Steward Health Care System LLC et al v. Blue Cross & Blue Shield of Rhode Island

Filing 346

OPINION AND ORDER denying 157 Motion for Summary Judgment. So Ordered by Chief Judge William E. Smith on 4/23/2018. (Jackson, Ryan)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
STEWARD HEALTH CARE SYSTEM, LLC;
)
BLACKSTONE MEDICAL CENTER, INC.,
)
f/k/a STEWARD MEDICAL HOLDING
)
SUBSIDIARY FOUR, INC.; BLACKSTONE )
REHABILITATION HOSPITAL, INC.,
)
f/k/a STEWARD MEDICAL HOLDING
)
SUBSIDIARY FOUR REHAB, INC.,
)
)
C.A. No. 13-405 WES
Plaintiffs,
)
)
v.
)
)
BLUE CROSS & BLUE SHIELD OF
)
RHODE ISLAND,
)
)
Defendant.
)
___________________________________)
OPINION AND ORDER
WILLIAM E. SMITH, Chief Judge.
I.

Background 1
In this antitrust action, Plaintiffs Steward Health Care

System,
Medical

LLC,

Blackstone

Holding

Rehabilitation

Medical

Subsidiary

Hospital,

Inc.

Center,

Four,

Inc.,

Inc.,

(collectively,

f/k/a

and

Steward

Blackstone

“Steward”)

claim

Defendant Blue Cross & Blue Shield of Rhode Island (“Blue Cross”)
unlawfully blocked Steward from entering the Rhode Island health

1

This factual discussion, as well as the facts noted
throughout this opinion, are taken from the parties’ statements of
undisputed and disputed facts, as well as the attached exhibits;
where disputed, inferences are drawn in favor of the nonmoving
party, Steward.
1

care and health insurance markets, by thwarting its attempt to
purchase a failing community hospital in receivership, Landmark
Medical Center (“Landmark”), in Woonsocket, Rhode Island.

(Pls.’

Corrected Statement of Disputed Facts (“SDF”) ¶ 49, ECF No. 1711.)
This is a complicated case, and the area of antitrust law
governing the claims is, to put it kindly, confused and opaque.
As explained in detail below, the Court’s view on the outcome of
this motion has changed as a result of careful and complete review
of the record and the law; and without question, this is a close
case – one that highlights the difficulty of applying less-thanclear

antitrust

doctrines

and

precedents

to

one

of

the

complicated and volatile sectors of the national economy.

most

In the

end, the analysis below has convinced the Court that a trial is
required on all counts of Steward’s Amended Complaint (ECF No.
90), and therefore Blue Cross’s Motion for Summary Judgment (ECF
No. 157) will be denied in full (Counts I-XVIII).
A.

Landmark

Landmark Medical Center (“Landmark”) is a “community based”
hospital that has served northern Rhode Island since 1988.

See

Landmark Medical Center, History, https://www.landmarkmedical.or
g/About-Us/History.aspx (last visited Apr. 16, 2018).

In 2008,

facing increasingly difficult financial straits, Landmark entered
receivership under the supervision of the Rhode Island Superior
2

Court.

(SDF ¶¶ 53, 62.)

After entering receivership, Landmark

operated under a court-appointed Special Master.

(Id. ¶ 62.)

Justice Michael Silverstein of the Rhode Island Superior Court
oversaw

the

receivership

proceedings

Jonathan Savage as Special Master.
Savage

solicited

bids

for

and

appointed

(Id. ¶ 63.)

Landmark

from

attorney

Special Master

prospective

including hospital systems Lifespan, Prime, and Steward.

buyers,
(Id. ¶

64.)
As early as 1996, Lifespan sought to potentially acquire
Landmark.

(Id. ¶ 65.)

Lifespan’s interest resurfaced in the

context of Landmark’s receivership proceedings in April 2009 when
the Special Master requested that Maria Montanaro, then-CEO of
Thundermist Health Center (“Thundermist”), 2 “outline a plan for
how health services would be delivered in Woonsocket in the event

2

Thundermist is a “major primary care provider” with a large
group of primary care physicians that serves many patients in the
Woonsocket area.
(Pls.’ Corrected Statement of Disputed Facts
(“SDF”) ¶ 47, ECF No. 171-1; id. ¶ 83; Dep. of Robert E. Guyon
94:8-9, SDF Ex. 5, ECF No. 206-5 (explaining Thundermist is key
source of prospective patients for area hospitals)). Thundermist
provides care to many people who are poor and historically
uninsured or underinsured. Few of Thundermist’s patients are
commercially insured. (See, e.g., SDF Ex. 128, ECF No. 160-29;
see also Thundermist Health Center, About Us, http://www.thunder
misthealth.org/AboutUs/AboutUsOverview.aspx (last visited Apr.
16, 2018) (“Thundermist Health Center’s goal is to bring healthcare
to the people who need it most. . . . Nearly 40% of Thundermist’s
42,000 patients in 2013 were uninsured. In 2014, we provided $6.6
million in unreimbursed care.”). “Thundermist wanted a future for
health care delivery in which it would play a significant role.”
(Pls.’ Statement of Additional Undisputed Facts (“SAUF”) ¶ 155,
ECF No. 177-1; SAUF Ex. 50, ECF No. 177-51.)
3

that Landmark were to close.”

(SDF ¶ 66; Dep. of Maria Montanaro

(“Montanaro Dep.”) at 38-39, SDF Ex. 27, ECF No. 206-27.)

The

plan devised by Montanaro “called for the elimination of inpatient
acute care at Landmark, and for the facility to provide primarily
urgent care, emergency services, and outpatient surgery.”

(Id. ¶

67; SDF Ex. 101, ECF No. 210-13; Dep. of Mary Wakefield (“Wakefield
Dep.”) at 31:1-6, SDF Ex. 30, ECF No. 206-30; Montanaro Dep. at
42:1-45:3, SDF Ex. 27; Dep. of George Vecchione (“Vecchione Dep.”)
at 14:8-14:14, SDF Ex. 29, ECF No. 206-29.)

Underlying the plan

was the idea that “a viable way to sustain Landmark hospital given
its current financial and operational burdens [did] not appear to
exist.”

(SDF ¶ 69.)

B.

The Steward Model

Steward is a for-profit hospital system, 3 which owns and
operates multiple hospitals in neighboring Massachusetts. 4
¶¶ 9, 11.)

(Id.

In its contracts with Massachusetts health insurance

companies, Steward receives compensation on a per-member-per-month
(“PMPM”) basis rather than a fee based on individual service(s)
performed.

(Id. ¶ 15.)

As Steward describes it, this is a “risk-

based” model, in which Steward shoulders “some amount of financial

3

Cerberus Capital Management, LP owns
controlling interest in Steward. (SDF ¶ 9.)
4

a

majority

and

At its inception in 2010, Steward owned six hospitals in
Massachusetts; by 2012, it owned eleven hospitals. (SDF ¶ 11.)
4

risk of providing healthcare services to the health insurers’
members.”

(Id.)

To be successful, such a relationship requires

a “working, constructive business relationship that involves the
sharing

of

information

insurers and Steward. 5

and

other

cooperation”

(Id. ¶ 16.)

between

health

Moreover, the success of

Steward’s healthcare vision requires that “the payer and provider
must together develop a system for sharing the health-care and
health-expense history of the insured patient population, also
develop an analytic for total medical expense (‘TME’) of that
population, and agree on reasonable grounds for reducing TME and
improving the quality of care.”

(Pls.’ Statement of Additional

Undisputed Facts (“SAUF”) ¶ 196, ECF No. 177-1.)
Steward’s vision was to offer a new, atypical health-careprovider model to Rhode Island.

(SDF ¶ 35.)

This model was

premised on “(1) right-siting care, such that community-based,
routine services are performed in community settings, whether
hospitals, urgent care centers, ambulatory services centers, or
physicians’ offices; (2) improving the quality of care provided in
the community; [and] (3) negotiating on behalf of an integrated
network of physicians and hospitals to drive lower premiums.” (SDF

5

Steward’s risk-based-contract model also contemplates that
Steward would compete to an extent with health insurers “for the
same premium dollars and Steward performs some functions
traditionally performed by insurers.” (SDF ¶ 16.)

5

¶ 40.)

In exchange for participation in its own “narrow network,”

Steward would accept lower reimbursement rates.

(Id.)

As a part of Steward’s vision, its executives believed it
could turn around the quality problems Landmark faced; indeed,
“that was the fundamental premise of Steward’s turnaround plan for
the hospital.”

(SDF ¶ 54.)

“Landmark quality of care is generally

good, although it has room for improvement.”

(Id.)

Steward’s long term goals extended beyond Landmark; it wanted
to acquire more hospitals in Rhode Island.

(SDF ¶ 28.)

To this

end, Steward petitioned the state legislature to amend the Rhode
Island Hospital Conversion Act “to eliminate a three-year waiting
period

between

hospital

acquisitions

by

for-profit

hospitals,

which would have allowed Steward to buy more than one Rhode Island
Hospital in a three year period.”
C.

(SAUF ¶ 139.)

The Caritas and Steward Bid To Acquire Landmark

In

August

2010,

over

one

year

after

the

receivership

commenced, Caritas, Steward’s predecessor, submitted a bid to
acquire Landmark. 6
precondition
(“APA”).

to

(SDF ¶ 76.)
Caritas’s

(Id. ¶ 77.)

A contract with Blue Cross was a

proposed

Asset

Purchase

Agreement

Feeling that it lacked the essential

partners, including Blue Cross, for a successful transaction over

6

2010.

Steward’s acquisition of Caritas was finalized in November
(SDF ¶ 13.)

6

Landmark, Caritas withdrew its bid in December 2010.

(Id. ¶ 78.)

In a press release following the failed transaction, the Special
Master “indicated critical discussions related to reimbursement
rates with Blue Cross/Blue Shield of Rhode Island did not produce
tangible results.”
biggest hurdle.

(Id.)

He added, “To date, this has been our

Unfortunately, attempts to address our inadequate

reimbursement rates with Blue Cross were not productive and in
fact stalled our negotiations with Caritas.”

(Id.)

In May 2011, Steward submitted a new bid to acquire Landmark.
(SDF ¶ 79.)

An APA was proposed, and although amended fifteen

times, this mostly extended the closing deadlines.
81,

82.)

While

conditions,

the

“[n]ot

various

all

APA

important

versions
matters

(Id. ¶¶ 79,

included
were

numerous

included

as

conditions in the APA, nor were all conditions in the APA clearly
‘important.’” (Id. ¶ 79.) Rather than rigid requirements, Steward
considered the conditions to be “flexible leverage points for
negotiations,”

or

even

“window

dressing.”

(Id.

¶¶

79,

82.)

Indeed, after realizing certain conditions could not be met,
Steward
Landmark.

nevertheless

plowed

ahead

in

attempting

to

acquire

(Id. ¶ 79.)

For example, the APA submitted in March 2012 included the
following conditions:

“An agreement to purchase 100% of Rhode

Island Specialty Hospital” (“RISH”); a Memorandum of Understanding
(“MOU”) with Thundermist; and “[a]n agreement to purchase the
7

interest of 21st Century Oncology (‘21st Century’) in Southern New
England Regional Cancer Center (‘SNERCC’), a cancer treatment
facility owned jointly by 21st Century and Landmark.” 7 (SDF ¶ 81.)
Steward made clear that it would consider waiving the Thundermist
and SNERCC conditions if and when it became necessary, if that
meant Steward would successfully acquire Landmark.

(Id. ¶ 82.)

(“You know, at the end of the day, it’s us and Blue Cross that
need to come to an agreement.”).
The

key

to

Steward’s

effort

to

acquire

Landmark

was

an

acceptable arrangement with Blue Cross on reimbursement rates,
because, as with all Rhode Island hospitals, this was the primary
source of income for services rendered at Landmark.
98; SAUF ¶ 173.)

(See id. ¶

For about a year from September 2011 to September

2012, with the assistance of various facilitators, Steward and
Blue

Cross

exchanged

numerous

proposals for Landmark.

and

detailed

(SDF ¶ 86.)

reimbursement-rate

Over the course of these

negotiations, Steward saw Blue Cross as “moving backwards” because
its offers of rate increases always included “quality targets that
were unrealistic, given Landmark’s condition.”

(Id.)

Blue Cross

would not discuss modifying these targets, even though it had done
so for other providers.

(Id. ¶ 88.)

7

In one of the last mediation

The conditions with respect to Thundermist and SNERCC,
however, were later omitted from the May 2011 APA and the first
seven amendments to the APA. (SDF ¶ 82.)
8

sessions the parties had with the Rhode Island Attorney General,
the Attorney General informed Steward executives that Blue Cross
“just do[es]n’t want you to do business in this state.”

(Id. ¶

86.)
Steward believed Blue Cross’s proposed quality metrics (a
part of Blue Cross’s Standard Quality Program) were unattainable,
so over the long course of negotiations, it proposed quality
metrics different than those Blue Cross advanced, but which it
believed to be achievable.

(SDF ¶ 100.)

For example, in September

2011, Steward introduced a proposal for quality metrics “based on
year-over-year improvement at Landmark, as opposed to targets
based on national averages.”

(Id.)

At every turn, Blue Cross

rejected Steward’s proposals and refused to stray from its Quality
Program’s methodology. 8

(Id.)

Beyond the financial issues, Steward needed and wanted Blue
Cross to be a “‘willing partner.’”

(Id. ¶ 88.)

After all, the

viability of Steward’s proposed model turned on a “non-hostile
relationship” with Blue Cross.

(Id.)

Although not expressly set

out as an APA condition, everyone involved understood that an

8

Such provisions were eventually included in the agreedupon quality program between Blue Cross and Prime, which eventually
acquired Landmark. (SDF ¶ 100.) Additionally, “Blue Cross made
changes in its quality program for Prime that it had refused to
make for Steward, including measuring certain quality metrics
against Landmark’s past performance and not against national
averages.” (Id. ¶ 101.)
9

agreement with Blue Cross was essential for a successful contract
over Landmark.

(SDF ¶ 112.)

On August 6, 2012, negotiations being facilitated by the
Attorney General came to an acrimonious stop when Steward’s team
walked away in response to what it viewed as an unproductive,
obstinate

negotiating

approach

by

Blue

Cross.

(Id.

¶

86.)

Steward’s decision to walk away was met with considerable anger
because at the time, some viewed Steward as petulantly abandoning
a process that so many people had invested in deeply. 9 Nonetheless,
with some prodding, the parties reengaged.
On

September

4,

2012,

Steward

sent

(SDF ¶ 87.)
a

letter

to

Justice

Silverstein that offered two, alternative paths to finalizing the
Landmark

acquisition.

(SDF

¶

114.)

One

path

consisted

of

“satisfying the three conditions, with or without an agreement
with Blue Cross.”

(Id.)

The other required an agreement with

Blue Cross but waived the RISH and Thundermist conditions, and
allowed Steward to “deal with SNERCC later.”

(Id.)

A final

mediation session with retired Chief Justice Frank Williams of the
Rhode Island Supreme Court occurred on September 12, 2012.

9

(Id.

This ire was best reflected in a letter sent to Steward by
the Attorney General. (SDF Ex. 207, ECF No. 204-10.) This letter
was met with a fiery and pointed response from Dr. de la Torre,
Steward’s CEO, summarizing what Steward viewed as Blue Cross’s bad
faith tactics and the Attorney General’s bias and intimidating
behavior. (Def.’s Statement of Undisputed Facts (“SUF”) Ex. 102,
ECF No. 169-33.)
10

¶ 89.)

Alas, this mediation too was unsuccessful.

(See id.)

Steward publicly announced its decision to withdraw its Landmark
bid on September 27, 2012.

(Id.)

Steward announced,

In order to move forward with Steward’s model of care
several conditions needed to be met. These conditions
were clearly spelled out in the Asset Purchase Agreement
and accepted by the Court. These conditions have not
been met. When we were notified that these conditions
could not be met, we presented a second path by which we
would waive two of these conditions.
This alternate
condition was also not met.
(Id. ¶ 117.)

The difference between Steward’s and Blue Cross’s

rate proposals is the subject of considerable dispute, but, as
calculated by Steward, was $3 million.
D.

(See SDF ¶ 97.)

The “Red Team”

Blue Cross’s Chief Financial Officer (“CFO”) Michael Hudson,
an individual involved in Steward negotiations from August to
September 2012, spearheaded what Blue Cross called the “Red Team”
in July 2012.
employees

(SDF ¶ 87.)

charged

with

competitive threats.

The Red Team was a group of Blue Cross
identifying

and

analyzing

(SDF ¶ 87; SAUF ¶ 142.)

potential

One of those

employees was Linda Winfrey, an Assistant Vice President at Blue
Cross responsible for gauging “risks to the enterprise up to and
including disruption of services.”

(SDF ¶ 87.)

AVP Winfrey had

been considering these issues for Blue Cross since at least May
2012, when she circulated (and later presented at an executive
leadership meeting) a document that highlighted Blue Cross’s most

11

pressing threats; at the top of that list was the “potential of
new competitors entering the market including Accountable Care
Organizations
enrollment

(ACO),”

losses

and

which
could

viability as a health plan.”

could

“result

negatively
(Id.)

in

affect

significant

our

long

term

In a similar presentation in

July 2012, “Competition in the Post-PPACA World,” “ACO: Supplier
Leverage” and “Limited Network Carrier (Steward/Fallon?)” were
pinpointed as “new threats” with a high “likelihood of entry to RI
market” and a substantial “adverse impact on BCBSRI.”

(Id.)

AVP

Winfrey also approved the idea of analyzing Steward’s prospective
threat in the first round of the Red Team’s analysis.

(Id.)

In

that analysis, the Red Team included “a map to show just how well
positioned [Steward is] in the southeast part of MA . . . they
have St. Anne’s, Good Sam’s, Morton, Norwood . . . they basically
have RI bordered.

Then Landmark would be the tip of the spear.”

(Id.)
Blue

Cross

contracting,

expressed

which

could

concern
strip

about

some

or

ACOs
all

and
of

an

risk-based
insurance

company’s traditional functions, and the profits associated with
insurance companies bearing risk.

(See, e.g., SAUF ¶ 146; SAUF

Ex. 35, ECF No. 177-36 at 12 (“[T]he possibility exists for the
ACO to develop a level of integration that makes an outside insurer
redundant”); Dep. of Dorothy Coleman (“Coleman Dep.”) at 435:313, 437:18-438:5, SAUF Ex. 7, ECF No. 214-7 (highlighting risk
12

that ACO might team up with an insurance company, which could
severely test Blue Cross’s relevance)).

Blue Cross viewed these

issues, referred to as “disintermediation,” and the process of
“providers becoming payers,” as existential threats.
146.)

Blue

Cross

CEO

Peter

Andruszkiewicz

(See SAUF ¶

testified

in

his

deposition that “disintermediation,” i.e., “providers becoming
payers” and “eliminat[ing] the intermediary known as the payer”
“was a concern among my team, me, and every health insurance
executive in the United States at this time frame.”

