DES MOINES, Iowa (Legal Newsline) – The Iowa Supreme Court has reversed a district court decision that would have allowed a collective of similarly situated chiropractors to sue a health insurance company over alleged antitrust violations in the state.
Attorneys for the plaintiffs in the district court case Mueller v. Wellmark Inc. cited the Iowa Competition Act, according to court documents. A civil complaint was filed in 2007 by Steven Mueller, a chiropractor who alleged Wellmark breached a contract in a $17,376 billing dispute.
Several other chiropractors joined Mueller in May 2008 to engage in legal action against Wellmark. This included filing an amended petition for claims in a class of Iowa chiropractors who “have billed for services provided to patients enrolled in Wellmark health insurance plans.”
According to the decision,the plaintiffs alleged Wellmark "discriminatorily fixed prices for services performed by chiropractors at rates lower than those paid to medical doctors and doctors of osteopathic medicine. Their amended petition alleged violations of Iowa insurance regulatory statutes, the Iowa Competition Law (Iowa Code chapter 553), and a national class-action settlement. The district court, without certifying this case as a class action, granted Wellmark’s motions to dismiss and for summary judgment. Plaintiffs appealed."
This led to the case being heard by the court for a first time in 2009. The court reversed the district court’s summary judgment dismissing antitrust claims against Wellmark based on the state-action exemption in Iowa Code section 553.6(4) (2009).
The court remanded the case for further proceedings on plaintiffs’ claims under the Iowa Competition Act. Meanwhile, the collective of chiropractors commenced an administrative action in the Iowa Insurance Division to litigate the violations of the insurance regulatory statutes.
"On Dec. 31, 2012, Wellmark moved to dismiss or stay the civil action pending the insurance commissioner’s decision in the related administrative action," the Supreme Court's opinion states. The commissioner decided in favor of Wellmark, who had argued the commissioner had primary jurisdiction "because the regulator was better suited to analyze the complex antitrust allegations and any effects on insurance markets," the opinion states.
There was resistance from the plaintiffs who argued that there wasn't a need to await the commissioner's decision because the amended petition alleged "per se" violations. As such, there was no requirement for the regulator's analysis of the market.
According to the court, under a per se violation, an agreement is “so plainly anti-competitive that no elaborate study of the industry is needed to establish . . . illegality.” A contrasting rule-of-reason claim “requires plaintiffs to demonstrate that a particular arrangement ‘is in fact unreasonable and anti-competitive before it will be found unlawful.’”
The ruling means that proper procedures were not followed and the district court was found to have erred in allowing the case to proceed without class certification in the first place, according to the Supreme Court.