Price Uniformity Not Required For Cert.: 7th Circ.
By Keith Goldberg
Law360, New York (January 13, 2012, 6:19 PM ET) -- The Seventh Circuit on Friday said that price uniformity isn't necessary to sustain the predominance requirement for class certification in antitrust cases involving entities with complex pricing systems, reviving a suit alleging NorthShore University HealthSystem hospitals abused their monopoly power after a 2000 merger.
In a published opinion, a three-judge panel vacated an April 2010 ruling by U.S. District Judge Joan H. Lefkow that said the plaintiffs could not prove that NorthShore had uniformly raised prices and therefore could not claim a classwide injury.
The panel said common evidence — the post-merger price increases NorthShore negotiated with insurers — to show that all or most of the insurers and patients that received coverage through these insurers suffered some antitrust injury as a result of the merger is enough to establish the predominance requirement for class certification, the panel said.
"In essence, it is important not to let a quest for perfect evidence become the enemy of good evidence," the panel said. "Under the district court's approach, [class certification] would require not only common evidence and methodology, but also common results for members of the class. That approach would come very close to requiring common proof of damages for class members, which is not required."
Mary Jane Fait of Wolf Haldenstein Adler Freeman & Herz LLP, an attorney for the plaintiffs, said the implications of the Seventh Circuit's decision could stretch beyond hospital systems to other entities that offer multiple prices for multiple services, especially in the context of monopolization.
"Basically, [the Seventh Circuit] has said in cases such as hospital mergers, that involve pricing to patients and health care consumers, you can establish common impact," Fait told Law360 on Friday. "Certainly for practitioners of class action and antitrust law, it provides some guidance."
NorthShore spokeswoman Amy Ferguson said Friday that the hospital was reviewing the decision.
NorthShore, which was previously known as Evanston Northwestern Healthcare Corp., is comprised of Evanston Hospital, Glenbrook Hospital, Highland Park Hospital and Skokie Hospital, and operates as a single, integrated entity.
The proposed class includes all of those who purchased inpatient hospital services or hospital-based outpatient services from ENH hospitals since ENH merged with Highland Park Hospital almost 10 years ago.
The complaint against ENH, filed in 2008, alleged two counts of unlawful monopolization or attempt to monopolize under Section 2 of the Sherman Act, as well as one count of unlawful monopolization under Section 7 of the Clayton Act.
ENH's merger with Highland Park Hospital has attracted other antitrust scrutiny. In 2004, theFederal Trade Commission filed an administrative complaint against ENH, alleging that the acquisition enabled ENH to raise its prices charged to health insurers far above price increases of other comparable hospitals.
The FTC ruled that the merger violated Section 7 of the Clayton Act and initially ordered ENH to divest Highland Park Hospital. On appeal, the commission found that divestiture was unnecessary but ordered ENH to establish separate teams for negotiating contracts with payors, with one for Evanston and Glenbrook hospitals, and another for Highland Park.
Judges David F. Hamilton, Diane S. Sykes and John Daniel Tinder sat on the panel for the Seventh Circuit.
The plaintiffs are represented by Mary Jane Fait and John Tangren of Wolf Haldenstein Adler Freeman & Herz LLP and Marvin A. Miller and Matthew E. Van Tine of Miller Law LLC.
NorthShore is represented by Gene C. Schaerr and Duane M. Kelley of Winston & Strawn LLP.
The case is Messner et al. v. NorthShore University HealthSystem, case number 10-2514, in the U.S. Court of Appeals for the Seventh Circuit.
--Additional reporting by Shannon Henson. Editing by Andrew Park.