(Dep. of Peter

Andruszkiewicz (“Andruszkiewicz Dep.”) at 93, SAUF Ex. 6, ECF No.
214-6.)

Likewise,

Mark

Waggoner,

a

member

of

Blue

Cross’s

Executive Leadership Team (“ELT”) and a key participant in Caritas
discussions, recalled “discussion at Blue Cross at about this same
time

about

delivery

the

system

possibility
could

in

that
some

the

ACO

sense

model

replace

or
a

integrated

conventional

insurance company” because “you saw some of that happening in some
parts of the country” and disintermediation was the “trend in
[nationwide] conversations at that point in time.”

(Dep. of Mark

Waggoner (“Waggoner Dep.”) at 298, SAUF Ex. 11, ECF No. 214-11.)
The

Red

Team

also

analyzed

other

prospective

including one in which Prime entered Rhode Island.

scenarios,

(SAUF ¶ 147;

SAUF Ex. 37, ECF No. 177-38; SAUF Ex. 38, ECF No. 177-39.)

13

E.

Blue Cross’s Contract with Landmark

Under

the

twelfth

amendment

to

Landmark’s

Hospital

Participation Agreement with Blue Cross, the Landmark-Blue Cross
contract was set to expire July 16, 2012.

(SDF ¶ 102.)

With

negotiations faltering, on May 21, 2012, Blue Cross filed an
application for a material modification with the Rhode Island
Department of Health (“DOH”), which included draft notice letters
informing Blue Cross’s subscribers and providers that Landmark
might go “out of network.”

(Id. ¶ 104.)

Upon receipt of Blue

Cross’s material-modification application, the DOH informed Blue
Cross

that

notification

it

should

letters”

send

“revised

detailing

“that

member
until

and
the

physician
Department

completes its review of this potential change and issues its
determination, members will be able to continue to receive covered
services at [Landmark and RHRI] at the in-network benefit level,
if

[the

material

modification]

termination of the contract.”

is

not

approved

prior

to

the

(Id. ¶ 105.)

This material modification request sent shock waves through
the receivership players.

On July 2, 2012, Special Master Savage,

noting the critical stage of negotiations between Steward and Blue
Cross, sought a temporary restraining order (“TRO”) from Justice
Silverstein to stop Blue Cross from putting Landmark out of network
and distributing the letters to subscribers and providers.

The

Superior Court denied the TRO on July 6, 2012; and on July 9, 2012,
14

Blue Cross mailed letters to providers and subscribers explaining
that Landmark might soon be “out of network.” 10

(Id. ¶¶ 107-08.)

On July 16, 2012, Blue Cross’s contract with Landmark terminated;
thereafter

Blue

Cross

compensated

subscribers

healthcare services provided at Landmark.

directly

(Id. ¶ 109.)

for

Landmark

remained out of network until August 31, 2012, when Blue Cross and
Landmark agreed to extend the terms of their participation contract
until three months after a buyer acquired the hospital.
110.)

(Id. ¶

In agreeing to extend the Landmark contract with Blue Cross

as part of a settlement approved by Justice Silverstein, the
Special Master felt he had no choice but to bend to Blue Cross’s
will

given

the

hopsital’s

precarious

condition.

With

court

approval, on September 12, 2012, Landmark was officially back in
network.

(Id.)

In June 2012, Blue Cross’s contracting group considered the
risks facing Blue Cross if it chose not to renew any of its
contracts with various community hospitals, including Landmark.

10

Although Blue Cross had from time to time filed paperwork
to initiate the material-modification process during lagging
negotiations with other hospitals, this move was unprecedented:
“at no time before the Landmark situation had it ever sent out
letters to subscribers and doctors alerting them that any other
hospital was about to be out of network.” (SAUF ¶ 175.) “Nor had
Blue Cross ever before stopped payments to a hospital that was
still officially ‘in network’ and instead directed payments to the
subscribers, leaving to the hospital the difficult burden of
collecting the monies due from the patients themselves.” (Id. ¶
176.)
15

(SAUF ¶ 179.)

Blue Cross knew that removing a hospital from its

network could substantially cost Blue Cross because it would force
its

subscribers

to

access

other,

more

expensive,

in-network

hospitals (such as Rhode Island Hospital, Miriam Hospital, or
Women’s & Infants Hospital).

(Id.)

Blue Cross also knew that

without a contract, Landmark might be forced to close.

(Id.)

Steward suggests, and Court accepts as true for purposes of this
motion, that “Blue Cross knew that the material modification
process typically took 4-6 months, and that the cost of being out
of contract with [Landmark/]Steward in advance of DOH approval
would cost Blue Cross an estimated $3 million per month.”

(Id. ¶

180.) Even without contemplating this cost, Steward adds, it would
cost Blue Cross much more to remove Landmark from its network than
“what Steward was then seeking in terms of reimbursement rate
increases.”

(Id. ¶ 181.)

Nevertheless, in spite of knowing full

well the short term costs of its decision, Blue Cross concluded
that the “path forward for Landmark was to ‘hold our position since
the material modification ha[d] already been filed.’”
Steward states:
pursuing

the

(Id.)

“Despite the financial risk to Blue Cross of

material

modification,

Blue

Cross’

demands

in

exchange for a swift resolution on the material modification were
those that it believed were necessary to end Steward’s bid for the
hospital. As Mike Hudson, Blue Cross’ CFO and then lead negotiator
with Steward explained, he was not going to even talk further with
16

Steward until he learned whether Landmark accepted Blue Cross’
terms, since those terms ‘[c]ould force Steward’s hand — if they
[Landmark] agreed to the contract, then Steward is likely out.”
(Id. ¶ 184.)
F.

Blue Cross Reaches a Deal with Prime over Landmark

Once Steward withdrew from the process, Prime 11 submitted a
proposed APA for Landmark to the Special Master on September 26,
2012.

(SDF ¶ 119.)

After lengthy negotiations, Prime acquired

Landmark on December 31, 2013.

(Id. ¶¶ 122, 125.)

The quality

program Blue Cross reached with Prime included provisions that it
would not accept when presented by Steward, namely evaluating
Landmark “based on improvement in Landmark’s performance against
past performance” rather than national averages.

(Compare SDF Ex.

195 at 6-7, ECF No. 203-16, and SDF Ex. 198 at 14, ECF 204-1 (“Blue
Cross Blue Shield of Rhode Island Hospital Quality Program 2014”)
(“BCBSRI compares each hospital . . . to the threshold targets
established using the national average results from a selected
comparison measurement period . . . unless otherwise determined by
contract.”), with SDF Ex. 197 at 11, ECF No. 203-18 (Blue Cross
and Prime agreement over Landmark) (“Both parties to establish
mutually agreeable improvement targets based on Landmark’s own

11

With forty-four hospitals and 43,500 employees, in
fourteen states, Prime has substantial experience in the business
of reviving distressed hospitals. (SDF ¶ 120.)
17

baseline CY 2013 data . . . .”)).

Although Prime has succeeded to

some degree in righting the ship for Landmark by increasing patient
volume and revenue, (see SDF ¶ 127), it is hotly disputed whether
Prime brought efficiency and innovation to Rhode Island through
Landmark.

(See id.; SDF Ex. 37 at 25, ECF No. 171-38 (noting

Landmark’s operating expenses under Prime increased from $109.3
million in 2013 to $130.6 million in 2015 and $130.4 million in
2016).

Indeed, Prime has not developed an ACO, a significant

physician network, or risk-based contracts. (See SAUF ¶ 197; Prime
30(b)(6) Dep. of Richard R. Charest (“Charest Dep.”) at 74:1076:5, 85:10-15, SAUF Ex. 14, ECF No. 214-14 (“We don’t have riskbased contracts.”); SAUF Ex. 102 at 3, ECF No. 215-27 (Jones of
Thundermist recalling meeting with Prime CEO, where “it was clear
to me that the Prime model does not consider health care efficiency
as an overall goal.”)).

Although at Landmark now “[t]here’s a

nice piano in the entrance” and “[i]t’s looking nicer,” Prime has
not made substantive improvements “in terms of quality or community
partnership.”

(SAUF ¶ 201; Dep. of Charles “Chuck” Jones (“Jones

Dep.”) 286:18-287:4, SAUF Ex. 12, ECF No. 214-12.)
G.

Procedural History

Steward filed its first complaint against Blue Cross on June
4, 2013, in which Steward alleged that Blue Cross’s unilateral
conduct violated Section 2 of the Sherman Act and Section 6-36-5
of the Rhode Island Antitrust Act.
18

(Compl. ¶¶ 62-114, ECF No. 1.)

On July 15, 2013, Blue Cross moved to dismiss Steward’s complaint
(ECF No. 16); this Court denied Blue Cross’s motion on February
19, 2014 (ECF No. 34); see also Steward Health Care Sys., LLC v.
Blue Cross & Blue Shield of R.I., 997 F. Supp. 2d 142 (D.R.I. 2014)
(“Steward I”).

Following the commencement of discovery, Steward

filed an amended complaint on August 26, 2015, adding claims under
Section 1 of the Sherman Act, suggesting Blue Cross’s conduct was
part of a conspiracy with Lifespan and Thundermist to keep Steward
out of Rhode Island.
On July 14, 2017, Blue Cross moved for summary judgment on
all

counts

of

Steward’s

amended

complaint.

Steward

filed

a

response in opposition (ECF No. 172) on August 11, 2017, to which
Blue Cross replied (ECF No. 219) on August 25, 2017.

The Court

heard oral argument by the parties on September 26, 2017 (ECF No.
229).

With a firm trial date approaching in January 2018, on

November 29, 2017, the Court issued a Notice Regarding Defendant’s
Motion for Summary Judgment (ECF No. 338) indicating that it
tentatively had decided to grant Blue Cross’s summary-judgment
motion on all counts, and cancelling the trial date.

The Court

noted that an Opinion and Order would be forthcoming.

Since that

Notice, the Court’s assessment of Blue Cross’s motion has evolved;
this Opinion and Order sets forth the reasons for the Court’s
determination that summary judgment should be denied.

19

II.

Legal Standard
Summary judgment is appropriate when “the movant shows that

there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”

Fed. R. Civ. P.

56(a). “Where the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party, there is no
‘genuine issue for trial.’”

Evergreen Partnering Grp., Inc. v.

Pactiv Corp., 832 F.3d 1, 7 (1st Cir. 2016) (quoting Matsushita
Elec. Ind. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986)).
The Court “draws all reasonable inferences in favor of the nonmoving party while ignoring conclusory allegations, improbable
inferences, and unsupported speculation.”

Id. (quoting Alicea v.

Machete Music, 744 F.3d 773, 778 (1st Cir. 2014)).
The onus is on the moving party to demonstrate that no genuine
dispute of material fact exists.
U.S. 317, 323 (1986).

Celotex Corp. v. Catrett, 477

“Once the moving party makes this showing,

the nonmoving party must point to specific facts demonstrating a
trialworthy issue.”
440,

447

(D.R.I.

United States v. Giordano, 898 F. Supp. 2d
2012).

Rather

than

rest

“upon

the

mere

allegations or denials in the pleading,” the nonmovant “must set
forth specific facts showing that there is a genuine issue of
material fact as to each issue upon which [it] would bear the
ultimate burden of proof at trial.”

Santiago-Ramos v. Centennial

P.R. Wireless Corp., 217 F.3d 46, 53 (1st Cir. 2000).
20

“[E]vidence

illustrating the factual controversy cannot be conjectural or
problematic; it must have substance in the sense that it limns
differing versions of the truth which a factfinder must resolve at
an ensuing trial.”

Mack v. Great Atl. & Pac. Tea Co., 871 F.2d

179, 181 (1st Cir. 1989).
III. Discussion
A.
The Refusal-To-Deal Claim (Counts I, II, V, VI, IX, X,
XIII, and XIV) 12
In 1980, Judge Keith of the Sixth Circuit Court of Appeals
complained that the question of when “a monopolist ha[s] a duty to
deal . . . is one of the most unsettled and vexatious in the
antitrust field.”

Byars v. Bluff City News Co., 609 F.2d 843, 846

(6th Cir. 1980).

Although nearly forty years of ink has spilled

on the topic – including the Supreme Court’s – Judge Keith’s lament

12

To the extent that Steward asserts claims under the Rhode
Island Antitrust Act, as opposed to the Sherman Act, this Court,
like the parties, analyzes the claims together, here and throughout
this Opinion (including Steward’s conspiracy claims).
See R.I.
Gen. Laws § 6-36-2(b); Stop & Shop Supermarket Co. v. Blue Cross
& Blue Shield of R.I., 239 F. Supp. 2d 180, 186-87 (D.R.I. 2003)
(“The provisions of the Rhode Island Antitrust Act mirror those of
§§ 1-2 of the Sherman Act . . . and are construed in the same
manner as the federal statutes.”). For similar reasons, the Court
likewise does not separate out Steward’s monopsonization and
attempted monopsonization claims from Steward’s monopolization and
attempted monopolization claims.
See Weyerhaeuser Co. v. RossSimmons Hardwood Lumber Co., 549 U.S. 312, 320-22 (2007) (“The
kinship between monopoly and monopsony suggests that similar legal
standards should apply to claims of monopolization and to claims
of monopsonization.”).
21

is as apt today as it was when Jimmy Carter was President. 13

As

one commentator succinctly put it, “There is a problem with Section
2 of the Sherman Act:
Lambert,

Defining

nobody knows what it means.”

Unreasonably

Exclusionary

Thomas A.

Conduct:

The

“Exclusion of a Competitive Rival” Approach, 92 N.C. L. Rev. 1175,
1177 (2014).

Nevertheless, this Court must resolve the difficult

(and admittedly close) Sherman Act section 2 question posed by
this case:

has Steward raised a triable issue as to whether Blue

Cross engaged in a predatory refusal to deal by blocking Steward
from entry into the Rhode Island health care and health insurance
markets?
initially

While the question is close – and indeed the Court was
inclined

to

grant

summary

judgment

–

careful

consideration of the case law, facts, and the applicable antitrust
policy objectives, has convinced the Court that the answer is yes,
and therefore Blue Cross’s motion must be denied.
Section 2 of the Sherman Act makes it unlawful to “monopolize,
or attempt to monopolize . . . any part of the trade or commerce

13

Indeed, one recent law review article recounts various
descriptions for the standard to discern exclusionary conduct in
a manner that this Court can appreciate. See Katharine Kemp, A
Unifying Standard for Monopolization: “Objective Anticompetitive
Purpose”, 39 Hous. J. Int’l L. 113, 115 (2017) (“The standards
applicable to the second element, exclusionary conduct, have been
variously
described
as
‘vacuous,’
‘uncertain,’
‘elusive,’
‘unclear,’ ‘unsettled,’ ‘oxymoronic,’ ‘in substantial disarray,’
‘in dire need of correction,’ and plagued by ‘serious definitional
inadequacies.’” (citations omitted)).
22

among the several States, or with foreign nations.”

15 U.S.C. §

2. “The elements of monopolization are ‘(1) possession of monopoly
power in the relevant market and (2) the willful acquisition or
maintenance

of

that

power

as

distinguished

from

growth

or

development as a consequence of a superior product, business
acumen, or historic accident.’” 14

Diaz Aviation Corp. v. Airport

Aviation Servs., Inc., 716 F.3d 256, 265 (1st Cir. 2013) (quoting
United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966)).
“In the absence of any purpose to create or maintain a monopoly,
the act does not restrict the long recognized right of trader or
manufacturer engaged in an entirely private business, freely to
exercise his own independent discretion as to parties with whom he
will deal . . . .” 15
307 (1919).

United States v. Colgate & Co., 250 U.S. 300,

“However, ‘[t]he high value that we have placed on

the right to refuse to deal with other firms does not mean that

14

Blue Cross’s monopoly power – which is “typically proven
by defining a relevant market and showing that the defendant has
a dominant share of that market” – has been assumed by the parties
for purposes of this motion.
Diaz Aviation Corp. v. Airport
Aviation Servs., Inc., 716 F.3d 256, 265 (1st Cir. 2013) (citing
Coastal Fuels of P.R., Inc. v. Caribbean Petroleum Corp., 79 F.3d
182, 196-97 (1st Cir. 1996)).
15

The Supreme Court in Verizon Commc’ns Inc. v. Law Offices
of Curtis V. Trinko, LLP, 540 U.S. 398, 408 (2004) quoted this
passage from United States v. Colgate & Co. but left out the key
qualifying language, “In the absence of any purpose to create or
maintain a monopoly[.]” 250 U.S. 300, 307 (1919). Although this
omission perhaps reflects the Supreme Court’s narrowing of Section
2 liability in Trinko, the qualifying language in Colgate has never
been countermanded and appears to remain the standard.
23

the right is unqualified.’”

Verizon Commc’ns Inc. v. Law Offices

of Curtis V. Trinko, LLP, 540 U.S. 398, 408 (2004) (quoting Aspen
Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 601
(1985)).

That is, “[u]nder certain circumstances, a refusal to

cooperate with rivals can constitute anticompetitive conduct and
violate § 2.”
Commc’ns,

Inc.,

Id.; see also Pacific Bell Tel. Co. v. Linkline
555

U.S.

438,

448

(2009)

(“[T]here

are

rare

instances in which a dominant firm may incur antitrust liability
for purely unilateral conduct.”).
The two leading cases in this area – Aspen Skiing and Trinko
– are well-known, often-cited, and require detailed discussion.
Aspen Skiing involved the Aspen ski area, which comprised four
distinct mountains.

The defendant owned three mountain areas, and

the plaintiff owned the fourth.

For more than fifteen years, the

parties had arranged to issue a joint-ski pass for access to all
four mountains.

So when the defendant suddenly terminated the

joint-ski-pass agreement, the plaintiff - concerned that skiers
would no longer frequent its mountain without a joint-ski pass
available - “tried a variety of increasingly desperate measures to
re-create the joint ticket, even to the point of in effect offering
to buy the defendant’s tickets at retail price.”

Trinko, 540 U.S.

at 408-09 (citing Aspen Skiing, 472 U.S. at 593-94). The defendant
steadfastly refused to recreate the joint-ski-pass arrangement.
Aspen Skiing, 472 U.S. at 594.

The issue before the Aspen Skiing
24

Court was whether defendant Ski Co., in terminating its fourmountain

ticket

with

plaintiff

Highlands,

was

“attempting

exclude rivals on some basis other than efficiency.”

to

Id. at 605.

The Court concluded that there was sufficient evidence to suggest
that the defendant “was not motivated by efficiency concerns and
that it was willing to sacrifice short-run benefits and consumer
goodwill in exchange for a perceived long-run impact on its smaller
rival,” and therefore upheld a jury verdict for the plaintiff.
Id. at 610-11.
Several years later, in Trinko, the Court reconsidered Aspen
Skiing and distinguished it.

