements, do not suffice. To prevent dismissal, all civil
complaints must now set out “sufficient factual matter” to show
that the claim is facially plausible. This then “allows the court to
draw the reasonable inference that the defendant is liable for the
misconduct alleged.” The Supreme Court’s ruling in Iqbal
emphasizes that a plaintiff must show that the allegations of his or
her complaints are plausible.
Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (citations omitted). In light of
Iqbal, the Fowler court then set forth a two-prong test to be applied by the district courts in
deciding motions to dismiss for failure to state a claim. First, the district court must accept all
well-pleaded facts as true and discard any legal conclusions contained in the complaint. Fowler
v. UPMC Shadyside, 578 F.3d at 210-211. Next, the court must consider whether the facts
alleged in the Complaint sufficiently demonstrate that the plaintiff has a “plausible claim for
relief.” Id. at 211. To survive a motion to dismiss, a complaint must show an entitlement to relief
through its facts. Id. (citing Phillips v. County of Allegheny, 515 F.3d 224, 234-35 (3d Cir. 2008).
Finally, in applying this plausibility standard, the reviewing court must make a context-specific
inquiry, drawing on its judicial experience and common sense. Id.
When addressing antitrust claims, the standard for dismissal is somewhat higher, because
“summary procedures should be used sparingly in complex antitrust litigation where motive and
intent play leading roles, the proof is largely in the hands of the alleged conspirators, and hostile

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witnesses thicken the plot.” Poller v. Columbia Broad. Sys., 368 U.S. 464, 473 (1962), see also
Rolite, Inc. v. Wheelabrator Envtl. Sys., Inc., 958 F. Supp. 992, 995 (E.D. Pa. 1997).
Courts liberally construe antitrust complaints at this stage of the proceeding. See Pennsylvania ex
rel. Zimmerman v. PepsiCo, Inc., 836 F.2d 173, 179 (3d Cir. 1988). “[I]n antitrust cases . . .
dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very
sparingly.” Hosp. Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 746 (1976). Nonetheless, the
antitrust plaintiff must allege facts sufficient to overcome a motion under Rule 12(b)(6). See
Pennsylvania ex rel. Zimmerman v. PepsiCo, Inc., 836 F.2d at 179.

IV.

DISCUSSION
1.

Premier’s Antitrust Standing

The UPMC Defendants argue that the Amended Complaint fails to allege an antitrust
injury, therefore Premier lacks standing and the antitrust action must be dismissed. The doctrine
of antitrust standing ensures that a “plaintiff is a proper party to bring a private antitrust action.”
Gulfstream III Associates, Inc. v. Gulfstream Aerospace Corp., 995 F.2d 425, 429 (3d Cir. 1993)
(quoting Associated General Contractors of California v. California State Council of
Carpenters, 459 U.S. 519, 535 n.31 (1983)).
In this circuit, courts consider the following factors in determining whether a complainant
has antitrust standing:
(1) the causal connection between the antitrust violation and the harm to the
plaintiff and the intent by the defendant to cause that harm, with neither factor
alone conferring standing; (2) whether the plaintiff's alleged injury is of the type
for which the antitrust laws were intended to provide redress; (3) the directness of
the injury, which addresses the concerns that liberal application of standing
principles might produce speculative claims; (4) the existence of more direct
victims of the alleged antitrust violations; and (5) the potential for duplicative
recovery or complex apportionment of damages.
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Ethypharm S.A. France v. Abbott Laboratories, 707 F.3d 223, 232-233 (3d Cir. 2013) (quoting
In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144, 1165–66 (3d Cir.1993)). “The
second factor, antitrust injury, ‘is a necessary but insufficient condition of antitrust standing.’”
Id. at 233 (quoting Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178, 182 (3d
Cir.1997). If antitrust injury is lacking, courts need not address the remaining factors3. Id.
Antitrust injury is “injury of the type the antitrust laws were intended to prevent and that
flows from that which makes [the] defendants’ acts unlawful.” Brunswick Corp. v. Pueblo Bowl–
O–Mat, Inc., 429 U.S. 477, 489 (1977). Because the antitrust laws were “enacted for the
protection of competition, not competitors,” Brunswick Corp., 429 U.S. at 488, an antitrust
plaintiff must show that he has been “adversely affected by an anticompetitive aspect of the
defendant’s conduct.” Atlantic Richfield Co. v. USA Petroleum, Co., 495 U.S. 328, 339 (1990).
“‘An antitrust plaintiff must prove that the challenged conduct affected the prices, quantity or
quality of goods or services,’ not just his own welfare.” Mathews v. Lancaster General Hospital,
87 F.3d 624, 641 (3d Cir. 1996)(quoting Tunis Bros. Co., Inc. v. Ford Motor Co., 952 F.2d 715,
728 (3d Cir.1991)). Recovery by a private plaintiff on an antitrust claim can only be had where
the loss “stems from a competition-reducing aspect or effect of the defendant’s behavior.”
Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. at 344.
In its Amended Complaint, Premier alleges more than harm to its own business, it
describes the harm to competition caused by UPMC’s effort to remove the low-cost containment
service provider in the relevant market. In February, 2014, WorkPartners asked Premier to

