UPMC, Highmark argue over settlement

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Hopes that warring Highmark and UPMC might resolve antitrust allegations against each other were dealt a setback Tuesday when the insurer asked a federal judge to enforce a tentative agreement -- plus a new, disputed provision.

Lawyers for Highmark and UPMC last week agreed, in principle, to end antitrust claims in which they face each other. Now Highmark wants a guarantee that UPMC won't characterize it as a monopolist in litigation brought by others, including a pending lawsuit by four plaintiffs.

A UPMC spokesman characterized that as a demand that it "give up its rights to defend itself in any present and future litigation involving Highmark."

The squabble is driven largely by a lawsuit filed by four private plaintiffs including Royal Mile Co., accusing UPMC and Highmark of colluding to jack up rates. In that lawsuit, plaintiffs late Monday filed a new complaint focused on the for-profit health insurance marketplace.

U.S. District Chief Judge Joy Flowers Conti, who is handling the cases, last week pushed attorneys for the health giants to negotiate based on UPMC's proposal to drop two lawsuits.

The first, a case filed against UPMC by West Penn Allegheny Health System, now the Allegheny Health Network, a Highmark affiliate, is 4 years old. UPMC filed the second antitrust suit against Highmark last year, weeks after the insurer agreed, as part of a broader pact, to bring an end to the AHN lawsuit.

Although its attorneys last week initialed the proposed settlement, Highmark contended that AHN's board had to approve it. In the interim, Highmark proposed a new plank under which neither side could "seek to impose liability on any released party" including in "defense in any present or future litigation to which they are both parties."

Highmark's court filings indicate that UPMC was planning to portray the insurer as a monopolist in the Royal Mile case.

"UPMC believes [incorrectly] that it can absolve itself from any liability to Royal Mile if it can show that Highmark, alone and/or in conjunction with West Penn, has violated the antitrust laws," Highmark's lawyers wrote. That would turn the agreement to drop the lawsuits into "a nullity," they contended.

Highmark said it wants to prevent UPMC from using the Royal Mile case as "a 'back door' tactic" to make accusations or "harass" others with "burdensome discovery requests."

UPMC spokesman Paul Wood said the hospital system couldn't sign on to a provision that tied its hands in its own legal defense.

"We wouldn't be allowed to tell the truth in court, and that's not how UPMC operates," said Mr. Wood. He added that UPMC "remains ready to sign the agreement that was before the court last Wednesday that lawyers from both sides initialed."

An AHN spokesman could not be reached for comment on whether that hospital group's board was still planning to meet Thursday, and whether it would address the pact to drop the lawsuits.

Property firm Royal Mile was joined by individual Pamela Lang, Cole's Wexford Hotel Inc. and accountant William Jay Snyder in filing an amended complaint accusing Highmark and UPMC of conspiring, and using their market power, to keep out competitors and jack up rates from 2002 through 2008 or later. They seek class action status.

Judge Conti found a month ago that she could not question the reasonableness of nonprofit Highmark's rates, because they are approved by the Pennsylvania Insurance Department.

The plaintiffs have now asked to file an amended complaint claiming that Highmark kept for-profit insurers, which would have charged lower rates, out of the marketplace. Most rates charged by for-profit insurers aren't approved by the state.

At the same time, the plaintiffs' attorneys wrote, "Highmark unilaterally transferred numerous [ratepayers] to a Highmark subsidiary [called Highmark Health Insurance Company] that was a for-profit commercial insurance company" and not subject to department rate controls.

"Our position is that the lawsuit lacks merit, and we plan to file a motion to dismiss the action," Highmark spokesman Michael Weinstein said.

Rich Lord: rlord@post-gazette.com or 412-263-1542. Twitter: @richelord. First Published October 29, 2013 11:50 AM

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