540 U.S. at 408-11.

Trinko involved

firms regulated under the Telecommunications Act of 1996, which
required that incumbent local exchange carriers (“ILECs”), like
defendant Verizon, share (i.e., “unbundle”) aspects of its network
with prospective entrants, competitive local exchange carriers
(“CLECs”).

540 U.S. at 402.

The plaintiff lodged a class action

pursuant to § 2 on behalf of CLECs, which complained that Verizon
filled rivals’ orders in a slow and discriminatory manner so as to
discourage customers from choosing its competitors’ services.
at 404-05.

Id.

The Court held that the facts of Trinko were not

comparable to those in Aspen Skiing.

Id. at 408-11.

In doing so,

it noted that the Aspen Skiing Court “found significance in the
defendant’s

decision

to

cease

participation

in

a

cooperative

venture,” adding that the “unilateral termination of a voluntary
25

(and thus presumably profitable) course of dealing suggested a
willingness

to

forsake

anticompetitive end.”

short-term

profits

to

achieve

an

“Similarly, the defendant’s unwillingness

to renew the ticket even if compensated at retail price revealed
a distinctly anticompetitive bent.”

Id. at 409.

Both Aspen Skiing and Trinko provide significant guidance on
what a refusal-to-deal claim might (Aspen Skiing) – or might not
(Trinko) – look like.
look like.

But neither dictated what such a claim must

As this Court reads these cases, they do not specify

granular factual predicates that must be present for a refusalto-deal claim to move forward; rather, the Supreme Court identified
facts that, in the circumstances of each case, pointed toward
conduct that may or may not be characterized as “exclusionary” or
“anticompetitive.”
Skiing,

the

Aspen Skiing, 472 U.S. at 603-04.

Supreme

Court

concluded

“Ski

Co.’s

In Aspen

decision

to

terminate the all-Aspen ticket” could “fairly be characterized as
exclusionary . . . .”

472 U.S. at 604.

When the Court discussed

and distinguished Aspen Skiing in Trinko, it noted that “[t]he
Court there found significance in the defendant’s decision to cease
participation in a cooperative venture.”

540 U.S. at 409 (citing

472 U.S. at 608, 610-11); the Court added, “[t]he unilateral
termination of a voluntary . . . course of dealing suggested a
willingness

to

forsake

anticompetitive end.”

short-term

profits

to

achieve

an

Id. (emphasis added); and finally, “the
26

defendant’s unwillingness to renew the ticket even if compensated
at retail price revealed a distinctly anticompetitive bent.”
(second emphasis added).
language

makes

clear

Id.

The Court’s descriptive, provisional

that

it

regarded

Aspen

Skiing

as

a

paradigmatic example of – not a paint-by-numbers kit for – unlawful
refusals to deal. See Trinko, 540 U.S. at 411 (“Antitrust analysis
must

always

be

attuned

to

the

particular

structure

and

circumstances of the industry at issue.”).
Much of the confusion over Aspen Skiing and Trinko results
from courts of appeals that either misread or deliberately extend
the holdings of these cases, construing them in a rigid fashion to
require, for example, an explicit prior course of dealing. 16

See,

e.g., Novell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1074 (10th
Cir. 2013) (“First, as in Aspen, there must be a preexisting
voluntary and presumably profitable course of dealing between the
monopolist and rival.”) (emphasis added); In re Elevator Antitrust
Litig., 502 F.3d 47, 52 (2d Cir. 2007) (requiring “alleg[ation]

16

Indeed, at the motion-to-dismiss stage, this Court may
well have implied that Steward must meet what the Court described
as the “baseline requirements” of a refusal-to-deal claim: the
“unilateral abandonment of a voluntary course of dealing,
forsaking of short-term profits, refusal to transact business with
the plaintiff even if compensated at rates set by the defendant,
and concomitant inability to provide a legitimate business
rationale . . . .” Steward I, 997 F. Supp. 2d at 153. After a
more careful review of the cases, however, the Court is of the
view that to require, without exception, each of these factors to
make out a refusal-to-deal claim (as Blue Cross would have it) is
to misconstrue Aspen Skiing and Trinko.
27

that defendants terminated any prior course of dealing” as “the
sole exception to the broad right of a firm to refuse to deal with
its competitors”); Covad Commc’ns Co. v. BellSouth Corp., 374 F.3d
1044, 1049 (11th Cir. 2004) (“Trinko now effectively makes the
unilateral

termination

of

a

voluntary

course

of

dealing

a

requirement for a valid refusal-to-deal claim under Aspen.”).
Novell

(authored

by

now-Justice

Gorsuch)

and

In

re

Elevator

Antitrust Litigation, in particular, use emphatic language to
describe

the

“mandatory”

holding

of

Trinko;

Covad

uses

less

strident words (“effectively makes . . . unilateral termination
. . . a requirement”).

But without sugar-coating it, Aspen Skiing

and Trinko just do not say what these courts say they do.

And

while there may be antitrust policy reasons that support pulling
back the reins on refusal-to-deal claims, it is up to the Supreme
Court to take this step.

Until then, Aspen Skiing and Trinko, in

this Court’s view, should be applied as written, in concert with
the instructive holdings of the First Circuit. 17

17

A policy reason against requiring the termination of a
prior course of dealing is that to do so would be to discourage
new, mutually beneficial market arrangements, thereby entrenching
the status quo. See Olympia Equip. Leasing Co. v. W. Union Tel.
Co., 797 F.2d 370, 376 (7th Cir. 1986) (Posner, J.) (“[T]he law
would be perverse if it made Western Union's encouraging gestures
the fulcrum of an antitrust violation.”).

28

The First Circuit has not had occasion to interpret Trinko,
but what it has said about Aspen Skiing is instructive.

In Data

General Corp. v. Grumman Sys. Support Corp., the court interpreted
Aspen Skiing as “casting serious doubt on the proposition that the
Court has adopted any single rule or formula for determining when
a unilateral refusal to deal is unlawful.”

36 F.3d 1147, 1183

(1st Cir. 1994), abrogated on other grounds by Reed Elsevier, Inc.
v. Muchnick, 559 U.S. 154 (2010).

Indeed, the court recognized

that under Aspen Skiing “a monopolist’s unilateral refusal to deal”
may arise “in . . . very different situation[s].”

Id.

Other Courts have likewise acknowledged that refusal-to-deal
law generally – and Aspen Skiing and Trinko specifically – is
concerned

with

harm

to

competition

without

a

valid

business

justification, which can manifest itself in myriad ways.

See,

e.g., In re Thalomid & Revlimid Antitrust Litig., No. 14-6997 (KSH)
(CLW), 2015 WL 9589217, at *15 (D.N.J. Oct. 29, 2015) (“[The
defendant]

reads

Aspen

Skiing

and

Trinko

too

narrowly.

The

termination of the dealing between Ski Co. and Highlands was used
as

circumstantial

evidence

of

Ski

Co.’s

demonstrated

anti-

competitive motivation, along with its lack of legitimate business
justifications for doing so.”); Helicopter Transp. Servs., Inc. v.
Erickson Air-Crane Inc., No. CV 06-3077-PA, 2008 WL 151833, at *9
(D. Or. Jan. 14, 2008) (“That Erickson and HTS had no prior course
of dealing is immaterial.

The Supreme Court has never held that
29

termination of a preexisting course of dealing is a necessary
element of an antitrust claim.

It was merely one of several facts

in Aspen Skiing that supported a finding that the refusal to deal
was intended to exclude competition rather than to advance a
legitimate business interest.”). 18
The question this Court must decide on summary judgment, then,
is whether a genuine and material factual dispute exists as to
whether Blue Cross’s conduct, which Steward characterizes as a
unilateral

refusal

to

deal

with

Steward,

amounts

to

illegal

exclusionary conduct as opposed to lawful, vigorous competition.
Data General provides a rubric to assess this question.

18

There,

Indeed, commentators more-or-less agree that the Supreme
Court has chosen not to enunciate an all-encompassing framework
for refusal-to-deal liability.
See, e.g., James A. Keyte, The
Ripple Effects of Trinko: How It Is Affecting Section 2 Analysis,
20 Antitrust 44, 49 (Fall 2005) (“Lower courts . . . have not read
Trinko as even attempting to construct a generalized predation
test or endorsing any particular analysis . . . .”); Robert A.
Skitol, Three
Years
After
Verizon
v.
Trinko: Broad
Dissatisfaction with the Whole Thrust of Refusal to Deal Law, 6
Antitrust Source 1, 1 (2007) (“Today, after more than three years
of experience with lower courts’ applications of the Court’s
ruling, Trinko has proven to be among the least satisfactory
antitrust opinions of the Supreme Court in the past three decades.
It has unsettled more than it has settled; made the law less rather
than more predictable; and exacerbated more than resolved the most
contentious
controversies
in
monopolization
and
attempted
monopolization cases.”); Edward D. Cavanagh, Trinko: A Kinder,
Gentler Approach to Dominant Firms Under the Antitrust Laws?, 59
Me. L. Rev. 111, 126 (2007) (“The question of when non-price
exclusionary behavior by a monopolist is unlawful is complex. The
Court in Trinko chose not to articulate a bright-line rule.”).

30

the court set forth a burden-shifting framework that requires a
plaintiff to prove a prima facie case that includes showing “a
monopolist’s unilateral refusal to deal with its competitors (as
long as the refusal harms the competitive process).” Data General,
36 F.3d at 1183.

Once proved, the monopolist “may nevertheless

rebut such evidence by establishing a valid business justification
for its conduct.” 19

Id. at 1183.

The court added:

In general, a business justification is valid if it
relates directly or indirectly to the enhancement of
consumer welfare.
Thus, pursuit of efficiency and
quality control might be legitimate competitive reasons
for an otherwise exclusionary refusal to deal, while the
desire to maintain a monopoly market share or thwart the
entry of competitors would not. In essence, a unilateral
refusal to deal is prima facie exclusionary if there is
evidence of harm to the competitive process; a valid
business justification requires proof of countervailing
benefits to the competitive process.
Id. (internal citations omitted).
Blue Cross has not structured its summary judgment argument
to correspond to the Data General burden shifting rubric; it has
instead directed its argument almost exclusively at Steward’s

19

The D.C. Circuit Court of Appeals endorsed a similar
burden-shifting framework in United States v. Microsoft Corp., 253
F.3d 34, 58-59 (D.C. Cir. 2001). There, recognizing the difficulty
in “stating a general rule between exclusionary acts, which reduce
social welfare, and anticompetitive acts, which increase it,” the
court laid out a five-step framework to decide “[w]hether any
particular act of a monopolist is exclusionary, rather than merely
a form of vigorous competition.”
Id. at 58-59.
The Microsoft
five-step framework, while not binding, may be useful at trial in
framing instructions for the jury.
31

theory at the prima-facie stage, while peppering its argument here
and there with legitimate business reasons for its behavior.
Likewise, the Court will not attempt to frame its analysis along
a strict Data General framework, but will deal with the arguments,
essentially as presented by Blue Cross.

The bottom line is that

the evidence Steward has presented meets its prima facie burden,
and Blue Cross’s claim of legitimate business reasons – to the
extent the Court can identify them 20 – is sufficiently rebutted by
Steward.
Aspen

Skiing

and

Trinko,

properly

read,

provide

useful

guidance as to whether Blue Cross’s conduct amounted to a refusal
to deal motivated by anticompetitive animus.

While the indicators

of anticompetitive animus here vary somewhat from what the Supreme
Court identified in Aspen Skiing and Trinko, those differences are
reflective of the very different marketplaces at issue (healthcare
and health insurance as opposed to ski resorts and regulated
telecommunications).

Potentially

anticompetitive

behavior

by

market participants is bound to manifest itself differently in
different markets.

See Eastman Kodak Co. v. Image Tech. Servs.,

Inc., 504 U.S. 451, 466-67 (1992) (“Legal presumptions that rest

20

Blue Cross’s argument rests primarily upon a theory that
it did not, as a matter of law, refuse to deal with Steward in
violation of Section 2. Its legal argument is incorrect for the
reasons explained.
32

on formalistic distinctions rather than actual market realities
are generally disfavored in antitrust law.”).
Here, Steward sets forth an abundance of evidence that points
toward a “distinctly anticompetitive bent,” which could in turn
persuade a reasonable jury that Blue Cross unlawfully monopolized
the relevant markets by excluding Steward from Rhode Island.
Some of the evidence that supports Steward’s theory, viewed
in the light most favorable to Steward, is as follows. 21
category

of

evidence

that

points

toward

The first

exclusionary

conduct

concerns Blue Cross’s conduct with respect to Landmark itself and
whether Blue Cross terminated its prior course of dealing with
Landmark to keep Steward out of Rhode Island.

The evidence

suggests that Blue Cross terminated a longstanding, presumably
profitable course of dealing with Landmark in order to block
Steward.

It is of no consequence that Blue Cross did not have or

terminate a prior course of dealing directly with Steward at
Landmark, for the reasons discussed above; the critical question
is how Blue Cross dealt with Landmark in the context of the effort
by Steward to purchase it.

21

As with the factual background presented at the outset of
the Opinion, this review of Steward’s evidence is not intended to
be exhaustive. Rather, it simply highlights a sample of Steward’s
factual presentation, which is sufficient under Rule 56 to raise
a genuine and material factual dispute requiring a trial.
33

It is undisputed that Blue Cross and Landmark entered into a
hospital-participation agreement in 2006, which had been routinely
extended multiple times.

(SDF ¶ 57.)

That all ended when Blue

Cross allowed its contract with Landmark to expire on July 16,
2012.

(See id. ¶¶ 102, 109.)

In May 2012, while in the midst of

difficult negotiations with Steward in connection with Steward’s
bid to acquire Landmark through the receivership, Blue Cross filed
the necessary papers with the DOH for a “material modification” –
i.e., official permission to remove Landmark from its provider
network.

(SDF ¶ 104; SDF Ex. 202, ECF No. 212-45.)

This step was

not necessarily unusual, as Blue Cross had, on other occasions,
taken steps to institute the material modification process with
the DOH when negotiations with other hospitals stalled.
175.)

Blue Cross, however, did not stop there.

(SAUF ¶

Although it had

not yet received DOH approval, on July 9, 2012, Blue Cross informed
subscribers via letter that the Landmark contract would expire on
July 16, and “[i]f the [DOH] approves the network change, Landmark
Medical Center will be considered out of network on August 1,
2012 . . . .”

(SAUF Ex. 84 at 2, ECF No. 215-9.)

Blue Cross

added, “Despite our continued efforts to resolve the current
situation, we feel it’s important to notify our members that a
resolution is doubtful at this time.”

(Id.)

Never before had Blue Cross mailed a letter to doctors and
subscribers notifying them of the immediate and impending removal
34

of a member hospital from its network.

To be clear, it was not

just the notification that was remarkable; never before or since
has Blue Cross kept true to its initial material modification
application promise by actually allowing a hospital to go “out of
network.” 22

22

Deposition testimony of Blue Cross employees
enlightening. Blue Cross’s CFO Michael Hudson testified:

is

Q. Has it been Blue Cross’s experience that when it sends
out letters announcing that hospitals are going to be
out of network after a certain date, that those letters
have no impact on usage of the hospital?
A. I don’t have data that indicate that one way or the
other.
I would say that the point is, no hospital’s
ever been out of network. . . . But in the time I was
there, with no hospital that I was aware of, nor any,
you know, significant medical group have they ever
actually gone nonparticipating.
. . .
Q. Can you remember any other occasion during your tenure
at Blue Cross where, with respect to one of the hospitals
in Rhode Island, you sent out letters to people saying,
On such-and-such a date, Westerly or South County or
whoever it might be, is going to be out of network?
A. Not in the time I worked there.
(Dep. of Michael Hudson (“Hudson Dep.”) 146:2-16, 148:4-10, SAUF
Ex. 9, ECF No. 214-9.)
And Shawn Donahue, Blue Cross’s Director of Government Relations,
had a consistent recollection:
Q. So since 2012, has Blue Cross sent out letters to
members informing them that a hospital will be removed
from its network?
A. . . . I don’t recall that I’m aware of any such
letters.
35

The consequences of Blue Cross permitting a hospital to - for
the first time ever - go “nonparticipating,” and of sending a
letter to members about it were significant; so significant, in
fact, that the Special Master tried to put a halt to it and to
extend Blue Cross’s contract with Landmark.

(SDF ¶ 103; SDF Ex.

90, ECF No. 210-2; SDF Ex. 219, ECF No. 213-14.)

On July 2, 2012,

the Special Master moved for an emergency TRO “to preserve the
status

quo

by

restraining

Blue

Cross

.

.

.

from

notifying

subscribers or the public that it has filed a request for material
modification of health insurance plans in order to remove Landmark
Medical Center . . . from its provider network.”

(SAUF ¶ 177;

SAUF Ex. 83 at 3, ECF No. 215-8.)

In that filing, the Special

Master

letter

argued

that,

“[s]ending

a

to

subscribers

and

providers notifying them that LMC and RHRI will be out-of-network
providers

after

August

6,

2012

is

premature

and

very

likely

misleading and inaccurate. . . . [g]iven the hurdles that Blue
Cross must overcome to obtain DOH approval and such additional
federal approvals that may be needed.”
added,

“Injunctive

relief

is

(SAUF Ex. 83 at 5-6.)

further

warranted

to

He

protect

Landmark, patients and physicians from the chaos and confusion
that will result from a letter that incorrectly advises them that

(Dep. of Shawn Richard Donahue (“Donahue Dep.”) at 310:5-9,
SAUF Ex. 8, ECF No. 214-8.)
36

[Landmark] and RHRI will be out-of-network providers as of August
6, 2012.” 23

(Id. at 9.)

Blue Cross’s conduct in removing Landmark from its network
and prematurely notifying subscribers about such a possibility
strayed far from its ordinary course of dealing with Landmark, or
any other hospital for that matter.

A reasonable jury could

conclude

hard-core

that

Blue

Cross’s

uniquely

approach

with

respect to Landmark, just as negotiations with Steward were at a
critical stage, was not a legitimate business decision, but was
designed to kill the Steward acquisition.

Indeed, Blue Cross

itself implicitly recognized this in its application for material
modification to the DOH:

“Despite our best efforts to provide

Steward with a fair and reasonable rate . . . we are concerned
that

we

may

not

be

able

to

come

to

an

agreement

with

Steward . . . . If we are not able to come to agreement with
Steward

by

[July

16,

2012],

Landmark

participating in the BCBSRI network.”

will

then

become

(SDF Ex. 202 at 2.) 24

nonIt

23

It is of little consequence that Justice Silverstein did
not grant the TRO; the important point is that the Special Master
perceived this move by Blue Cross as a potentially catastrophic
economic event.
24

Other evidence the jury may have to consider includes the
Attorney General’s comment to Steward officials at a negotiation
session that, Blue Cross “just do[es]n’t want you to do business
in this state.” (SDF ¶ 86 (quoting Dep. of Joseph Maher at 182:21183:17, SDF Ex. 7, ECF No. 206-7; see also Dep. of Ralph de la
Torre at 167:17-23, SDF Ex. 1, ECF No. 206-1 (“The message is Blue
Cross is going to do anything to keep you out. They literally cut
37

is undisputed that Landmark remained out of network until August
31, 2012, at which point the Special Master and Blue Cross agreed
to extend the terms of the hospital participation contract until
three months after a buyer acquired Landmark.