3

The Court notes that “the existence of antitrust injury is not typically resolved through
motions to dismiss.” Schuylkill Energy Resources v. Pennsylvania Power & Light Co., 113 F.3d
405, 417 (3d Cir. Pa. 1997)
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perform an extensive medical bill review and repricing test audit to determine whether Premier
or MCMC, UPMC-HB’s repricing vendor at that time, provided the best service and the most
savings. Am. Comp. ¶ 64. The results of such audit indicated that Premier’s performance was
superior to MCMC’s on virtually every measure of competence, and that an 18 page business
case study report had been issued to WorkPartners’ senior management recommending that
Premier be awarded the repricing medical bill review business for UPMC-HB. Am. Comp. ¶ 70.
Despite such results, WorkPartners advised Premier that MCMC, and not Premier, would receive
the UPMC-HB repricing contract. Am. Comp. ¶ 87. Premier alleges that one of the reasons
WorkPartners decided to use MCMC as its repricing vendor was because WorkPartners would
have lost the PPO access revenue MCMC kicked back to it if it chose Premier. Am. Comp. ¶ 99.
Moreover, WorkPartners mandated that its TPA clients use MCMC for repricing services which
resulted in those employers having to pay higher prices, saving less costs and receiving lesser
quality of service. Am. Comp. ¶ 36.
As early as 2010, when Premier was providing cost containment services to
WorkPartners, including panel development, WorkPartners continued to develop its own panels
for UPMC-HB’s insureds located in close proximity to UPMC’s hospitals and physician
practices. Am. Comp. ¶¶ 29-31. In 2014, while WorkPartners was requesting Premier’s panel
provider data base, UPMC-HB was using the information to develop panels in-house and/or was
referring its requests for panel development to MCMC and/or Align. Am. Comp. ¶ 90.
Moreover, Align provided panel development services to WorkPartners’ self-insured employers
and to UPMC-HB’s insured employers without a written agreement, yet WorkPartners and
UPMC-HB told their insureds that they could not use a Premier managed panel because Premier
was not a contracted vendor of WorkPartners, and therefore, was not considered an approved
panel. Am. Comp. ¶ 98.
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Premier alleges, that as a result of such conduct, numerous self-insured and insured
employers that could benefit from Premier’s cost containment services, were told by
WorkPartners that they could not do business with Premier. The only remaining option was to
purchase those products from WorkPartners and UPMC-HB and use the cost containment
services so directed. Accepting as true the factual allegations in the Amended Complaint and all
reasonable inferences that can be drawn therefrom, this Court finds that Premier alleged injury is
of the type for which the antitrust laws were intended to provide redress.
The UPMC Defendants also assert that Premier antitrust claims fail because it is not a
competitor of the UPMC Defendants’ products and services. The Court finds sufficient factual
allegations in the Amended Complaint that indicate that Premier and the UPMC Defendants are
competitors including, inter alia:
(1)

WorkPartners represents to the employees of UPMC-HB’s insured
employers that the amount of their premiums will increase if they do not
use provider panels approved by WorkPartners and/or UPMC-HB;

(2)

WorkPartners directs that UPMC-HB’s insured employers use the PT
services of Centers for Rehab Services (“CRS”), a company that is one
hundred (100%) percent owned by UPMC;

(3)

WorkPartners directs that UPMC-HB’s insured employers use the MRI
services of UPMC’s own diagnostic testing facilities; and

(4)

WorkPartners mandates that UPMC-HB’s insureds utilize “WorkPartners
approved panels” which include either UPMC-owned PT and MRI
network facilities or include Align PT and One Call diagnostic networks
or a combination thereof.

