ProMedica can drop McLaren St. Luke's insurance coverage, appeals court says

Aug. 11—A federal appeals court on Tuesday said ProMedica's insurance arm can proceed with dropping coverage of McLaren St. Luke's patients — a move that had been halted by a lower court last year.

The decision by the U.S. 6th Circuit Court of Appeals in Cincinnati is the latest turn in an antitrust lawsuit filed by Maumee-based McLaren St. Luke's.

Read the decision here.

It vacates a preliminary injunction granted late last year by U.S. District Court Judge Jack Zouhary, which had prevented ProMedica's insurance subsidiary, Paramount, from terminating St. Luke's and its patients from various health plans that it offers.

ProMedica spokesman Tausha Moore said in a statement the company was pleased with the decision.

"Paramount has always been focused on the best interests of its plan members, and we appreciate that the Court of Appeals expressly recognized the competitive benefits that a lower cost, narrow network health plan like Paramount provides to members and employers," she said. "We strongly believe the Court of Appeals' decision confirms that McLaren's lawsuit is meritless."

It was not immediately clear late Tuesday how soon St. Luke's patients covered by Paramount might be forced to find other coverage or change doctors, or how many the decision will affect. Officials for ProMedica did not immediately have information on its next steps.

McLaren spokesman Ginger Petrat said the company is "deeply disappointed" by the decision and plans to continue exploring legal options. ProMedica's actions, she said, "continue to disrupt the important relationships thousands of patients have built with their physicians and caregivers."

Ms. Petrat said Paramount members at McLaren St. Luke's should contact their plan administrator to learn if and when changes will occur. With open enrollment approaching, she said, employers and individuals should "carefully review" their benefit options to ensure they can stick with McLaren St. Luke's and its physicians.

Tuesday's opinion said ProMedica had good reason to stop insuring with McLaren St. Luke's patients.

"Because ProMedica had a legitimate business explanation for ending the relationship, St. Luke's is unlikely to show that ProMedica unlawfully refused to continue doing business with it," Chief Judge Jeffrey Sutton wrote in Tuesday's decision vacating the preliminary injunction.

That explanation dates back several years. In 2012, the U.S. Federal Trade Commission blocked a merger between ProMedica and St. Luke's. Later, the two hospital groups agreed that while they would not be under the same corporate umbrella, ProMedica could provide insurance via Paramount to St. Luke's patients.

Then St. Luke's was purchased by Michigan-based McLaren Health last October — a large health provider and direct competitor with ProMedica. ProMedica then opted to terminate its deal to continue offering St. Luke's patients coverage.

A provision of the original agreement drawn up between the hospitals allowed ProMedica to terminate its insurance agreement if St. Luke's ownership changed hands, court documents state, describing it as a "pre-approved exit ramp."

Still, when ProMedica decided to exercise that provision, McLaren St. Luke's sued, alleging anticompetitive business practices by ProMedica. It contended that "ProMedica engaged in a pattern of monopolistic and anticompetitive behavior designed to maintain and increase its dominant market position by limiting patient choice and causing harm to St. Luke's and its affiliated physicians."

The appeals court didn't buy it, siding with ProMedica that its decision to pull coverage made business sense.

"Every shrewd businessperson, and every athlete and politician to boot, intends to beat her competitors. Just so for companies, the most strategic of which hope to squash the competition by delivering a superior product," the opinion said. "... That ProMedica might want to beat McLaren St. Luke's by delivering less expensive, vertically integrated healthcare in Lucas County is not a sign of market forces failing. It is just the opposite."

First Published August 10, 2021, 5:50pm

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