(SDF ¶ 110.)

The

Special Master agreed to this settlement, however, only because
Landmark’s condition once removed from network left him no other
choice but to accept whatever terms Blue Cross demanded.

(SDF Ex.

205 at 3, 4, ECF No. 204-8 (in Special Master’s emergency petition
to superior court for instructions on September 6, 2012, explaining
that Landmark going out of network caused “the cash receipts of
Landmark” to “decline[] precipitously” and “a substantial loss of
patients” and “The Special Master believes that the very survival
of

Landmark

and

RHRI

is

at

stake

and

that

he

had

no

other

alternative but to execute the MOU on the conditions imposed by
Blue Cross . . . .”); Dep. of Jonathan N. Savage at 143:4-5, SDF
Ex. 28, ECF No. 206-28 (Special Master describing his agreement to
Blue Cross’s MOU as “an absolute and total capitulation” to Blue
Cross’s terms)).
Blue Cross knew how its demands could impact Steward.

As

Blue Cross CFO (and then-lead negotiator) Mike Hudson made clear
in an email leading up to Landmark moving back in network and in

off funds to a hospital that is going bankrupt, and the Special
Master is powerless to change it. The judge, he’s kind of there,
kind of not.
It’s another body shouting a clear message that,
‘They just don’t want you.’”).
38

the midst of the Blue Cross-Steward negotiations:

“Landmark asked

the judge to have us pay them instead of the member and was willing
to accept the prior contracted rates. . . . Could force Steward’s
hand – if [Landmark] agree[s] to the contract, then Steward is
likely out.”

(SDF Ex. 91, ECF No. 210-3.)

And it appears that’s

precisely what happened.
Next, and perhaps most importantly, Steward presents plethora
evidence that Blue Cross sacrificed short-term profits for the
longer-term
Steward.

benefit

of

eradicating

potential

competition

from

For example, in June 2012, Blue Cross conducted a

“Contract Renewal Risk Analysis & Strategic Assessment,” in which
it “identif[ied] and weigh[ed] the risks to BCBSRI and [its]
members associated with the failure to reach agreement [with] four
community hospitals currently in negotiation” including Landmark. 25
(SAUF Ex. 71 at 2-3, ECF No. 214-71.)
number

of

termination

financial
of

a

“risks”

in

the

Blue Cross identified a
event

community-hospital

of

non-renewal

contract,

or

including

“[f]inancial exposure of non-participation status and flow of
services to other entities.” (Id. at 3.) These financial exposure
risks included:

(1) “payment to full charge exposure upon non-

25

The objective of this assessment by Blue Cross was to
“provide recommendations taking into account the relevant
considerations and how best to strategically proceed.” (SAUF Ex.
71 at 3, ECF No. 214-71.)
39

participation,”

i.e.,

having

to

pay

hospitals

at

regular,

undiscounted rates for patients who still used the now out-ofnetwork hospital; and (2) the cost of “moving services to higher
cost hospitals,” i.e., having to pay higher reimbursement rates at
the other in-contract hospitals where subscribers would now seek
care because Blue Cross removed their previous top-choice hospital
from the network. (Id.) This latter category was most potentially
impactful because, Blue Cross recognized, “[a]ll” of the four
community hospitals with contracts set to expire in 2012 (including
Landmark) “are in dire financial trouble and all are likely to
fail if their BCBSRI agreement is not renewed.”

(Id.)

In its internal analysis, Blue Cross calculated exactly how
much it would cost to pay the reimbursement rate increases Steward
was seeking (i.e., the “[p]osition [v]ariance based on current
[negotiation] positions”) and compared it to how much it would
cost to allow Landmark to go out of network, and likely shut its
doors.

(Id. at 4-5.)

Blue Cross estimated that Landmark going

out of network and/or closing would cost Blue Cross $9.8 million.
(Id. at 5.)

This exceeded by over $4 million the amount Blue Cross

estimated it would lose if it accepted the rate increases proposed
by Steward for Landmark, which would cost $5.4 million. 26

(Id. at

4.)

26

And, Steward contends there is more. This loss does not
include the pre-material modification costs estimated to be $3
40

In one presentation slide titled “Risk Factors Integrated
View,” Blue Cross uses a graphic to assess and value the various
“risk factors” for each of the four community hospitals, assigning
each risk factor a value between one and four points.
In

the

“Financial

Impact”

category

evaluated

by

(Id. at 8.)
Blue

Cross,

Landmark was the only hospital of the four to receive a full four
points.

(Id.)

hospitals,

Blue

With
Cross

respect

to

assessed

the
that

three

other

“[b]ecause

community
of

[the]

significant risk,” it would consider additional rate increases and
work toward achieving contracts to keep these hospitals in network.
(See id. at 9.)

Despite identifying an out of contract or closed

Landmark as its most serious risk, Blue Cross elected to stay the
course:

“We recommend that we continue to hold our position with

Landmark since the material modification has already been filed.”
(Id.)

Blue Cross had on occasion before filed papers to initiate

material modification for negotiation leverage when discussions
with other hospitals lagged, but in those instances Blue Cross
always reached an agreement before taking the extreme and unusual
step of announcing to its members that a hospital would be out-

million per month, over a period of four to six months. (SAUF ¶
180; SAUF Ex. 71; Dep. of Mark Waggoner at 184:12-185:3, SAUF Ex.
11, ECF No. 214-11.). Notably, even Blue Cross’s estimate that
Steward’s proposal would cost $5.4 million is disputed. Steward
suggests it would have cost $3 million, (see SDF ¶ 97; DSUF Ex.
102, ECF No. 169-33 (de la Torre letter to Attorney General)),
which, if true, would make this loss even greater.
41

of-network and allowing a contract to terminate.

(See SAUF ¶ 175;

Hudson Dep. at 146:21-148:16, SAUF Ex. 9; Donahue Dep. 310:2-13,
SAUF Ex. 8 (“There’s been contentious negotiations adversarial,
but they generally get resolved before they get to this phase.”)).
This evidence more than suffices to create a trial-worthy
issue as to whether Blue Cross sacrificed short-term profits (by
letting the Landmark contract lapse) for the long-term benefit of
keeping Steward out of Rhode Island.

And if more were needed,

which it is not, Steward’s experts confirm this point.

(See SAUF

¶ 182; Expert Report of Professor Leemore Dafny, SAUF Ex. 22 at
13,

ECF

No.

214-22

(“[T]hese

analyses

corroborate

BCBSRI’s

contemporary analyses showing that rejecting Steward’s offers was
costly to BCBSRI.”)).
Steward also presents evidence to suggest that the proposals
made and rejected by Blue Cross amounted to a refusal to deal,
because Blue Cross negotiated in bad-faith.

This evidence is

complicated in light of what both parties acknowledge is the
“complex and highly differentiated” aspect of hospital services,
(see Def.’s Mem. in Supp. of Mot. for Summ. J. (“Def.’s Mem.”) 29,
ECF No. 157); Pl.’s Resp. in Opp’n to Def.’s Mot. for Summ. J.
(“Pls.’ Resp.”) 32, ECF No. 172-1); but Blue Cross cannot hide
behind this complexity to escape the material factual disputes
that Steward has effectively uncovered.

For present purposes, the

Court need not decide the proper methodology to assess appropriate
42

hospital reimbursement rates (indeed, both parties have different
takes on this subject, which itself suggests it is a matter for
trial).

It is sufficient that Steward has sufficiently created a

factual dispute as to whether Blue Cross refused to deal with
Steward over Landmark by proposing rates below the averages it
paid to other Rhode Island hospitals, and rejecting proposals
consistent with what it accepted for other hospitals, essentially
negotiating in bad faith with Steward.
The evidence Steward sets forth is as follows.

It is not

disputed that Blue Cross pays a range of reimbursement rates to
various hospitals in Rhode Island. In 2010 when Caritas (Steward’s
predecessor) first attempted to acquire Landmark, an OHIC study
titled

“Variations

in

Hospital

Payment

Rates

by

Commercial

Insurers in Rhode Island” reported that the rates paid to Landmark
were twenty-two percent below the average for all Rhode Island
hospitals, and even farther below the rates that some Lifespan and
CNE-affiliated hospitals received.
ECF No. 208-11.)

(SDF Ex. 67 at 16 & Fig. 10,

Steward argues the highest rate increase it

proposed to Blue Cross (in May 2012) was for Landmark to be
reimbursed at ninety-five percent of the average Blue Cross paid
to all hospitals in Rhode Island, with an option to receive an
additional

five

percent

based

on

43

quality,

which

practically

amounted to about a fifteen percent rate increase. 27
106, ECF No. 215-31; SAUF ¶ 203.)

(See SAUF Ex.

What is important is that

Steward has produced evidence that it proposed reimbursement rates
for Landmark at a level lower than what Blue Cross was paying other
hospitals (based on averaging the rates).
Blue Cross argues that “the undisputed evidence shows that
the rates Blue Cross offered Steward at Landmark were higher than
the rates Blue Cross paid comparable hospitals for comparable
services.”

(Def.’s Mem. 29-30.)

At summary judgment this Court

need not accept at face value what Blue Cross contends are the
appropriate hospital comparators.

Indeed, Blue Cross undermines

its own position on this point in its brief:

after suggesting

what the proper hospital-rate comparison should be, i.e., which
hospitals Landmark can and cannot be compared to for calculating
reimbursement rates, in other parts of its brief it argues that
because hospital services are so different, no two hospitals can
really be compared for these purposes at all.

(See id.)

Then,

remarkably, Blue Cross pivots again to argue that the appropriate

27

Steward also offered Blue Cross a lower rate increase for
Landmark of 7.4% per year for two years, to be offset by
significant reductions in Blue Cross’s payments to Steward’s St.
Anne’s hospital. (See SDF Ex. 157 at 5, ECF No. 199-12.)
44

comparison is actually between Steward and Prime, the entity that
ultimately acquired Landmark. 28

(See, e.g., id. at 34.)

Regardless of what it now asserts for purposes of this motion,
Blue Cross’s own evidence and analysis supports the premise that
Blue

Cross

including

had

been

Lifespan

comparing
and

CNE

Landmark

hospitals

to

other

that

Blue

hospitals
Cross

–

more

generously reimbursed – because patients would be leaving Landmark
for those hospitals upon Landmark’s closure.
71.)

(See, e.g., SAUF Ex.

The upshot is that, at trial, Steward and Blue Cross will

have the opportunity to argue which hospitals Landmark should and
should not properly be compared to for rate-increase purposes.
While

Blue

Cross’s

view

of

this

world

of

rate

setting

may

ultimately persuade a jury that it was operating in good faith and
not refusing to deal, summary judgment is not appropriate.
Although the Court is satisfied that the above discussion
explains

why

Steward’s

refusal-to-deal

claim

must

advance

to

trial, Blue Cross has raised several additional arguments to rebut
Steward’s Section 2 claim.

None of these arguments change the

outcome.
First, Blue Cross argues that it could not have refused to
deal because “it was Steward that walked away from negotiations

28

Blue Cross may ultimately be correct that the terms on
which it eventually agreed with Prime are relevant for some purpose
at trial, but the Court need not decide that question on this
motion.
45

and refused to deal.”

(Def.’s Mem. 17.)

As a matter of law, it

does not matter that Steward “walked away” from the negotiating
table, if Blue Cross made an offer that it knew could not be
accepted. See MetroNet Servs. Corp. v. Qwest Corp., 383 F.3d 1124,
1132-33 (9th Cir. 2004) (“An offer to deal with a competitor only
on unreasonable terms and conditions can amount to a practical
refusal to deal.”).

Blue Cross’s own belief in its good faith and

its suggestion that it invested “enormous effort to try to get a
deal done with Steward at Landmark,” (Def.’s Mem. 20), is not
dispositive at summary judgment; the record contains sufficient
evidence from which a reasonable juror could conclude otherwise,
i.e., that Blue Cross was moving backwards in negotiations with
Steward, including imposing knowingly unattainable quality metrics
on

Steward.

Specifically,

Steward

contends

that

Blue

Cross

responded to Steward’s proposals with counter-proposals that moved
backwards then requested a response, effectively attempting to
force Steward to bargain against itself.

(See, e.g., SDF Ex. 155,

ECF No. 211-12; SDF Ex. 179, ECF No. 212-22; SDF Ex. 180, ECF No.
212-23; see also Rich Dep. 193:24-194:6, SDF Ex. 11, ECF No. 20611 (“I think this is part of the fundamental problem in Mark
[Waggoner’s]

email,

his

last

sentence.

proposal.’ We had already bid.

.

.

.

‘We

welcome

a

They gave us a bid that was

effectively lower, and they’re asking us for a counter, what we
believe to be [bargaining] against ourselves.”).
46

Next, Steward

cites comments by Andruszkiewicz in an August 6, 2012 Providence
Business News article, indicating that Blue Cross might offer a
“limited-network” product that could exclude certain hospitals,
including Landmark.

(See SDF Ex. 181, ECF No. 212-24.)

And

finally, Steward points to an email from Mark Hudson of Blue Cross
to Mark Rich of Steward – both lead negotiators for the respective
entities -

in which Hudson writes,

You reiterated your demand that Landmark be included in
all BCBSRI products, including those that may have a
limited or tiered network. In the event BCBSRI offers
products with tiers in the future, the tiers will be
determined based on cost and quality.
Granting
preferred status to providers who otherwise wouldn’t
qualify would impair the quality of any tiered product,
especially when granting such status was made to an
organization that refuses to participate in quality
improvement initiatives.
(SDF Ex. 182 at 3, ECF No. 212-25.)

A jury will have to decide if

this was, as Steward contends, bad faith, backward negotiations,
or as Blue Cross says, just good business.
Next, Blue Cross argues that in order for Steward’s claim to
move forward, this Court must “impose on a state-regulated insurer
a novel antitrust duty to purchase hospital services.”
Mem.

34.)

In

suggesting

that

Steward’s

legal

(Def.’s

theory

is

“unprecedented,” Blue Cross argues that “Steward asks this Court
to find that Blue Cross had an antitrust duty to accept particular
reimbursement rates proposed by the acquirer of a failing Rhode
Island hospital.”

(Id. at 35.)

47

This is melodrama, as are Blue

Cross’s unsubstantiated assertions that to allow Steward’s claim
to clear summary judgment requires the Court to “assum[e] the role
of a regulator of health insurer provider networks,” and thus
“upset the delicate balance that OHIC and Blue Cross strike when
fulfilling their public interest missions.”
It

is

simply

incorrect

to

say

(Id. at 35-36.)

that

to

recognize

the

possibility of a refusal-to-deal by Blue Cross requires the Court
to impose a “novel antitrust duty” by requiring that Blue Cross
accept the reimbursement rates that Steward proposed.

The law

does not impose, and this Court may not dictate, the precise terms
that Blue Cross must accept; but the law does impose a duty on
Blue Cross to compete fairly, and specifically to not forego short
term

profits

for

the

maintaining a monopoly.

purpose

of

blocking

competition

and

And in order to enforce this duty, the

Court – in fact the jury – must consider the parties’ conduct in
the context of the particular markets at issue.

Town of Concord

v. Bos. Edison Co., 915 F.2d 17, 22 (1st Cir. 1990) (Breyer, C.J.)
(“[A]ntitrust analysis must sensitively recognize and reflect the
distinctive economic legal setting of the regulated industry to
which it applies.” (internal quotations and citations omitted)).
If the jury finds in favor of Steward, it will need to consider
the question of damages (discussed below), but none of this equates
to the result Blue Cross purportedly fears.

48

In

addition,

Blue

Cross

overstates

the

role

of

OHIC

regulations and the supposed “delicate balance” that enforcing the
antitrust laws would upset in this case.

Indeed, the meager

regulatory context at play here is far different from what the
Supreme Court recognized – and underscored – in Trinko.

OHIC’s

role is distinguishable from the FCC’s regulatory function in
Trinko, both in scope and effect.
In

Trinko,

the

Supreme

Court

emphasized

“[t]he

specific

nature of what the 1996 [Telecommunications] Act compels,” which
included “statutory restrictions upon Verizon’s entry into the
potentially lucrative market for long-distance service.”
at 409, 412.

540 U.S.

“Authorization by the FCC require[d] state-by-state

satisfaction of § 271’s competitive checklist, which as [the Court
has] noted includes the nondiscriminatory provision of access to
UNEs.”

Id. at 412.

There is nothing even close to this enforced infrastructure
sharing arrangement in the OHIC scheme.

The RI OHIC regulatory

scheme is essentially a rate setting mechanism, one that ensures
that rates will not increase too much in a given year without good
reasons and approval. 29

29

The 2012 Rate Approval Conditions provided,

Upon written request of an issuer, supported by the
hospital’s written agreement with the issuer’s request,
the Commissioner may approve exceptions to the index
limit for those hospital contracts which the issuer
49

Further, the “Office of Health Insurance Commissioner” does
not regulate health care providers or doctors nor the prices they
charge for services; instead, as its name suggests, it regulates
health insurers and insurance.

(Dep. of former OHIC Commissioner

Chris Koller (“Koller Dep.”) at 225:22-226:3, SDF Ex. 26 (“Q. If
a hospital had requested a waiver, would you have considered it?
A. We have no jurisdiction over hospitals.”).
So rather than present “a regulatory structure designed to
deter and remedy anticompetitive harm,” Trinko, 540 U.S. at 412,
in which circumstances “the additional benefit to competition
provided by antitrust enforcement will tend to be small,” id.,
here, as in similar cases, “[t]here is nothing built into the
regulatory scheme which performs the antitrust function,” id.
(alteration in original) (quoting Silver v. N.Y. Stock Exch., 373

demonstrates, to the Commissioner’s satisfaction, align
significant financial responsibility for the total costs
of care for a defined population and set of services in
manners generally consistent with the alternative
Medicare
payment
mechanisms
proposed
under
the
Affordable Care Act.
Issuers are encouraged to file
such requests.
(SDF Ex. 43 at 2, ECF No. 206-43.)
And former OHIC
Commissioner Chris Koller testified:
“[W]e would consider
and possibly approve exceptions to the index limit and the
quality incentives. In other words . . . this was a wideopen area if the hospital and the issuer -- the insurer -wanted to do something different.”
(Dep. of Chris Koller
(“Koller Dep.”), SDF Ex. 26 at 235:16-21, ECF No. 206-26.)
50

U.S. 341, 358 (1963)).

Thus, “the benefits of antitrust are worth

its sometimes considerable disadvantages.”

Id.

