UPMC wants to air Highmark pact

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UPMC wants all the world to see the weeks-old agreement between Highmark and West Penn Allegheny Health System, UPMC argued Wednesday in filings in a lawsuit between the region's two big hospital networks.

West Penn is fighting against disclosure of the affiliation agreement it has with Highmark, saying it is "laced with highly sensitive, confidential information" on the health system's compliance with regulations, salaries, legal battles and more.

The dispute over whether to make public a private document with implications for the region's economy is the latest twist in West Penn's lawsuit. Contending that the region's big medical provider and big insurer conspired to stifle competition, it had been viewed as struggling against West Penn's legal Hail Mary pass. Now it may have been intercepted by UPMC's aggressive defense.

It comes at a time when the local health insurance market has become "ultra-competitive, where Highmark and UPMC are involved in a high-stakes game right now, and any advantage that one can gain against the other, the other is going to guard against, ferociously," said Jim McTiernan, a principal with Triad USA, which negotiates with insurers on behalf of employers.

The partnership between West Penn and Highmark was floated in April, and drove UPMC to end contract renewal talks with Highmark and invite other insurers.

When West Penn filed its lawsuit in 2009, it contended that Highmark and UPMC made deals that undermined smaller health care providers, and kept other insurers out of the region.

The argument changed on Oct. 31, the day before West Penn and Highmark announced a pact that has the insurer injecting capital into the region's number-two hospital network. West Penn asked to dismiss Highmark as a defendant in the case. U.S. District Judge Arthur J. Schwab consented.

West Penn then asked Judge Schwab for permission to amend its complaint in light of the removal of Highmark. UPMC called West Penn's proposed rewrite of its allegations "a stunning about face" that "entirely gutted" the conspiracy theory.

"West Penn has substituted UPMC as the sole bad actor in cases where misconduct had been alleged as to a UPMC-Highmark tag team and has substituted UPMC for Highmark in cases where misconduct had been alleged solely as to Highmark," UPMC's lawyers wrote.

Perhaps most perilous to West Penn is a Nov. 8 order by Judge Schwab to file the affiliation agreement on the public docket. The judge wants the parties to discuss, at a Nov. 28 conference, the "legal and practical implications" of the pact to the lawsuit.

UPMC's lawyers wrote in Wednesday's brief that the full agreement between West Penn and Highmark "should be disclosed not just to [UPMC], but also to the public whose interest West Penn purports to have been championing all along."

West Penn said in a brief Monday that the agreement isn't relevant to the legal proceedings, and that just one of its untold pages deals with West Penn's dismissal of Highmark from the lawsuit. If it must be filed, West Penn's attorneys wrote, it should be sealed and viewed only by attorneys and experts involved in the case.

If the agreement is revealed to UPMC or made broadly public, it would "substantially impair" the business of West Penn and the insurer-hospital combination it is trying to create with Highmark, according to West Penn's brief.

It noted that UPMC was allowed to file its 2002 agreement with Highmark under seal.

"I would tend to agree that there's probably stuff in there that is not for public viewing, especially from competitors," said Mr. McTiernan. A competitor armed with information on Highmark's reimbursements to West Penn for various procedures could use that as a bargaining chip in its own negotiations with hospitals, he said.

UPMC argued that there are only narrow exceptions to the general rule of public access to federal court documents, and they don't apply to the agreement. Judge Schwab ordered West Penn to submit another round of arguments on the matter today.

Separately, Highmark in July sued UPMC over the hospital giant's ad campaign and private communications, saying they are illegally misleading and breach the contract between the two. That suit is pending.

Rich Lord: rlord@post-gazette.com or 412-263-1542.


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