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Northern District Of Illinois Denies Motion To Dismiss Antitrust Claims In Healthcare Providers’ Price Fixing Lawsuit
06/17/2025On June 3, 2025, Judge Matthew F. Kennelly denied motions to dismiss federal and state antitrust claims brought by healthcare providers (“plaintiffs”) against MultiPlan (a healthcare payment management service) and third-party payors (insurers, administrators and managed care organizations) (“defendants”). In re Multiplan Health Ins. Provider Litig., No. 24 C 6795 (E.D. Ill. June 3, 2025). The Court’s ruling permits plaintiffs’ Sherman Act Section 1 claims to proceed on a “hub-and-spokes” conspiracy theory, while rejecting their horizontal price fixing conspiracy theory. In addition, the Court denied defendants’ motion to dismiss plaintiffs’ state antitrust and consumer protection claims, but granted their motion to dismiss unjust enrichment claims.
In the United States, most payments for medical services are not made by patients directly, but through third-party payors who negotiate rates with providers. While in-network rates are generally predetermined, out-of-network rates have historically been determined by “usual, customary, and reasonable” (“UCR”) benchmarks. MultiPlan offers an alternative method for calculating appropriate out-of-network rates, through an algorithm called Data iSight. By 2019, Multiplan managed over 80% of out-of-network payments, leading to allegations of coordination and price fixing between Multiplan and third-party payors.
A Sherman Act Section 1 claim requires plaintiffs to plausibly allege that (1) defendants entered into a contract, combination or conspiracy agreement, (2) which resulted in an unreasonable restraint on trade within the relevant market, and (3) that plaintiffs suffered harm as a result. Plaintiffs pled five theories alleging violations of Sherman Act Section 1, but the Court only addressed two: horizontal price fixing agreements and “hub-and-spokes” agreements.
Plaintiffs first argued that the contracts between Multiplan and third-party payors should be characterized as horizontal price-fixing agreements. In analyzing this argument, the Court emphasized that horizontal price-fixing agreements are per se unlawful. To support their contention, plaintiffs asserted that Multiplan itself had acted as a third-party payor and had competed with other payors in the past for out-of-network services, pointing to factual allegations of MultiPlan acknowledging competition with payors in connection with its preferred provider organization network.
However, the Court rejected plaintiffs’ theory, finding that the factual allegations only support Multiplan’s competition with payors in the in-network market, rather than the out-of-network market at issue. Plaintiffs made no allegations that Multiplan actually purchased out-of-network services or competed with third-party payors in that market. The Court also found no plausible allegations that Multiplan was a potential competitor in the out-of-network market. As a result, the Court concluded that plaintiffs had not plausibly alleged a horizontal price fixing agreement between competitors in the relevant market for out-of-network healthcare services.
Plaintiffs alternatively alleged a “hub-and-spokes” agreement to support their Sherman Act Section 1 claim. Despite finding that Multiplan does not compete directly with third-party payors for out-of-network services, the Court acknowledged that a noncompetitor can nonetheless enable an agreement among competitors, thereby facilitating a horizontal agreement. These agreements are commonly referred to as “hub-and-spokes” agreements, where a coordinating party (i.e., the “hub,” MultiPlan) enables an agreement among competitors (i.e., the “spokes,” third-party payors).
In analyzing the alleged “hub-and-spokes” agreement, the Court considered parallel conduct among the third-party payors. Plaintiffs alleged that the third-party payors switched from using traditional UCR benchmarks to calculate out-of-network service rates to Multiplan’s rate calculation services. The Court found that third-party payors’ shift from using traditional methods to calculate rates to using Multiplan’s software was sufficient to allege parallel conduct, even though the third-party payors did not contract with Multiplan at the same time.
The Court also identified a number of so-called “plus factors” supporting the plausibility of a “hub-and-spokes” price fixing conspiracy. First, that it was contrary to the third-party payors’ self-interest to use Multiplan’s services because there were less expensive alternatives available for calculating out-of-network payment rates.
Second, that third-party payors’ use of below-market rate calculation services was against the self-interest of any individual payor acting alone. If only one payor adopted these lower rates, it risked losing subscribers because providers would be less willing to accept patients from payors that underpaid. This risk of subscriber loss would deter unilateral adoption, making it rational only if the third-party payors knew their competitors were also participating.
Third, third-party payors allegedly provided Multiplan with detailed pricing data, which Multiplan communicated to other third-party payors. The Court considered this exchange of competitively sensitive information, which is normally kept confidential to preserve a competitive advantage, as indicative of the potential for collusive behavior.
Finally, the Court considered the market structure and circumstances that could facilitate collusion. The Court noted the alleged high barriers to entry and exit, high market concentration, and past collusive conduct are often indicative of the possibility for coordinated action. Taking plaintiffs’ allegations as a whole, the Court found it plausible that Multiplan facilitated an agreement among third-party payors to fix prices.
As such, the Court denied defendants’ motion to dismiss plaintiffs’ Sherman Act Section 1 claims. As the litigation continues, it remains to be seen how the Court’s conclusions may impact the business practices of insurers and healthcare providers