For all the reasons discussed above, Steward’s refusal-todeal claims for unlawful monopolization and monopsonization clear
the summary-judgment bar. Blue Cross’s motion for summary judgment
with respect to these counts will therefore be denied. 30

30

One final point:
Steward also points to Blue Cross’s
conduct toward St. Anne’s and Morton – two Steward-owned hospitals
in the area of Massachusetts bordering Rhode Island with which
Blue Cross had direct, prior dealings – as evidence of its
anticompetitive bent toward Steward/Landmark.
This too is
complicated, but in summary, Blue Cross proposed shifting patients
who used St. Anne’s and Morton to the “BlueCard” program, which
allowed Blue Cross to pay the reimbursement rates negotiated
between Blue Cross Blue Shield of Massachusetts (“BCBSMA”) and
Steward, rather than renegotiating new contracts with new rates
with these hospitals. Blue Cross forecasted that this move would
annually save it $3.2 million. But it would lose about half of
that because the BlueCard Program imposed a hefty administrative
fee. (SAUF Ex. 89 at 4; SAUF Ex. 90.) So Steward offered Blue
Cross a better deal: a new direct contract with St. Anne’s at the
same rates paid by BCBSMA, but without the administrative fee.
(See SDF ¶ 136.) Steward’s proposal offered Blue Cross the added
benefit that its Medicare Advantage program subscribers could
continue to access these hospitals, whereas under the BlueCard
program, they could not. (See SAUF Ex. 89; SAUF ¶ 187.) Blue
Cross rejected these entreaties as well, arguably forsaking short
term profits for the purpose of further impeding Steward’s effort
to break into Rhode Island.
51

B.

The Conspiracy Claims
1. Conspiracy in Restraint of Trade (Counts IV, VIII, XII,
and XVI)

Blue Cross also moves for summary judgment with respect to
Steward’s conspiracy claims. 31

Section 1 of the Sherman Act

prohibits “[e]very contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or commerce among
the several States.”

15 U.S.C. § 1.

A conspiracy is born when

“two or more entities that previously pursued their own interests
separately . . . combin[e] to act as one for their common benefit.”
Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752, 769 (1984).
“Section 1 by its plain terms reaches only ‘agreements’— whether
tacit or express.”
(1st

Cir.

2011)

White v. R.M. Packer Co., 635 F.3d 571, 575

(emphasis

added)

(citing

Bell

Atl.

Corp.

v.

Twombly, 550 U.S. 544, 553 (2007)).
Importantly, “at the summary judgment stage a § 1 plaintiff’s
offer of conspiracy evidence must tend to rule out the possibility
that the defendants were acting independently.”

Twombly, 550 U.S.

at 554 (2007) (citing Matsushita, 475 U.S. at 574). 32

“It does

31

Like Steward’s refusal-to-deal claim, the Court analyzes
Steward’s conspiracy counts brought under the Rhode Island
Antitrust Act together with Steward’s conspiracy counts brought
under the Sherman Act. (See supra note 13.)
32

The law of conspiracy, like refusal-to-deal law, is no
model of clarity for trial courts trying to make sense of – and
apply – its standards. See, e.g., 1 John J. Miles Health Care and
52

not reach independent decisions, even if they lead to the same
anticompetitive
actors.”

result

as

an

actual

agreement

R.M. Packer Co., 635 F.3d at 575.

among

market

“In addition, the

Supreme Court has ‘limit[ed] the range of permissible inferences
from ambiguous evidence in a § 1 case,’ holding that, at summary
judgment, ‘conduct as consistent with permissible competition as
with illegal conspiracy does not, standing alone, support an
inference

of

antitrust

conspiracy’

evidence to reach a jury.”

that

allows

plaintiffs’

Id. at 577 (alteration in original)

(emphasis added) (quoting Matsushita, 475 U.S. at 588).

But this

evidence will reach the jury when it shows ‘parallel behavior that
would probably not result from chance, coincidence, independent
responses to common stimuli, or mere interdependence unaided by an
advance understanding among the parties.’”

Id. (quoting Twombly,

550 U.S. at 557 n.4).
Steward builds its case around circumstantial evidence, so it
must rely on “plus factors” as “proxies for direct evidence of an
agreement.”

Evergreen Partnering Grp., Inc. v. Pactiv Corp., 720

F.3d 33, 46 (1st Cir. 2013) (quoting In re Flat Glass Antitrust

Antitrust Law § 2A:6 (2018) (“The line between permissible
inference and impermissible speculation is not clear and never
will be.”); William H. Page, Tacit Agreement Under Section 1 of
the Sherman Act, 81 Antitrust L.J. 593, 594 (2017) (“The outcomes
on these motions depend in large part on what the courts think a
Section 1 agreement is. Even after 125 years of Section 1
litigation, however, the meaning of that fundamental concept
remains uncertain.”).
53

Litig., 385 F.3d 350, 359-60 (3d Cir. 2004)). Plus-factor evidence
is “evidence pointing toward conspiracy,” R.M. Packer Co., 635
F.3d

at

577,

possibility

that

that

is,

the

evidence

defendants

“tend[ing]
were

to

acting

rule

out

the

independently,”

Twombly, 550 U.S. at 554.
Courts have identified – and the First Circuit in Evergreen
and R.M. Packer Co. countenanced – a non-exhaustive list of three
Section 1 plus factors:

“(1) evidence that the defendant had a

motive to enter into a[n] [antitrust] conspiracy; (2) evidence
that

the

defendant

‘evidence

implying

acted
a

contrary

traditional

to

its

interests;

conspiracy.’”

In

and
re

(3)
Ins.

Brokerage Antitrust Litig., 618 F.3d 300, 321-22 (3d Cir. 2010)
(quoting Flat Glass, 385 F.3d at 360); cf. Twombly, 550 U.S. at
557 (“A statement of parallel conduct . . . needs some . . .
further circumstance,” or “further factual enhancement” to plead
a plausible § 1 claim).

“The third factor, ‘evidence implying a

traditional conspiracy,’ consists of ‘non-economic evidence “that
there was an actual, manifest agreement not to compete,”’ which
may include ‘proof that the defendants got together and exchanged
assurances of common action or otherwise adopted a common plan
even though no meetings, conversations, or exchanged documents are
shown.’”

In re Ins. Brokerage Antitrust Litig., 618 F3d at 322

(quoting Flat Glass, 385 F.3d at 361); see also In re High Fructose
Corn Syrup Antitrust Litig., 295 F.3d 651, 661 (7th Cir. 2002); 6
54

Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 1434b
(2017).
Before delving into the evidence, a few other fundamental
principles are worth noting.

The first concerns “conspiracy.”

Blue Cross tries hard to raise the bar on Steward, suggesting that
an illicit “agreement” requires explicit evidence that minds have
met.

(See Def.’s Mem. 42-45.)

This is not correct.

understanding or a wink and a nod can be sufficient. 33

A tacit

See United

States v. Beaver, 515 F.3d 730, 738 (7th Cir. 2008) (“Although the

33

Blue Cross is wrong to suggest that the law forbids only
outright confessions of anticompetitive animus. See 3B Areeda &
Hovenkamp, supra, ¶ 308.
The Seventh Circuit has persuasively
addressed this issue:
[N]o single piece of the evidence that we’re about to
summarize is sufficient in itself to prove a pricefixing conspiracy. But that is not the question. The
question is simply whether this evidence, considered as
a whole and in combination with the economic evidence,
is sufficient to defeat summary judgment. . . . We tried
in Troupe v. May Department Stores Co., 20 F.3d 734,
736–37 (7th Cir. 1994), to straighten out the confusing
(and, as it seems to us, largely if not entirely
superfluous)
distinction
between
direct
and
circumstantial evidence.
The former is evidence
tantamount to an acknowledgment of guilt; the latter is
everything else including ambiguous statements. These
are not to be disregarded because of their ambiguity;
most cases are constructed out of a tissue of such
statements and other circumstantial evidence, since an
outright confession will ordinarily obviate the need for
a trial.
In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d 651,
661–62 (7th Cir. 2002).
55

existence of . . . an agreement is the essence of the government’s
§ 1 conspiracy allegation . . . . the government was required only
to establish that the [defendants] had a tacit understanding based
upon a long course of conduct to limit their discounts.” (internal
quotation marks and citations omitted)); Am. Tobacco Co. v. United
States, 328 U.S. 781, 810 (1946) (“Where the circumstances are
such as to warrant a jury in finding that the conspirators had a
unity of purpose or a common design and understanding, or a meeting
of the minds in an unlawful arrangement, the conclusion that a
conspiracy is established is justified.”); Esco Corp. v. United
States,

340

F.2d

1000,

1007

(9th

Cir.

1965)

(“[I]t

is

well

recognized law that any conspiracy can ordinarily only be proved
by inferences drawn from relevant and competent circumstantial
evidence, including the conduct of the defendants charged.

A

knowing wink can mean more than words.” (citation omitted)).
Second, and perhaps more important for dealing with Blue
Cross’s motion, the Supreme Court long ago dispensed with the
notion that a court can slice and dice the record in a way that
scrutinizes each individual piece of evidence for conspiratorial
motive.

Rather, the Court must evaluate the evidence based on its

aggregate effect, and draw reasonable inferences from the evidence
as a whole.

Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370

U.S. 690, 699 (1962) (“In cases such as this, plaintiffs should be
given

the

full

benefit

of

their
56

proof

without

tightly

compartmentalizing the various factual components and wiping the
slate clean after scrutiny of each.”); United States v. Patten,
226 U.S. 525, 544 (1913) (“It hardly needs statement that the
character and effect of a conspiracy are not to be judged by
dismembering it and viewing its separate parts, but only by looking
at it as a whole.” (citations omitted)); Evergreen, 720 F.3d at 47
(“While

each

of

[plaintiff’s]

allegations

of

circumstantial

agreement standing alone may not be sufficient to imply agreement,
taken together, they provide a sufficient basis to plausibly
contextualize the agreement necessary for pleading a § 1 claim.”).
With these principles guiding its analysis, the Court finds
in the record substantial evidence that, for conspiracy purposes, 34

34

At the outset, Steward’s monopolization and conspiracy
claims are not mutually exclusive. The Court rejects Blue Cross’s
suggestion that because Steward argues Blue Cross had unilateral,
illicit motives to exclude Steward, it necessarily acted
“consistent with its unilateral self-interest” and thus could not
have illegally conspired against Steward. To be clear, behavior
consistent with unilateral self-interest refers to lawful
independent conduct that furthers competition.
See In re Flat
Glass Antitrust Litig., 385 F.3d 350, 360-61 (3d Cir. 2004)
(“Evidence that the defendant acted contrary to its interests means
evidence of conduct that would be irrational assuming that the
defendant operated in a competitive market.”).
There is no
discernable reason why an antitrust plaintiff cannot assert both
a unilateral monopolization claim and a conspiracy claim; and
indeed, the case law supports that these claims can coexist. See,
e.g., Microsoft Corp., 253 F.3d at 70 (rejecting defendant’s
argument that “the District Court’s holding of no liability under
§ 1 necessarily precludes holding it liable under § 2.”); United
States v. Dentsply Int’l, Inc., 399 F.3d 181, 197 (3d Cir. 2005)
(“[A] finding in favor of the defendant under Section 1 of the
Sherman Act . . . [does] not ‘preclude the application of evidence
of . . . exclusive
dealing
to
support
the
[Section]
2
57

tends

to

exclude

an

inference

of

independent

conduct.

In

marshalling the evidence, Steward highlights four separate but
related episodes:

(1) the “treat-and-transfer” model developed by

Lifespan and Thundermist, with Blue Cross’s encouragement, for a
failed Landmark; (2) rate concessions offered by Lifespan to Blue
Cross in exchange for additional patient volume; and Thundermist’s
decisions to (3) shift OB patients and (4) reject an MOU with
Steward

(including

proposed).

a

proposal

that

Thundermist

itself

had

(See Pl.’s Resp. 43-67.)

First, a reasonable juror could conclude that part of the
agreement between Blue Cross, Lifespan, and Thundermist to block
Steward from Rhode Island was premised on the treat-and-transfer
plan proposed as an alternative to Steward acquiring Landmark.
The treat-and-transfer model, which sought to make Landmark “less
than a full-service, acute-care hospital,” (Wakefield Dep. at
32:1-6, SDF Ex. 30), was conceived in April of 2009 by Maria
Montanaro, then-CEO of Thundermist, in a letter to Special Master
Savage. 35

(See SDF Ex. 101).

Landmark was placed in receivership

claim.’ . . . A court’s refusal to accept one theory rather than
another [does not] undermine[] the claim as a whole . . . [and]
the [plaintiff] can obtain all the relief to which it is entitled
under Section 2 and has chosen to follow that path without
reference to Section 1 . . . .” (quoting LePage’s Inc. v. 3M, 324
F.3d 141, 157 n.10 (3d Cir. 2003))).
35

It appears undisputed that this plan was conceived prior
to Steward coming into the picture. This simple fact does not,
however, defeat the powerful inference gleaned from the evidence
58

in 2008, (see SDF ¶ 62), around the same time Caritas emerged as
a prospective acquirer of the hospital.
ECF No. 210-14.)

(See SDF Ex. 102 at 4-5,

In May 2009 in a letter to Justice Silverstein,

Montanaro detailed her concerns regarding Landmark’s “possible
affiliation with Caritas Christi.”

(Id.)

She wrote,

To me, this should not be about the survival of an
institution, but rather about how to best deliver the
highest quality, most cost-effective care in northern
RI. It is possible, that the most sustainable model of
high quality, cost effective care would be one that does
not include a full service, licensed hospital.
(Id. at 5.)
The evidence also supports the inference that Blue Cross was
in on the plan for treat-and-transfer as the alternative to a
Caritas/Steward-owned Landmark.

In the fall of 2010, Caritas took

part in discussions and meetings with Blue Cross over acquiring
Landmark.
21.)

(SDF Ex. 108, ECF No. 210-20; SDF Ex. 109, ECF No. 210-

On November 18, 2010, Mark Waggoner of Blue Cross reported

to Blue Cross’s ELT that then-Blue Cross CEO Jim Purcell wanted
Blue Cross to occupy a greater role over Landmark’s future.

He

stated:
Jim Purcell called me earlier this week to chat about
Caritas/Landmark. He seems to be leaning more towards
to wanting to step off of the sideline and play more of
a broker role in a local solution to Landmark.
Apparently, he had a conversation earlier in the week
with M. Montan[a]ro of Thundermist . . . that may have

that the treat-and-transfer model resurfaced with Steward in mind,
once it entered the picture.
59

influenced his thinking a bit about the role we might
play.
(SDF Ex. 105 at 2, ECF No. 210-17.) Before getting back to Caritas,
Purcell touched base with Lifespan and Thundermist to convey his
reaction to the Caritas proposal and a plan for Lifespan and
Thundermist to meet with Justice Silverstein to discuss treat-andtransfer:

“Maria [Montanaro (Thundermist)] and George [Vecchione

(Lifespan)]

know

we’ll

send

our

letters

this

Wednesday

[the

rejection letter to Caritas and the Special Master], and they will
ask for a meeting with the Judge.”
210-19.)

(SDF Ex. 107 at 2, ECF No.

Lifespan and Thundermist conferred about how to keep

Blue Cross happy and on board:

“It is important to BCBSRI to head

in this direction [integrated service delivery networks], and
would give them further reasons to support our work together on
the model we are proposing.”

(SDF Ex. 111 at 3, ECF No. 210-23.)

Before meeting with the judge, Blue Cross first huddled with
Lifespan and Thundermist.

(SDF Ex. 113 at 2, ECF No. 210-25.)

Notes from that meeting indicate that discussion topics included:
(1) undermining Caritas’s efforts to acquire Landmark; and (2)
underscoring treat and transfer as the preferred alternative. (See
SDF

Ex.

117

at

2,

ECF

No.

210-29.)

In

2012,

CEO

Peter

Andruszkiewicz of Blue Cross (Purcell’s successor) and CEO George
Vecchione of Lifespan discussed the treat-and-transfer plan in the
context of Andruszkiewicz’s calculation that Landmark would not go

60

to Steward.

(See SDF Ex. 118, ECF No. 210-30.)

Montanaro, who by

then had left Thundermist to become a Blue Cross consultant,
reported to Chuck Jones, her successor as Thundermist CEO:
Peter [Andruszkiewicz] tells me that he believes Steward
will fail to acquire here in RI. He has no intention of
giving into their demands. He has talked with George
[Vecchione], who has told him “with as much certainty as
he has ever heard George use” that Lifespan WILL step in
and take over the hospital, following the model we
developed with them years ago. Peter wants to see Care
NE then do the OB piece. He talked with George and his
leadership about this yesterday.
(SDF

Ex.

118

at

2.)

Montanaro

prediction about Landmark:

concluded

her

email

with

a

“Peter thinks it will be Lifespan.”

(Id.)

An internal Lifespan email, sent a few weeks later adds

more.

Lifespan’s new CEO Timothy Babineau (Vecchione’s successor)

wrote to his leadership team:
Peter [Andruszkiewicz] called me yesterday to update me
on a 5 hour meeting he had on Monday with the AG, Steward
(Ralph himself!) and George Nee trying to mediate an
agreement. At the end of the day, BCBSRI put an offer
on the table that Peter described as still being within
OHIC’s guidelines. He did not elaborate and I did not
ask.
They are meeting again next Monday (5 hours scheduled)
during which Steward is supposed to react/accept/counter
BCBSRI most recent offer.
The real reason for the phone call was for Peter to let
me know that he told the AG that it was his (Peter A’s)
understanding that Lifespan would be willing/interested
to re-engage in discussions with Landmark should Steward
pull out. He indicated the AG heard that but seemed (in
Peter’s words) “underwhelmed”. I affirmed that this was
still our position but offered no specifics. Question--is it worth a call to the AG to re-affirm our position,
or should we remain on the sidelines at this point?
61

(SDF Ex. 120 at 2, ECF No. 210-32.)

Lifespan’s CFO clarified,

“Peter’s saying, you know, there’s another alternative; you don’t
have to come so hard after me.”

(Wakefield Dep. 181:13-15. SDF

Ex. 30.)
The above evidence, when stitched together, makes clear that
a reasonable juror could conclude that the treat-and-transfer
model for Landmark was one part of an understanding between Blue
Cross, Lifespan, and Thundermist aimed at keeping Steward out of
Rhode Island.
The next conspiratorial “episode” cited by Steward concerns
the link between rate concessions for Blue Cross by Lifespan in
exchange for increased patient volume, which presumably would come
from Landmark.

Steward concedes that Thundermist is not directly

implicated in this chapter of the conspiracy saga. 36
First, Steward offers evidence to make sense of why Lifespan
would

suddenly

retreat

from

what

had

contentious negotiations with Blue Cross.

36

been

otherwise

highly

(See SAUF Ex. 77, ECF

Although Thundermist is not directly linked to this part
of Steward’s theory, it does not have to be.
See Pinkerton v.
United States, 328 U.S. 640, 646 (1946) (no requirement that each
conspirator actively participate in each act in furtherance of the
conspiracy); United States v. Barker Steel Co., 985 F.2d 1123,
1129-30 (1st Cir. 1993). This makes sense, especially in light of
the directive that this Court view the evidence in totality rather
than isolation.

