Judge greenlights feds’ steering contract suit against Carolinas
A North Carolina federal judge upheld a lawsuit brought by the U.S. Justice Department against Carolinas HealthCare System alleging the system’s steering provisions in insurer contracts are anticompetitive.
U.S. District Judge Robert Conrad ruled March 30 that the Justice Department has sufficient evidence to prove the system takes advantage of its mar- ket power in Charlotte, N.C., by forcing four major insurers into steering contracts that raise prices for patients.
Carolinas controls 50% of the Charlotte healthcare market. The Justice Department claims insurers agree to contracts with Carolinas that prevent them from steering patients to less costly providers because of this market power.
The health system alleges it needs steering provisions in order to prevent insurers from using its inclusion in their plans as a marketing ploy. Carolinas’ attorneys also claim that their arrangements with the insurers promote competition because the health system is providing discounted services in exchange for “customer loyalty.”
The insurers—Aetna Health of the Carolinas, Blue Cross and Blue Shield of North Carolina, Cigna Healthcare of North Carolina and United-Healthcare of North Carolina—hold 85% of the commercial insurance market in the Charlotte area, according to the feds.
In response to the judge’s ruling, Carolinas said in a statement that it “has not violated the antitrust laws and we look forward to further supporting our position in court.”