Am. Comp. ¶¶ 106 & 107.
2.

Plausible Product or Geographic Markets

Assessing antitrust injury necessarily involves consideration of the relevant product and
geographic markets. See Bocobo v. Radiology Consultants of South Jersey, P.A., 305 F. Supp.
2d 422, 425 (D.N.J. 2004), aff’d, 477 F. App’x 890 (3d Cir. 2012). Plaintiff has the burden of
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defining both of these markets. See Queen City Pizza v. Domino’s Pizza, 124 F.3d 430, 436 (3d
Cir. 1997) (citing Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 482, 112 S.
Ct. 2072, 119 L. Ed. 2d 265 (1992)).
The relevant product market is determined by examining “the reasonable
interchangeability of use or the cross-elasticity of demand between the product itself” and its
substitutes. Brown Shoe Co. v. U.S., 370 U.S. 294, 325 (1962). “Interchangeability implies that
one product is roughly equivalent to another for the use to which it is put; while there may be
some degree of preference for the one over the other, either would work effectively.” Queen City
Pizza v. Domino’s Pizza, 124 F.3d at 437 (quoting Allen-Myland, Inc. v. Int’l Bus. Mach. Corp.,
33 F.3d 194, 206 (3d Cir. 1994)). Courts consider the price, use, and quality of the products. Id.
Cross-elasticity of demand is “defined as the degree by which the amount of a product purchased
will change in response to changes in its price.” SmithKline Corp. v. Eli Lilly & Co., 575 F.2d
1056, 1063 (3d Cir. 1978). A relevant product market describes those groups of producers that
have the actual or potential ability to take significant amounts of business away from each other
because of the similarity of their products. Id. “A market definition must look at all relevant
sources of supply, either actual rivals or eager potential entrants to the market.” Id.
A court may dismiss a case:
[w]here the plaintiff fails to define its proposed relevant market with reference to
the rule of reasonable interchangeability and cross-elasticity of demand, or alleges
a proposed relevant market that clearly does not encompass all interchangeable
substitute products even when all factual inferences are granted in plaintiff's
favor, the relevant market is legally insufficient and a motion to dismiss may be
granted.
Queen City Pizza v. Domino’s Pizza, 124 F.3d at 436. Antitrust claims, however, do not have a
heightened pleading standard: “[d]efinition of the relevant product market often requires ‘a
deeply fact-intensive inquiry,’ and courts are hesitant to grant motions to dismiss for failure to
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plead a relevant market definition.” In re Time Warner, 2011 U.S. Dist. LEXIS 39001, at * 27,
(S.D.N.Y. April 8, 2011) (quoting Todd v. Exxon Corp., 275 F.3d 191, 199-200 (2d Cir. 2001)).
Premier alleges two (2) relevant product markets:
[B]oth insured employers who purchase workers’ compensation policies and
derivatively cost containment services sold by firms such as [UPMC-HB] and
[UPMC-BMS] and [Premier] and self-insured employers who purchase third
party administration (workers compensation) services from [UPMC-BMS] and
cost-containment services that are purchased in conjunction with the
administration workers compensation claims. Am. Compl. ¶ 43; and
[M]edical services consumed by individuals receiving workers’ compensation
benefits. This provider market is defined by the types of medical services
routinely purchased by workers compensation claimants. Am. Compl. ¶ 44.
The UPMC Defendants argue that the first product market alleged by Premier is not plausible
because it “asserts a single brand market limited to the provision of cost containment for
WorkPartners’ insured and self-insured workers’ compensation clients.” UPMC Brief p. 14. In
support, UPMC contends that Premier fails to allege that cost containment services provided
to WorkPartners or other TPAs are materially different than those provided to other workers’
compensation insurers or TPA providers. See i.e. Green Country Food Mkt. v. Bottling Grp.,
371 F.3d 1275, 1282 (10th Cir. 2004) (“Even where brand loyalty is intense, courts reject the
argument that a single branded product market constitutes a relevant market.”). UPMC further
argues that Premier impermissibly combines: (1) the sale of insurance with TPA cost
containment services; and (2) disparate cost containment services.
The Court disagrees. Premier has alleged sufficient facts to define the relevant market
with reference to long-accepted antitrust metrics, i.e. “the reasonable interchangeability of use or
the cross-elasticity of demand between the product itself and substitutes for it.” Brown Shoe Co.
v. U.S., 370 U.S. at 325; Tunis Bros. Co., Inc. v. Ford Motor Co., 952 F.2d 715, 722 (3d Cir.