62

No. 215-2; SAUF ¶ 170 (Lifespan demanding rate increases in excess
of six percent and adjusting its position only nominally over
several months)).

Lifespan informed Blue Cross that it would only

back down on its rate demands in exchange for additional patients:
“Lifespan is willing to consider more substantive reductions to
their position only if Blue Cross can provide additional service
volume.”

(SAUF Ex. 78 at 5, ECF No. 215-3.)

Now, Steward asks, where might Blue Cross come up with more
patient volume to satisfy Lifespan?

A reasonable juror could

conclude that the answer was Landmark.

It was no secret that

Lifespan would be the primary beneficiary of a weakened or defeated
Landmark.

(See SAUF Ex. 75 at 9, ECF No. 182-15 (Blue Cross noting

subscribers

in

vicinity

of

Landmark

used

Lifespan

hospitals,

Miriam and RIH); (SAUF Ex. 71 at 6) (evaluating effect of Blue
Cross’s failure to renew Landmark contract:

“Rhode Island and

Miriam would see an influx of the majority of medical/surgical and
outpatient services”); SAUF Ex. 22 at Fig. 35 (predicting Landmark
going “out of network” would cause nearly forty-five percent of
previous-Landmark patients to use a Lifespan hospital).

Indeed,

Lifespan mapped out Landmark’s impact on RIH and Miriam, whether
it thrived under Steward’s ownership or failed if “Steward bails.”
(SAUF Ex. 69, ECF No. 214-69.)

Unsurprisingly, Lifespan predicted

a vast financial reward in the event that Landmark went under, and

63

it forecasted a significant financial blow if Steward acquired
Landmark.

(Id.)

But that’s not all.

Steward also cites the June 2012 Blue

Cross Contract Analysis in which Blue Cross identified the hefty
cost of failing to renew community hospitals like Landmark because
patients dispersing to costlier hospitals came with an added
financial sting to Blue Cross.

In this context, Blue Cross’s

analysis recommended “[w]ith Lifespan and CNE facilities as a
primary

recipient

of

the

service

migration,

we

would

engage

discussions with these systems to establish a longer term plan to
develop service capacity at favorable payment levels.”
71 at 9 (emphasis added)).

(SAUF Ex.

Blue Cross added, “[b]y doing so, we

would be in a better position to manage the impact to the network
and more strategically leverage options that currently do not
exist.”

(Id.)

In an update to that same July 2012 presentation,

Blue Cross added that “in order to address the potential movement
of services to other hospitals in the future, we have initiated
discussions with Lifespan on opportunities involving additional
volume and the impact on payment levels.”

(SAUF Ex. 76 at 7, ECF

No. 215-1.)

In August 2012, Blue Cross documented that “Lifespan

is

to

willing

consider

more

substantive

reductions

to

their

position only if Blue Cross can provide additional service volume.”
(SAUF Ex. 78 at 5.)

64

Seemingly out of the blue, in September 2012, at the same
time negotiations with Steward were cratering, Lifespan’s rate
demands declined to 4.8% for commercial.

(SAUF Ex. 79 at 3, ECF

No. 215-4) (email summarizing Lifespan’s proposal).

According to

Blue Cross documents, Steward asserts, this pivot saved Blue Cross
nearly $12 million, and was in stark contrast to the ordinary
course of highly contentious Lifespan-Blue Cross negotiations that
preceded it.

(Compare SAUF Ex. 80, ECF No. 215-5 (showing total

savings (loss) with respect to Lifespan as “$11,862,139”); with
SAUF Ex. 81, ECF No. 215-6 (email from Blue Cross CFO Coleman to
Andruszkiewicz and Waggoner regarding 2011 Lifespan negotiations)
(“BCBSRI achieved (almost) Lifespan’s original request of $24
[million] in additional revenue.
much we gave to the cause.”).

Just a friendly reminder of how

A reasonable juror could conclude

that Blue Cross secured rate concessions from Lifespan in exchange
for added patient volume, which could only come from Landmark,
once Steward was removed from the picture.
The next chapter of Steward’s conspiracy claim colors the
alleged

role

played

by

Thundermist.

Steward

contends

that

Thundermist’s decisions to (1) move OB patient referrals from
Landmark to Women & Infants Hospital in 2011 and (2) to not sign
an MOU to be an affiliated provider with Steward/Landmark were
similarly motivated by exclusionary goals.

65

With

respect

to

Thundermist’s

shift

of

OB

patients,

a

reasonable juror could conclude that it was one piece of the larger
plan to exclude Steward.

First, in November 2011, Jones of

Thundermist sought “for Lifespan to commit to support publicly our
shared vision of health care in Northern Rhode Island in the face
of a threatened or actual Steward departure.”
No. 210-37.)

(SDF Ex. 125, ECF

In other words, before pulling the trigger on a shift

of patients, Jones needed cover and support from Lifespan:
I remain inclined to move Thundermist’s OB service to
[Women & Infants hospital, part of Care New England]. I
therefore need to take Jon Savage and Steward at their
words and prepare to defend my decision against a Steward
announcement to abandon Landmark and publicly blame
Thundermist for the decision.
In this context it will be important for me to be able
to point to Lifespan’s interest in developing an
appropriate care model for Northern Rhode Island. Given
the timeframe involved, I believe a letter to me (or
press release if you prefer) describing the model of
care Lifespan would be willing to support publicly, with
Thundermist, in Northern Rhode Island.
(Id.) Remarkably, in spite of the fact that Thundermist’s patients
would be sent to CNE - Lifespan’s primary competitor - Lifespan
agreed to annually pay Thundermist $150,000, which replaced annual
payments from Landmark that would cease upon terminating the
Landmark arrangement.

(SDF Ex. 125; Jones Dep. at 109:7-110:14,

115:7-18, SDF Ex. 24, ECF No. 206-24 (“Q. Okay.

So because the

Women and Infants deal wasn’t going to include Thundermist being
paid for that, you told Lifespan that by moving to Women and

66

Infants, you were going to lose the $135,000 that you were getting
from Landmark and you wanted their help in making that up?

A.

Yes.”).
The explanations provided by Thundermist and Lifespan do
little to clear the air about this strange payment.

In his

deposition, Jones suggested that this “[f]inancial support” was
“to support development of these more closely integrated networks
of care.”
said:

(SDF Ex. 125.)

Lifespan’s George Vecchione in turn

“It wasn’t just to fill a loss, a gaping hole, and no

prospects for benefit.

Frankly, I viewed it as an investment.”

(Vecchione Dep. 140:4-12, SDF Ex. 29.)
email

to

Jones,

Montanaro

wrote

And, as noted above, in an
that

Blue

Cross’s

Peter

Andruszkiewicz "want[ed] to see Care NE then do the OB piece.”
(SDF Ex. 118 at 2.)

These explanations raise more questions than

answers, and at least give the appearance of Blue Cross acting as
a puppet-master distributing the spoils. And the payment persisted
for six consecutive years.
In

her

deposition,

circumstance,

with

(Wakefield Dep. 172-174, SDF Ex. 30.)

CFO

Wakefield

could

the

exception

of

not

unions,

pinpoint
where

“supported” an organization to the tune of $150,000.

another
Lifespan

(Id. at 174.

But see Vecchione Dep. 139-140, SDF Ex. 29 (recalling two grants
from Lifespan, one to Thundermist and another to Providence Health,
but noting, “There’s not many of them”)).

Curiously, Lifespan did

not keep track nor inquire of what purpose Thundermist put the
67

$150,000,

and

there

were

no

real

conditions

imposed

Thundermist disbursed Lifespan’s generous donation.

on

how

CEO Jones

testified that the payment had no strings attached:
Q. And under this agreement, besides reporting and
keeping track of things, what is Thundermist required to
do in return under the public health grant agreement?
A. Continue to provide charity care for our community.
Q. Do you do the same things you had to do anyways?
A. Yes.
Q. So there’s no new obligations imposed by this?
A. No.
Q. This was just giving you 150,000 and you have to meet
certain reporting requirements for legal purposes?
A. Yes.
Q. And was reporting to Lifespan required?
A. No.
Q. And did you do any reporting to Lifespan about what
you did with the money?
A. No.
(Jones Dep. at 127:19-128:16, SDF Ex. 24.) And Lifespan CEO George
Vecchione testified consistently:
Q. And did she [Montanaro], in fact, put some of the
money to that use, to your knowledge?
A. I don’t . . . recall. What she did with the money,
I don’t know.
It’s not that I don’t recall, I don’t
know.
Q. Meaning that you don’t think you ever knew?
A. Correct.
Q. Part of the grant process is not some sort of followup by the recipient to say, Gosh, here’s the great things
we do with your money?
A. Correct. Um-hm.
Q. Can you – I take it you can’t point to some particular
thing that Thundermist did thanks to the grant money
that you were providing, or can you?
A. I can’t.
(Vecchione Dep. at 141:3-19, SDF Ex. 29.)

Although early on in

the Lifespan-Thundermist negotiations, Lifespan’s grant had been

68

incorporated into the two entities’ Partnership Model, (see SDF
Ex. 128, ECF No. 210-40), the funds were later buried in a
different

“Public

Health

Grant

Agreement,”

former, was never disclosed to the DOH.
SDF

Ex.

24.)

Moreover,

in

the

which

unlike

the

(Jones Dep. at 129-130,
context

of

anticipating

Thundermist’s prospective relationship with Steward if it acquired
Landmark, Jones detailed how he saw the interplay between OB
patients and a Steward presence:
I think if they stay, whether or not we move OB, our
relationship with Steward becomes more complicated . .
. . If they stay and we don’t want to cooperate with
them, I believe they could do some damage or at least
make life difficult for us to do anything but cooperate.
So although I wouldn’t be happy about the scenario where
we move OB and Steward decides to stay, I don’t think
it’s that much different from the scenario where we do
nothing, and they decide to stay.
Either way,
Thundermist’s ability to make independent decisions in
the best interests of our patients could be compromised
by a Steward presence.
That threat only goes away
entirely if we move OB.
(SDF Ex. 126, ECF No. 210-38.)
And what role did Blue Cross play in all of this?

In addition

to Lifespan, Jones looked to Blue Cross to provide assurances that
they too would stand behind his decision to shift patients.

Prior

to making the OB-patient-shift announcement, Jones intended to
“set up [a] meeting between Peter A [of Blue Cross] and George [of
Lifespan] to get commitments on a common communications plan.”
(SDF Ex. 129, ECF No. 210-41.)

Soon-to-be consultant for Blue

Cross and former CEO of Thundermist, Montanaro, offered a helping
69

hand to Thundermist.
with Peter A.

(SDF Ex. 130, ECF No. 210-42 (“Nice talk

He thinks you should walk away from Landmark and

let them close.

He said [to] call him and he will talk to you

about it, if you want.”; see also Andruszkiewicz Dep. at 270:4-5,
SDF Ex. 12, ECF No. 206-12 (“I supported his decision.”)).

This

was the support Jones wanted and needed to move forward with the
shift – and Blue Cross delivered.

(See SDF Ex. 131, ECF No. 210-

43 (“Chuck felt supported by Peter’s earlier call.”)).

At the end

of the day, rather than an “independent” decision by Thundermist,
a reasonable juror could conclude that Thundermist’s shift of OB
patients from Landmark to Women & Infants, and the concomitant
payment from Lifespan, was all part of an understanding to keep
Steward out of Rhode Island.
The

final,

and

perhaps

most

glaring

part

of

Steward’s

conspiracy story concerns Thundermist’s abrupt rejection of an MOU
with Steward.

Throughout the time period that treat and transfer

and OB patient shifting was being discussed, Thundermist was also
in talks with Steward.

Jones had been working with Steward on an

MOU that considered, among other things, patient referrals and
certain areas of exclusivity with Steward/Landmark.

(See SDF Ex.

133, ECF No. 210-45; SDF Ex. 134, ECF No. 210-46.)

Although

Thundermist and Steward traded various MOU proposals, on May 11,
2012, Jones met with Steward and indicated that he was no longer
willing to enter any agreement.

Perhaps most illuminating, Jones
70

would not even sign the April 30 proposal that he had himself
proposed to Steward.
And indeed, the evidence indicates that Jones did not come to
this epiphany on his own; behind the scenes, Jones surveyed a wide
range of opinions in approaching his talks with Steward.
“talked with Peter A (BCBSRI) and Dennis Keefe (CNE).

He
These

conversations, and discussions with just about every other health
leader in RI, have helped me clarify a bit.”

(SDF Ex. 135, ECF

No. 210-47.)
But it was Blue Cross that had Jones all eyes and ears.
Jones’s follow-up notes from the May 11 meeting with Steward
recount why he did not sign the MOU:

“[y]ou’re asking me to give

up participation with an organization that has 70% market share?”
(SDF Ex. 139, ECF No. 210-51.)

Jones’s reaction to Blue Cross’s

apparent pressure is even more peculiar given the few commercially
insured patients Thundermist had, and the fact that Thundermist’s
capacity would not have been affected by either version of the
proposed MOU.

(See Jones Dep. at 292, SDF Ex. 24 (“Q. [I]s there

anything that the agreement would have prevented you from doing
with an insurer that you’ve now done?
can’t think of anything.”).

A. No, I don’t think so.

I

Later, Jones erased any doubt about

Blue Cross’s influence on his approach to an MOU with Steward.
(See id. at. 216:2-13 (“Q. ‘You have no market share in Rhode
Island.

You’re

asking

me

to

give
71

up

participation

with

an

organization that has 70 percent market share?’ That’s a reference
to Blue Cross.
that

the

deal

Correct?
with

A. Yes.

Steward

would

Q. And that was the concern
give

you

--

give

opportunity to have participation with Blue Cross.

up

your

Correct?

As an example of the – yes, of what could happen.”).

A.

In the

aftermath of his Steward meeting, Jones calculated how he would –
and would not - broach the subject with the press:

“If we respond,

we cannot avoid the statement that we have not reached agreement
with Steward.

I wouldn’t even say that ‘we have not yet reached

agreement’ because that infers an agreement is possible.”
Ex. 140, ECF No. 210-52.)

(SDF

He added, “[o]ur close partners know

what our position is and inferring in a public statement that
there’s still hope for an agreement seems disingenuous.”
Jones’s

“close

partners,”

namely

Blue

Cross

by

(Id.)
way

of

Montanaro, also played a role in making sure Jones was prepared
for his Steward meeting.

(SDF Ex. 141 at 3, ECF No. 210-53

(Interoffice Memorandum from Montanaro to Blue Cross executives)
(“Chuck Jones continues to seek m[y] advice on issues with Steward
Healthcare.”).

And when Jones offered to pay Montanaro for the

“long meeting” in which she helped Jones craft “talking points,”
she insisted that would not be necessary:

“No need to bill you I

was on BCBS’s dime and spent the time with their full support.
They think very highly of you and were happy to contribute me to
the cause today.”

(SAUF Ex. 51 at 2, ECF No. 214-51; see also id.
72

(email from Montanaro to Jones) “Nice job taking it in and pushing
some

of

the

points.

I

am

impressed.

I

thanked

Peter

[Andruszkiewicz] for you in hosting the meeting at BCBS today.

He

said he ran into Constantino, 37 who was saying he thinks the ‘air
is coming out of Steward[’]s balloon.’”).

Montanaro even drafted

a proposed letter to be sent from Jones to Steward with a list of
reasons to resist Steward.
instructed Jones:

(SAUF Ex. 55, ECF No. 214-55.)

She

“As groups line up and pick sides, so will

Thundermist need to do the same . . . . This will be true as you
deepen your relationship with payers and with some, but not all of
the

hospitals

relationships.”

with

which

you

(emphasis added).

currently

have

referral

Jones heard the message loud

and clear, which explains his eventual refusal to sign any version
of a Steward MOU, including the version he had crafted.
139.)

(SDF Ex.

A reasonable juror could conclude that, instead of an

independent action by Thundermist, Jones’s choice was to align
with Blue Cross (and Lifespan) to keep Steward out of Rhode Island.

37

This is a reference to former State Representative and
House Finance Committee Chairman, Steven Costantino, thenSecretary of Health and Human Services, with significant
involvement in the Rhode Island health care and insurance
marketplace. See Ian Donnis, Steven Costantino Appointed To Head
Vermont Insurance Program, Rhode Island Public Radio (Feb. 9,
2015), http://ripr.org/post/steven-costantino-appointed-headvermont-insurance-program. Constantino is now commissioner of the
Department of Vermont Health Access. See id.
73

Finally, in cases where acts against self-interest are not
fully

explained,

traditional

evidence

of

conspiracy,

i.e.,

conversations, assurances, and swapping value among the alleged
conspirators, prove instructive.
583.

And

as

the

See R.M. Packer Co., 635 F.3d at

aforementioned

evidence

makes

clear,

the

indicators pointing to a conspiracy are numerous in this case.
The

record

is

replete

exchanges of value.

with

assurances,

conversations,

and

Ultimately, Steward has provided more than

enough evidence that tends to exclude the inference of independent
conduct; and a reasonable juror could conclude that the conduct of
the players here amounted to an illicit agreement to keep Steward
out of Rhode Island.

For these reasons, Blue Cross’s motion with

respect to Steward’s conspiracy claims must be denied.
2. Conspiracy To Monopolize/Monopsonize (Counts III, VII,
XI and XV)
Section 1 of the Sherman Act prohibits conspiring to restrain
trade whereas Section 2 forbids conspiring to attain or maintain
a monopoly. 38

Blue Cross’s argument on summary judgment is that

“conspiracy claims under Section 1 and Section 2 will both fail if
. . . the record does not show an unlawful agreement,” (see Blue
Cross’s Reply in Supp. Mot. for Summary J. 30 n.16); see also W.

38

For purposes of this motion, the Court need not separately
discuss Steward’s conspiracy-to-monopolize and conspiracy-tomonopsonize claims, as the relevant analysis is the same.
74

Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 99 (3d Cir.
2010) (“To prevail on a section 1 claim or a section 2 conspiracy
claim,

a

plaintiff

agreement . . . .”).

must

establish

the

existence

of

an

As discussed infra, the Court disagrees with

Blue Cross about what the record shows on this point, i.e., a
reasonable juror could find an illicit agreement between Blue
Cross, Lifespan, and Thundermist on these facts.
common

requirement

of

agreement,

a

Section

1

different elements than a Section 2 conspiracy.

Beyond this

conspiracy

has

See, e.g., Lenox

MacLaren Surgical Corp. v. Medtronic, Inc., 847 F.3d 1221, 1231
(10th Cir. 2017); Invamed, Inc. v. Barr Labs., Inc., 22 F. Supp.
2d 210, 217 (S.D.N.Y. 1998) (“While section 1 of the Sherman Act
forbids contracts or conspiracies in the restraint of trade or
commerce, section 2 ‘addresses the actions of single firms that
monopolize or attempt to monopolize, as well as conspiracies and
combinations to monopolize.’” (quoting Spectrum Sports, Inc. v.
McQuillan, 506 U.S. 447, 454 (1993))).
movant

-

has

not

sufficiently

Yet Blue Cross – as the

parsed

these

substantive

differences, nor has it specifically challenged Steward’s Section
2 conspiracy claim by attacking the presence of specific intent to
enable or maintain a monopoly or monopsony position between Blue
Cross, Lifespan, and Thundermist. See In re Zinc Antitrust Litig.,
155 F. Supp. 3d 337, 382 (S.D.N.Y. 2016) (“The specific intent to
monopolize, rather than the power to exclude competitors, is the
75

key element of a conspiracy to monopolize claim.”); Oxbow Carbon
& Minerals LLC v. Union Pac. R.R. Co, 926 F. Supp. 2d 36, 47
(D.D.C. 2013) (dismissing Section 2 conspiracy claim that lacked
factual allegations about “how the defendants used the agreement
to monopolize the rail freight market”).

While Steward appears to

have mustered little evidence to support Blue Cross may ultimately
merit judgment as a matter of law on Steward’s conspiracy to
monopolize/monopsonize

claims,

for

now

it

survives

summary

judgment because Blue Cross has not specifically addressed it,
beyond

unsuccessfully

agreement.

arguing

that

there

was

no

evidence

of

Therefore, summary judgment is denied on Counts III,

VII, XI, and XV.
C.

State-Law Tort Claims (Counts XVII and XVIII)

Much of Blue Cross’s argument on Steward’s state law claims
is built on the proposition that, “[w]here conduct does not violate
the antitrust laws, the conduct also is not tortious as a matter
of law because ‘antitrust law provides the best available barometer
— indeed the only available barometer — of whether or not Blue
Cross’[s] conduct can be found to be “wrongful” or “illegitimate”
—and hence, tortious.’” (See Def.’s Mem. 79 (quoting Ocean State
Physicians Health Plan, Inc. v. Blue Cross & Blue Shield of R.I.,
883 F.2d 1101, 1114 (1st Cir. 1989))).

76

Because the Court has found

that

Steward’s

antitrust

claims

are

viable,

it

follows

that

Steward’s state-law-tort claims survive summary judgment. 39
D.
Blue

Blue Cross’s Remaining Arguments
Cross

makes

several

independent

and

substantial

arguments to support its summary judgment motion, all of which
fail, but which require some discussion.
1.
Blue

Causation

Cross

suggests

that

other

superseding

causes

are

responsible for Steward’s alleged injuries, namely (1) Steward’s
apparent inability to satisfy the APA conditions unrelated to Blue
Cross; and (2) the OHIC regulations that allegedly cabined the
rates that Blue Cross could offer Steward.
To prove causation, a Sherman Act plaintiff must demonstrate
that

its

injury

was

caused

anticompetitive conduct.

“by

reason

of”

15 U.S.C. § 15(a).

the

defendant’s

The parties agree

that a plaintiff “need not prove that the antitrust violation was

39

Incidentally, the Court rejects Blue Cross’s spin on Ocean
State Physicians.
A close reading of that opinion makes clear
that, although it may be sufficient, it is not necessary for a
plaintiff to lodge a successful antitrust claim in order to prove
a claim for tortious interference with contractual relations or
interference with prospective contractual relations. Ocean State
Physicians, 883 F.2d at 1114 (“To be sure, not all business torts
are ‘exclusionary’ under the antitrust laws. In an appropriate
case, a plaintiff might fail to establish an antitrust violation
but still establish that certain torts had been committed.”
(citation omitted)); see also Kartell v. Blue Shield of Mass.,
Inc., 749 F.2d 922, 933-34 (1st Cir. 1984) (highlighting
possibility that Blue Shield’s conduct – though not an antitrust
violation – “might amount to minor business torts”).
77

the sole cause of [its] injury, but only that it was a material
cause.”

Sullivan v. Nat’l Football League, 34 F.3d 1091, 1103

(1st Cir. 1994).
standing.

Causation is a factor that establishes antitrust

See Sterling Merch., Inc., v. Nestlé, S.A., 656 F.3d

112, 120-21 (1st Cir. 2011).

The law recognizes that when an

injury “[i]s attributable to . . . other factors independent of”
the challenged conduct, a plaintiff has “not . . . met its burden.”
Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 12627 (1969).
As

this

Court

said

at

the

motion-to-dismiss

stage,

“[A]ntitrust laws have been interpreted to incorporate common law
principles of causation.”

Steward I, 997 F. Supp. 2d at 158

(quoting R.I. Laborers’ Health & Welfare Fund ex rel. Trs. v.
Philip

Morris,

(alteration

in

Inc.,

99

F.

original)).

Supp.

2d

174,

187

“‘Contingencies,

(D.R.I.

2000)

conjecture,

and

speculation will not support a finding of proximate cause,’ and
will, therefore, not support a finding of antitrust liability.”
Id. (quoting Philip Morris, Inc., 99 F. Supp. 2d at 187).
Steward has presented sufficient evidence to survive summary
judgment and to place the causation question before the jury.
Specifically, there is a material factual dispute about whether
failure to reach a deal with Blue Cross caused Steward to abandon
the Landmark negotiations, in the form of (1) testimony of Steward

78

witnesses; (2) conduct of Steward players; and (3) conduct of other
key players.
Blue Cross asserts that a “force other than the antitrust
violation fully accounts for” Steward’s alleged injury because
Steward would not waive and could not satisfy three conditions in
the APA:

(1) the RISH condition (the May 2011 APA encompassed a

condition

for

Landmark’s

purchase

of

100%

of

RISH);

(2)

the

Thundermist condition (a MOU with Thundermist); and (3) the SNERCC
condition (that Landmark attain a majority interest in SNERCC,
owned by 21st Century).

(Def.’s Mem. 55 (quoting In re Canadian

Import Antitrust Litig., 470 F.3d 785, 791-92 (8th Cir. 2006))).
Steward’s evidence sufficiently calls into question whether each
or any of these conditions were requirements, or more akin to
bargaining

chips

in

Steward’s

quest

to

reach

an

acceptable

agreement with Blue Cross over Landmark.
Just a sample of Steward’s evidence makes the point:

Steward

highlights extensive testimony that reaching a deal with Blue Cross
was the only dispositive condition for Steward.

(See, e.g., Dep.

of Ralph de la Torre (“de la Torre Dep.”) at 45-46, SDF Ex. 1, ECF
No. 206-1 (“A. I firmly believe at every stage of this agreement,
and still believe now, that there is only one predicate condition
to success in that area in caring for the totality of the patient,
and that’s Blue Cross Blue Shield, okay. . . . So that was the
only

truly

predicate

condition.”);
79

id.

at

49-50

(“I

mean,

conditions can be on a document, but at the end of the day, I think
everybody understood that it was Blue Cross . . . the AG never
called in 21st Century Oncology. They never called in Thundermist.
It was always Blue Cross.

Again, actions speak louder than words.

That’s pretty clear to me that everybody understood that it was us
and them at the end.”); Dep. of Joshua Putter at 98:2-11, SDF Ex.
9, ECF No. 206-9 (“[S]o the cancer center wasn’t like a go, no-go
type of thing.

We were going to acquire Landmark and figure out

the cancer center strategy.

We wanted to acquire it.

That wasn’t

a, if we don’t acquire all of it, we’re not going to do it type of
decision. . . . [W]e, Steward, abandoned the Landmark deal because
of the Blue Cross rates, not because of the cancer center.”)).
As to the first two conditions (RISH and Thundermist), Steward
set

forth,

for

instance,

a

letter

to

Justice

Silverstein

on

September 4, 2012, in which Steward informed the court that,
“progress on the three conditions has been fleeting” and “as an
alternative, [Steward] proposed that if BCBSRI is able to execute
a participation agreement with Steward, Steward Health Care will
waive conditions (i) [MOU with Thundermist] and (ii) [100% interest
in RISH] . . . .”

(SDF Ex. 144 at 3, ECF No. 210-56.)

Similarly,

Steward sets forth evidence that it was willing to waive the SNERCC
condition.

(See, e.g., de La Torre Dep. at 122-123, SDF Ex. 1

(“Q. . . . [D]id Steward, to your knowledge, ever express to
anyone,

mediator,

attorney

general,
80

Jon

Savage,

Justice

Silverstein, anybody, that Steward would waive condition (iii),
meaning an agreement with 21st Century where Steward would own 100
percent of SNERCC?

A. Absolutely.”); id. at 123 (“A. I can

unequivocally

tell

you

unequivocally.

And I’m pretty sure that I said to the judge, ‘With

the

appropriate

that

contract,

I

we

expressed

could

even

it

waive

to

Savage,

[the

SNERCC

condition,]’ but that’s harder to come by.”)).
As to Blue Cross’s second causation argument (that OHIC
regulations

capped

what

Blue

Cross

could

offer

Steward

and

therefore caused Steward’s alleged injury) Steward sets forth
sufficient evidence to create a jury question. As discussed supra,
the OHIC regulations themselves and communications by OHIC belies
Blue

Cross’s

rigid

reading

of

the

regulations.

Blue

Cross

reluctantly acknowledges this when it states, “[u]nder certain
narrow

circumstances,

OHIC

considered

regulations from other insurers.”

waivers

from

these

(Def.’s Mem. 66.)

It is not dispositive (even if true, which Blue Cross can
attempt to show at trial) that Steward “never discussed any such
exception with OHIC.”

(Id.)

Steward advances sufficient evidence

to suggest it was Blue Cross – and not Steward – that had the
burden to raise such exceptions with OHIC.

(See SDF Ex. 43 at 2,

ECF No. 206-43 (“Issuers [insurers] are encouraged to file such
requests [for exceptions].”)).

After all, as discussed above,

OHIC regulates health insurers – not hospitals and doctors.
81

Moreover, the facts suggest that Blue Cross never viewed the
OHIC regulations as inflexible as it now casts them, (see Def.’s
Mem. 66.), and that Steward did in fact raise the issue of
approaching OHIC for an exception, in the context of bundling rate
increases and quality metrics with Steward’s other hospitals in
Massachusetts

and

Landmark.

Steward

proposed

“bundling”

reimbursement agreements for Landmark, St. Anne’s, and Morton
whereby Steward would accept a lower increase for St. Anne’s and
Morton hospitals to achieve higher rates at Landmark, while still
satisfying OHIC. And Blue Cross recognized the potential viability
of this approach in spite of OHIC.

(See, e.g., BCBSRI/Steward

Proposal Summary August 5, 2012 3, SDF Ex. 186, ECF No. 212-29
(“BCBSRI

agrees

with

Steward’s

proposed

concept

of

bundling

several of its hospitals in a way that creates value and will allow
BCBSRI to justify additional increases at Landmark for 2012; while
aligning with the OHIC Hospital Contracting Conditions.”)).
Moreover, Steward’s evidence refutes, or at least creates a
factual dispute, with respect to Blue Cross’s suggestion that
“[t]he other major insurers in Rhode Island—Tufts and United”
understood too that “the OHIC regulations were binding.”

(Def.’s

Mem. 66; see also 2011 OHIC Standards 16, SDF Ex. 44 (“Too much
prescriptiveness may encourage an excessive focus on compliance
and discourage the kind of payment reform and innovation which was
intended.”); id. (suggesting OHIC approved contracts involving
82

United and Tufts where OHIC conditions were not fully complied
with); Dep. of Todd Whitecross at 120, SDF Ex. 31, ECF No. 206-31
(suggesting Tufts offered rate increases above OHIC cap because at
that time, it “didn’t have a formal relationship with [Prime]”)).
It will be for the jury to decide the extent OHIC regulations
entered into the parties’ negotiations calculus and whether they
or something else caused Steward’s alleged injury.
simply

a

question,

as

Blue

Cross

suggests,

of

This is not
“interpreting

regulatory text in light of government purposes,” a matter of law
reserved for this Court, (see Def.’s Mem. 66 (quoting Kolbe v. BAC
Home Loans Servicing, LP, 738 F.3d 432, 443 (1st Cir. 2013)));
instead,

it

is

a

factual

question

of

what

caused

Steward’s

attempted acquisition of Landmark to fail, as to which Steward
will bear the ultimate burden of proof at trial.

See Addamax Corp.

v. Open Softward Found., Inc., 152 F.3d 48, 54 (1st Cir. 1998) (In
the

context

of

an

alleged

Sherman

Act

injury,

“whether

the

defendants’ assumed conduct had been a substantial or material
cause of the losses claimed by [plaintiff]” was properly a “factual
determination” for jury).
2.

Harm to Competition

Blue Cross claims summary judgment should also enter because
there is no evidence that Blue Cross’s alleged conduct harmed
competition.

It argues:

(1) merely swapping out one potential

buyer (Steward) for another actual buyer (Prime) is of no inherent
83

consequence under the antitrust laws; and (2) Prime’s acquisition
of Landmark benefited consumers (and thus competition) because
Prime charges lower prices than those Steward would have charged.
This argument is a silver bullet aimed at the wrong target.
To create a jury question on harm to competition in this
circuit, “evidence of actual, present competition is not necessary
as long as the evidence shows that the potential for competition
exists.”

Sullivan,

34

F.3d

at

1100.

The

Sullivan

court’s

discussion of harm to competition is particularly instructive.
There,

defendants

the

National

Football

League

and

multiple

organizations that owned NFL franchises (collectively, “NFL”),
appealed a jury finding that the NFL had harmed competition and
therefore

violated

the

antitrust

laws

by

prohibiting

member-

football-team owners from offering public stock in their teams.
Id. at 1094.

The plaintiff, a former owner of the New England

Patriots, prevailed at trial after challenging the NFL’s policy
that required him to sell his team to a private buyer rather than
to the public.

Id.

In asserting there was inadequate evidence of

harm to competition, the NFL endorsed a narrow conception of
competition, suggesting “that the alleged effect of its ownership
policy [was] to reduce prices of NFL team ownership interests,
rather than to raise prices which is normally the measure of an
injury to competition.”

Id. at 1101.

tapered

and

vantage

point

The court rejected the NFL’s

declared,
84

“The

Supreme

Court

has

emphasized, however, that overall consumer preferences in setting
output and prices is more important than higher prices and lower
output, per se, in determining whether there has been an injury to
competition.”

Id. (citing Nat’l Collegiate Athletic Ass’n v. Bd.

of Regents of Univ. of Okla., 468 U.S. 85, 107 (1984) (NCAA)).
The court added, “regardless of the exact price effects of the
NFL’s policy, the overall market effects of the policy are plainly
unresponsive to consumer demand for ownership interests in NFL
teams. . . . Thus, a jury could conclude that the NFL’s policy
injured competition by making the relevant market ‘unresponsive to
consumer preference.’”

Id. (quoting NCAA, 468 U.S. at 107).

In

the face of the NFL’s suggestion that plaintiff’s “position was
based on nothing more than sheer speculation,” the Court emphasized
that “[i]t would be difficult indeed to provide direct evidence of
competition when the NFL effectively prohibits it.”

Id. at 1100.

Thus, Sullivan countenances that measuring harm to competition is
more complicated than simply assessing price and output – evidence
of efficiency is also pertinent.

See id. at 1100-02.

Blue Cross misses this when it declares, “[i]n order to
establish harm to competition, a plaintiff must show ‘a reduction
in output and an increase in prices in the relevant market.’”
(Def.’s Mem. 69 (quoting Sterling Merch., 656 F.3d at 121 (first
emphasis added))).

Blue Cross omits the qualifying language,

derived from Sullivan, 34 F.3d at 1097, that harm to competition
85

is “usually measured” in this way.

This case is far from “usual”

– and it is not an instance where prospective harm to competition
can only be assessed by a reduction in output or an increase in
consumer prices. 40
Blue

Cross’s

argument

that

swapping

out

one

potential

hospital buyer for another actual buyer only works if the jury
rejects Steward’s theory that what it brought to the marketplace
was a new competitive health care delivery model that Blue Cross
feared

and

sought

to

defeat.

In

other

words,

there

is

a

difference, Steward contends, in a “Steward Landmark” and a “Prime
Landmark,” and this affects the legal parameters for assessing
harm to competition.

Blue Cross’s own assessments acknowledge

that Steward offered something new and different to Rhode Island.
(See, e.g., Andruszkiewicz Dep. at 297:9-13, SAUF Ex. 6 (“The
other,

which

actually

is

a

positive

in

terms

of

Steward’s

acquisition of Landmark, was that we knew that they did bring some
innovation,

a

different

kind

of

model

for

the

way

care

was

delivered, and we thought that was a good thing.”); id. at 27:1127:8, 39:9-39:12 (“[Dr. de la Torre and Steward] have their model
and I think it’s an advancement over, you know, what’s been
happening in Massachusetts” “because it’s moving away from sort of
the siloed sort of approach by providers and the fee for service

40

Although, Blue Cross cannot, as a matter of undisputed
fact, satisfy that test either.
86

only, you know, methodology of providers getting paid.”)).

The

same was true of Thundermist’s early assessments of the Steward
model.

In a September 28, 2011 email to Montanaro, Jones writes:

met with Steward . . . [g]enerally impressed with what
they are doing, including developing partnerships with
tertiary hospitals for specialty care and progress on
radiology quality. Showing very good quality and cost
results on the MA AQC. With the new Tufts plan offering
15-30% discounts for their community model of care, they
are a serious threat to the status quo.
(SAUF Ex. 98 at 2, ECF No. 215-23.)
2010 testimony

And Montanaro’s March 26,

before Justice Silverstein strikes the same chord:

Now that we have health care reform and we understand
much more about the direction in which health care is
going, a great deal of change is going to be needed among
all hospital systems and their relationship to primary
care
and
specialist
care.
In
my
preliminary
conversations with Ralph de la Torre and his senior
leadership team at Caritas, I feel very confident and
actually enthusiastic about . . . their approach to
meeting those opportunities and challenges across their
whole system; and particularly . . . for the care
delivery in northern Rhode Island.
(SAUF Ex. 99 at 61:5-17, ECF No. 215-24.)

Blue Cross also

recognized the value of the plan Steward offered and acknowledged
that Prime was not – and never purported to be – Steward.

(See

SAUF Ex. 101 at 2, ECF No. 215-26 (email from Blue Cross’s Mark
Waggoner to Blue Cross employees) (comparing “Prime, vs. a few
months ago w Steward” and outlining the logic to explain variances
in negotiation rates with Steward versus Prime: “we believed there
to be extensive value to engaging with Steward at higher rates
given the integrated delivery capabilities they could bring to the
87

market in year 3?”); Jones Dep. 285-286, SAUF Ex. 12 (describing
conversation with Dr. Reddy of Prime, who “didn’t know what an ACO
was” which, among other things, made it “clear to [Jones] that the
Prime model does not consider healthcare system efficiency as an
overall

goal”);

id.

at

286:18-287:4

(“Q.

And

[Prime]

made

improvements in how [Landmark] looks or repair it or make it more
modern or anything?

A. There’s a nice piano in the entrance, and

I think they’ve redone a couple -- I took a tour of one of the
floors.