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1991). In support of its contention that Paragraph 43 of the Amended Complaint defines a
plausible product market, Premier argues:
[It] has facially not alleged a single-product market, and the product market for
workers compensation cost containment services is broadly defined to include all
reasonably interchangeable services. Here, unlike in [Queen City Pizza], the
proposed product market is not limited so as to exclude workers compensation
cost containment services offered as part of insurance plans offered by companies
other than Health Benefits or TPA services offered by companies other than
WorkPartners.
Premier Brief p. 10. The plain language of Paragraph 43 of the Amended Complaint does not
describe “a single brand market limited to the provision of cost containment services only for
WorkPartner’s insured and self-insured workers’ compensation clients.” Premier describes the
relevant product market to include cost containment services “sold by firms such as [UPMC-HB]
and [UPMC-BMS] and [Premier]”.
Moreover, Premier argues that it has properly alleged that workers compensation cost
containment services constitute a valid “cluster” market as defined by the Supreme Court in
United States v. Grinnell Corp., 384 U.S. 563 (1966). There, the Supreme Court found a valid
“cluster” market of central fire alarm and burglary systems which were not interchangeable or
economic substitutes for an end user, stating that the Court “see[s] no barrier in combining in a
single market a number of different products or services where that combination reflects
commercial realities.” Id. at 572. The Court further suggested that distinct, non-interchangeable
services could be grouped together into one market if “companies recognize that to compete
effectively, they must offer all or nearly all types of service.” Id.
Premier describes the cost containment services provided to workers’ compensation
insurers and TPA service providers to include: (1) panel development; (2) injury management;
(3) medical bill review; and (4) physical therapy and diagnostic network access. See Am. Comp.
¶ 28. The combination of such services in this instance obviously reflects Premier’s belief that,
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based upon commercial realities, it must offer groupings of services in order to compete in the
market. Accordingly, the Court finds that, at this stage of the litigation, Premier has sufficiently
identified a relevant product market.
Similarly, the Court finds that Paragraph 44 of the Amended Complaint also defines a
plausible product market. The product market is defined to include medical services used by
injured individuals receiving employee benefits under the Act with specific reference to
Premier’s panel development and maintenance services.
Further, after a comprehensive review of the pleadings, the Court finds that, at this stage
of the litigation, Premier has:
(a) Sufficiently defined the geographic market;
(b) Alleged both market power and barriers to entry; and
(c) Alleged anticompetitive effects and exclusionary conduct.

V.

CONCLUSION
Based on the foregoing, the motions to dismiss filed on behalf of the UPMC Defendants

and MCMC will be denied. An appropriate Order follows.
Cercone J.

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
PREMIER COMP SOLUTIONS LLC,

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Plaintiff,
v.
UPMC., a Pennsylvania non-profit non-stock
corporation, UPMC BENEFIT
MANAGEMENT SERVICES, INC.,
d/b/a UPMC WORKPARTNERS,
UPMC HEALTH BENEFITS, INC.,
d/b/a UPMC WORKPARTNERS, and,
MCMC, LLC a wholly-owned subsidiary
of York Risk Management,
Defendants.

2:15cv703
Electronic Filing

ORDER OF COURT
AND NOW, this 18th day of February, 2016, upon consideration of Defendants’ Motions
to Dismiss (Document Nos. 26 & 29), Plaintiff’s response thereto, the briefs and appendices
filed in support thereof, and pursuant to Memorandum Opinion filed herewith,
IT IS HEREBY ORDERED that Defendants’ Motions to Dismiss are DENIED.
Defendants shall answer the Amended Complaint within twenty-one (21) days of the date of this
Order. The Court’s Case Management Order shall follow.
s/ DAVID STEWART CERCONE
David Stewart Cercone
United States District Judge
cc:

Stanley M. Stein, Esquire
Jeffrey S. Jacobovitz, Esquire
Paul S. Mazeski, Esquire
Daniel K. Oakes, Esquire
Richard B. Dagen, Esquire
Peter S. Wolff, Esquire
Thomas G. Rohback, Esquire
(Via CM/ECF Electronic Mail)
18