It looks nicer, yes.

Q. Has there been any substantive

improvement at Landmark, in your view?
or community partnership, no.”)).

A.

Not in terms of quality

Even Prime acknowledged that it

had none of Steward’s ambitions with respect to bringing a riskbased model or ACOs into Rhode Island.

(Charest Dep. at 74:10-

17, SAUF Ex. 14 (“Q. [D]oes Prime have any plans to participate in
an ACO product in Rhode Island?

A. No. . . . They’ve not found an

ACO product that’s been acceptable to them”); id. at 85:15 (“We
don’t have risk-based contracts.”).
What Steward claims it could have introduced into the Rhode
Island health care and health insurance markets was potentially
beneficial to competition, and blocking it had potential antitrust
consequences.

See, e.g., Federal Trade Comm’n v. Arch Coal, Inc.,

329 F. Supp. 2d 109, 146 (D.D.C. 2004) (“An important consideration
when analyzing possible anticompetitive effects is whether the
acquisition would result in the elimination of a particularly
88

aggressive competitor in a highly concentrated market . . . .”
(citations and quotations omitted)); cf. Brooke Grp. v. Brown &
Williamson, 509 U.S. 209, 223-24 (1993) (describing “maverick”
firm, i.e., a firm that, for a variety of reasons, is more likely
to “stray[] from the group”); United States v. H&R Block, Inc.,
833 F. Supp. 2d 36, 79 (D.D.C. 2011) (“In the context of antitrust
law, a maverick has been defined as a particularly aggressive
competitor that ‘plays a disruptive role in the market to the
benefit of customers.’” (quoting Merger Guidelines § 2.1.5)). That
is, it is both legally and factually important to the antitrust
analysis that Steward – a hospital owner that wanted to bring
change

and

to

eventually

compete

to

potentially

minimize

or

displace the modern and traditional role of insurance companies –
was swapped out with a hospital system that concededly had no –
and was even arguably troubled by – such aspirations.

(See Jones

Dep. at 286:7-10, SAUF Ex. 12.)
The evidence that Blue Cross’s alleged refusal to deal with
Steward

harmed

competition

is

plentiful.

Steward

presents

evidence that Blue Cross’s “Red Team” 41 – the group of employees
and consultants who considered business threats – identified and

41

The Red Team’s motto was “Attack Adapt Advance” and its
logo appears to be a hatchet enclosed within the “shield” of Blue
Cross’s emblem. (See, e.g., SAUF Ex. 29 at 2, ECF No. 214-29.)
89

analyzed Steward’s potential competitive impact. 42

(See, e.g.,

SAUF Ex. 31, ECF No. 214-31 (presentation to Blue Cross’s ELT of
potential competitive “risks to BCBSRI” of a Steward ACO partnering
with Tufts to offer a new, less-expensive, higher-quality product
to Rhode Island); SAUF Ex. 28, ECF No. 214-28 (email between Red
Team members) (“One thought I had was in order to really press the
issue of how big a potential threat Steward is, maybe change the
map to show just how well positioned they are in the southeast
part of MA...they have St. Anne's, Good Sam's, Morton, Norwood,
and Quincy...they basically have RI bordered. Then [L]andmark
would be the tip of the spear. . . . It’ll look like they’re
getting ready for a blitzkrieg!”); SAUF Ex. 29.)

Steward presents

evidence that Blue Cross employees were apprehensive that if
Steward acquired Landmark, in addition to its continued operation
of

hospitals

in

nearby

Massachusetts,

the

“Steward

Community

Choice health plan” with rates “15% to 30% below a comparable broad

42

Blue Cross has its own assignment of meaning to the Red
Team documents, which may ultimately persuade the jury. The Red
Team’s September 2012 presentation to Blue Cross’s ELT included a
disclaimer that, “Information included in the presentation is for
illustrative purposes only; names and scenarios do not represent
real life situations and parties could be interchanged.” (SAUF
Ex. 31 at 2.)
Despite Blue Cross’s proviso, how close the Red
Team’s analysis tracks in time and substance the reality of what
Steward was seeking to bring to Rhode Island does more than raise
a few eyebrows – it raises a genuine factual dispute over the
meaning of the Red Team documents to both Blue Cross and this case.
Indeed, the Red Team’s cast of characters included those with major
influence in real-life negotiations, including Consultant Maria
Montanaro. (See id.)
90

network plan” offered in partnership with Tufts in Massachusetts
could more effectively infiltrate Rhode Island.

(See, e.g., SAUF

Ex. 32, ECF No. 214-32 (email from Blue Cross employee Daniel
Belvin to other employees:

“I do not expect to see this move [of

Steward’s Community Choice Plan] in Rhode Island at launch since
the required physicians and hospitals are all community hospitals
and affiliated physicians in Massachusetts (Saint Anne’s in Fall
River is the closest at this time).

However, if the Landmark

acquisition goes through it could lead to a more effective entry
point for this product into our market.”); cf. SAUF Ex. 23 at 3,
ECF No. 214-23 (Sept. 2012 Red Team Scenarios, “Expansion of
Community Choice Product into Rhode Island”: “However with Steward
facilities in nearby Fall River (St. Anne’s Medical Center) and
Taunton (Morton Hospital), Bristol and Newport counties may also
be served, bringing cost-effective coverage to more than 72% of
the state’s population.”).

And Steward presents evidence that

Blue Cross was generally anxious about the potential competitive
impact that ACOs and risk-based contracting posed for insurance
companies.

(See, e.g., SAUF Ex. 35 at 11 (“Just supporting such

structures is insufficient because the possibility exists for the
ACO to develop a level of integration that makes an outside insurer
redundant.”); Coleman Dep. at 435-38, SAUF Ex. 7 (Blue Cross’s
then-CFO describing how an ACO in collaboration with a hospital
could risk “disintermediation” of Blue Cross, i.e., “the health
91

care insurance company is no longer relevant”); Andruszkiewicz
Dep. at 93:3-5, SAUF Ex. 6 (describing “disintermediation” as the
provider “eliminat[ing] the intermediary known as the payer and
[then] becom[ing] the provider and payer”); id. at 93:7-13 (“And
so [disintermediation] was a concern among my team, me, and every
health insurance executive in the United States at this time frame.
And so we’re walking here the fine line, in the way I guess I’d
describe it, between having a partnership with this provider and
protecting

ourselves

from

them

taking

away

our

business.”);

Waggoner Dep. at 298:9-21, SAUF Ex. 11 (“Q. [W]asn’t there some
discussion

at

Blue

Cross

at

about

this

same

time

about

the

possibility that the ACO model or integrated delivery system could
in some sense replace a conventional insurance company?
sure there was.

A. I’m

I don’t recall, you know, specific conversations.

But the trend in conversations at that point in time, there was a
lot of conversation like that in the country at that point in
time.”)).
Blue Cross’s second argument that Prime’s acquisition of
Landmark benefited consumers (and thus competition) because Prime
charges lower prices than those Steward proposed is saturated with
material factual disputes.

Even assuming that the calculus is as

narrow at Blue Cross suggests, Steward presents evidence that a
Steward-owned Landmark would have saved Blue Cross (and therefore
consumers) money.

(See, e.g., SAUF Ex. 86 at 6, ECF No. 215-11
92

(“Redirection
hospital

of

would

costs.”);

care

have

Eisenstadt

to

lower

tremendous
Rep.

¶

cost,

impact

58,

SDF

non-network
on

Ex.

lowering
39,

ECF

community
healthcare
No.

206-39

(“Steward would not have needed to achieve any volume growth at
Landmark relative to 2011 for BCBSRI and its employer accounts to
have been financially better off in 2015.”).
¶¶

203-12,

SDF

Ex.

40,

ECF

No.

206-40

But see Noether Rep.
(Blue

Cross’s

expert

concluding Blue Cross saved money with Prime)). At bottom, whether
competition was harmed is a matter of how the jury sees the
question and assesses the facts.
Finally, Blue Cross’s argument that “the actual evidence, as
opposed

to

speculation

about

the

future

effect

of

Steward’s

business plans, shows that Steward’s acquisition of Landmark would
have harmed Rhode Islanders in the form of higher healthcare
costs.”

(Def.’s Mem. 74.)

Like the boy who kills his parents and

then pleads for mercy as an orphan, Blue Cross’s argument is the
height of chutzpah. Steward cannot be faulted for having no direct
evidence of the competitive benefits that it could have brought to
Rhode

Island

when

the

barricade

allegedly exclusionary conduct.

was

erected

by

Blue

Cross’s

The Supreme Court long ago closed

the door to this reasoning when it stated, “the most elementary
conceptions of justice and public policy require that the wrongdoer
shall bear the risk of the uncertainty which his own wrong has
created.”

Coastal Fuels of P.R., Inc. v. Caribbean Petrol. Corp.,
93

79 F.3d 182, 200 (1st Cir. 1996) (quoting Bigelow v. RKO Radio
Pictures, 327 U.S. 251, 256 (1946)).

To modify slightly what the

First Circuit said in Sullivan, “It would be difficult indeed to
provide

direct

evidence

of

effectively prohibit[ed] it.”
3.

competition

when

[Blue

Cross]

34 F.3d at 1100.

Damages

Blue Cross suggests that the Court should exclude Steward’s
damages model because all but a small portion of its damages could
have been mitigated, and that Steward’s damages model clashes with
Steward’s claims because it does not distinguish between damages
caused by lawful versus unlawful conduct. 43
Several overarching principles guide the Court’s analysis.
First, although antitrust plaintiffs have a duty to mitigate their
losses, see, e.g., Golf City, Inc. v. Wilson Sporting Goods, Co.,
555 F.2d 426, 436 (5th Cir. 1977), the failure to mitigate is an
affirmative defense, which the defendant must plead and prove.
See, e.g., Pierce v. Ramsey Winch Co., 753 F.2d 416, 436-37 (5th
Cir. 1985) (“[D]efendant bears the burden of demonstrating a
failure to mitigate . . . .”); Malcolm v. Marathon Oil Co., 642
F.2d 845, 863 (5th Cir. 1981) (“[T]he burden of showing that the
victim of [the anticompetitive] conduct failed to minimize his

43

This section cross-references Steward’s previously filed
Motion in Limine To Exclude Damages Testimony of Keith Ghezzi and
Marc Sherman (ECF No. 161).
94

damages

rests

with

the

wrongdoer.”

(quotations

and

citations

omitted)). And second, on a summary-judgment motion, the defendant
must clear that hurdle as a matter of undisputed fact.

See

Creative Copier Servs. v. Xerox Corp., No. Civ.A 301CV155SRU, 2005
WL 2175138, at *5 (D. Conn. Sept. 2, 2005) (deeming mitigation of
damages in antitrust case a “classic example of a disputed issue
of material fact”).
It

is

also

significant

that,

“any

model

supporting

a

plaintiff’s damages case must be consistent with its liability
case, particularly with respect to the alleged anticompetitive
effect of the violation.”
1426, 1433 (2013).

Comcast Corp. v. Behrend, 133 S. Ct.

Blue Cross asserts that Steward could have

mitigated all but $800,000 of its damages by accepting Blue Cross’s
proposed reimbursement rates.

This factual assertion essentially

acknowledges that summary judgment is not appropriate. In reality,
this part of Blue Cross’s motion amounts to a motion in limine to
restrict the evidence of damages at trial.

It asks the Court to

shun Steward’s liability case as a matter of law.
characterized, the argument is rejected.

However it is

Blue Cross suggests that

Steward – in the midst of intense and seemingly ongoing, goodfaith negotiations – was required to step back, identify a breach,
i.e., an antitrust violation, and then accept Blue Cross’s latest
offer (having determined it was in bad faith), because not doing
so would neglect its duty to mitigate.
95

This is nonsensical, and,

not surprisingly, finds no support in the law, in antitrust or
otherwise.

Cf. In re Kellett Aircraft Corp., 186 F.2d 197, 198-

99 (3d Cir. 1950) (“The rule of mitigation of damages may not be
invoked

by

a

contract

breaker

as

a

basis

for

hypercritical

examination of the conduct of the injured party, or merely for the
purpose of showing that the injured person might have taken steps
which seemed wiser or would have been more advantageous . . . .”);
Koby v. United States, 53 Fed. Cl. 493, 497 (2002) (“Accordingly,
courts have been reluctant to require parties, under the duty to
mitigate, to deal further with the breaching party . . . .”).

The

offer Blue Cross says Steward should have accepted is part and
parcel of Blue Cross’s alleged anticompetitive conduct; it cannot
be said that, as a matter of law, the duty to mitigate required
Steward to accept Blue Cross’s arguably bad faith offers in order
to mitigate.
As to Blue Cross’s suggestion that Steward’s damages model is
based

in

part

on

Blue

Cross’s

failure

to

participate

in

a

“collaborative relationship” with Steward and that holding Blue
Cross responsible for failing to engage in such a relationship
exceeds the law’s proscription with respect to “lawful” conduct,
Blue Cross can make this argument at trial.

For now, Steward has

created a genuine dispute of material fact that Blue Cross would,
if it had acted in good faith, implemented a rate agreement with
Steward that included a collaborative, risk-based agreement in
96

year three, which is consistent with an antitrust approach to
calculating

damages:

offense-free

world

“an
as

a

expert

may

construct

yardstick

for

a

reasonable

measuring

what,

hypothetically, would have happened ‘but for’ the defendant’s
unlawful activities.”
Cir. 2003).

LePage’s Inc. v. 3M, 324 F.3d 141, 165 (3d

Part of the world Steward constructs as the reality

but for Blue Cross’s refusal to deal with Steward embraces a
“cooperative” business relationship between Steward and Blue Cross
– not because the antitrust laws required such a relationship,
rather because the parties projected such an arrangement through
their course of dealing.

In other words, Steward’s expert simply

details what is implicit in every contract:
and fair dealing.

the duty of good faith

See Dovenmuehle Mortg., Inc. v. Antonelli, 790

A.2d 1113, 1115 (R.I. 2002) (per curiam) (“[V]irtually every
contract contains an implied covenant of good faith and fair
dealing between the parties.” (quoting Centerville Builders, Inc.
v. Wynne, 683 A.2d 1340, 1342 (R.I. 1996)).

It is premature to

conclude, as Blue Cross does, that accepting Steward’s damages
model fails to distinguish between lawful and unlawful conduct.
Unlike the many cases Blue Cross cites in which conduct had already
been

deemed

lawful

or

unlawful,

here

there

is

no

previously

adjudicated, lawful conduct to filter out from Steward’s model.
Cf. MCI Commc’ns Corp. v. AT&T, 708 F.2d 1081, 1163 (7th Cir. 1983)
(reversing jury award where plaintiff’s damages model assumed
97

illegality of all of defendant’s charged acts, when liability was
predetermined as to only seven).

And based on the viability of

Steward’s claims as outlined above, summary judgment is not the
time to test Blue Cross’s damages theory.
A final point:

although damages will be further examined at

trial, a plaintiff is not required to quantify damages to sustain
a damages award in this context; when an antitrust plaintiff
demonstrates it has been damaged, a jury may award nominal damages.
See Sciambra v. Graham News, 892 F.2d 411, 415 (5th Cir. 1990)
(“[P]roof of an antitrust violation and the fact of damage is a
sufficient basis for an award of nominal damages.”); Home Placement
Serv., Inc. v. Providence J. Co., 819 F.2d 1199, 1207, 1210 (1st
Cir.

1987)

(affirming

nominal

damages

award

where

plaintiff

established fact of damage but did not set forth adequate evidence
“to permit a trier of fact to ascertain the amount of damages by
just and reasonable inference”).

Blue Cross’s declarations over

damages do not suffice to grant summary judgment against Steward.
4.

State-Action Doctrine

Finally, Blue Cross avers that the state-action doctrine
forecloses Steward’s antitrust claims because state regulation
compelled

the

supposedly

unreasonable

rates

that

Blue

Cross

offered.

As a matter of law, the Court doubts that the state-

action doctrine contemplates these circumstances, and, even if it

98

did, Blue Cross’s argument is deficient for many of the reasons
outlined above with respect to the OHIC regulations.
The state-action doctrine immunizes from challenge conduct
that is the intentional or foreseeable result of state or local
government policy.

See Parker v. Brown, 317 U.S. 341, 351 (1943).

And it has two elements for immunizing supposed compelled conduct:
“[f]irst,

the

challenged

restraint

must

be

‘one

clearly

articulated and affirmatively expressed as state policy’; second,
the policy must be ‘actively supervised’ by the State itself.”
Ca. Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S.
97, 105 (1980) (quoting City of Lafayette v. Louisiana Power &
Light Co., 435 U.S. 389, 410 (1978)).

For purposes of argument,

Steward concedes the first prong and solely addresses the second,
the “active supervision prong.”
In Patrick v. Burget, the Supreme Court set forth that “the
active supervision requirement mandates that the State exercise
ultimate control over the challenged anticompetitive conduct.”
486 U.S. 94, 101 (1988).

The “mere presence of some state

involvement or monitoring does not suffice.”

Id.

To invoke the

doctrine also necessitates that “state officials have and exercise
power to review particular anticompetitive acts of private parties
and disapprove those that fail to accord with state policy.”

Id.;

see also FTC v. Ticor Title Ins. Co., 504 U.S. 621, 634-35 (1992)
(“[The

active-supervision

inquiry’s]
99

purpose

is

to

determine

whether the State has exercised sufficient independent judgment
and control so that the details of the rates or prices have been
established as a product of deliberate state intervention, not
simply by agreement among private parties. . . . The question is
not how well state regulation works but whether the anticompetitive
scheme is the State’s own.”).

A brief summation of the state-

action doctrine standard alone crystallizes why it does nothing to
bar Steward’s claims here.

Because it cannot be said that Blue

Cross’s “anticompetitive acts were truly the product of state
regulation,” Blue Cross cannot “claim state-action immunity from
Sherman Act liability.”

Patrick, 486 U.S. at 100; see also Ticor,

504 U.S. at 636 (“state-action immunity is disfavored.”).
In any event, assuming arguendo that that the doctrine somehow
contemplates these circumstances, Steward easily overcomes it.
a matter of disputed fact:
hospitals

–

only

health

As

(1) OHIC has no authority over

insurers;

(2)

based

on

OHIC’s

own

publications, OHIC has previously excepted application of its
regulations for certain hospitals, and OHIC regulations are not
inflexible in the sense that they would prohibit Blue Cross from
ever offering rate increases of a certain amount.

Thus, Steward

has at least created a material factual dispute regarding the
“active supervision” prong.

Blue Cross’s request for summary

judgment on this ground fails.

100

E.

Conclusion

For the reasons outlined above, the Court DENIES Blue Cross’s
Motion

for

Summary

Judgment

(ECF

No.

Steward’s Amended Complaint (ECF No. 90).
XVIII will proceed to trial.
IT IS SO ORDERED.

William E. Smith
Chief Judge
Date: April 23, 2018

101

157)

on

all

Counts

of

Accordingly, Counts I-