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Prescient Medicine Holdings, LLC v. Laboratory Corporation of America Holdings

United States District Court, D. Delaware

February 14, 2019

PRESCIENT MEDICINE HOLDINGS, LLC, Plaintiff,
v.
LABORATORY CORPORATON OF AMERICA HOLDINGS, LABORATORY CORPORATION OF AMERICA, AMERIHEALTH, INC., and AMERIHEALTH CARITAS DELAWARE, INC., Defendants.

          Richard H. Cross, Jr., Cross & Simon, LLC, Wilmington, Delaware. Daniel W. Tarpey and Matthew M. Showel, Tarpey Wix LLC, Chicago, Illinois. Attorneys for Plaintiff.

          Raymond J. DiCamillo, Chad Shandler, Katharine L. Mowery, Richards, Layton & Finger, P.A., Wilmington, Delaware. Steven F. Barley, Marc A. Marinaccio, Hogan Lovells U.S. LLP, Baltimore, Maryland. J. Robert Robertson, Hogan Lovells U.S. LLP, Washington, DC. Attorneys for Defendants Laboratory Corporation of America and Laboratory Corporation of America Holdings.

          Jody C. Barillare, Morgan, Lewis & Bockius LLP, Wilmington, Delaware. Eric Kraeutler, Steven A. Reed, R. Brendan Fee, Zachary M. Johns, Alexandra M. Lastowski, Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania. Attorneys for Defendants AmeriHealth, Inc., and AmeriHealth Caritas Delaware Inc.

          MEMORANDUM OPINION

          NOREIKA, U.S. DISTRICT JUDGE

         Plaintiff Prescient Medicine Holdings, LLC (“Prescient”), a company that provides laboratory testing services, alleges that Defendants have conspired to exclude Prescient from providing those services to the Delaware market. There are two groups of defendants, Laboratory Corporation of America and Laboratory Corporation of America Holdings (collectively “LabCorp”) and AmeriHealth, Inc., and AmeriHealth Caritas Delaware Inc. (collectively “AmeriHealth” and collectively with LabCorp “Defendants”). LabCorp, like Prescient, provides laboratory testing services. (D.I. 1 ¶ 17). AmeriHealth is a managed care organization that has selected LabCorp as one of its “in network” providers. (D.I. 1 ¶ 1).

         In its Complaint (D.I. 1), Prescient asserts federal and state law claims against Defendants. The federal claims arise under Sections 1 and 2 of the Sherman Act (Count I and Count II) and Section 16 of the Clayton Act (Count III). (D.I. 1 ¶¶ 42-58). The state law claims are based on the Delaware Deceptive Trade Practices Act (Count IV), Fraud (Count V), Civil Conspiracy (Count VI), Tortious Interference with Contract (Count VII), Deliberate Interference with Prospective Business Opportunity (Count VIII), and Business Defamation (Count IX). (Id. ¶¶ 59-100). Pending before the Court are Defendants' motions to dismiss all claims of the Complaint pursuant to Fed.R.Civ.P. 12(b)(6).[1] (D.I. 14, 16). The Court has subject matter jurisdiction over the federal claims pursuant to 28 U.S.C. § 1331 and over the state law claims pursuant to 28 U.S.C. § 1367. For the following reasons, the motions to dismiss will be granted.

         I. BACKGROUND

         Under the Social Security Act, states may delegate management and administration of Medicaid healthcare programs for low-income populations to privately managed care organizations. See generally Medicaid Managed Care, 81 Fed. Reg. 27498, 27500 (May 6, 2016). AmeriHealth is one of two managed care organizations selected by the Delaware Department of Health and Social Services, Division of Medicaid and Medical Assistance, “to provide managed Medicaid services in the state of Delaware.” (D.I. 1 ¶ 10). “In its role as a managed care organization . . . for Delaware Medicaid, AmeriHealth can choose which health care service providers it will allow into its network . . . .” (Id. ¶ 11). “In network” means that Medicaid “will reimburse the provider for a portion of the patient's services, thus lowering the out-of-pocket costs to the patient.” (Id.). In December 2017, Prescient applied to be included as an “in network” provider for AmeriHealth. (Id. ¶ 36). AmeriHealth instead selected LabCorp as its exclusive in network provider of laboratory services for Medicaid patients in the state of Delaware. (Id. ¶ 38).

         LabCorp is based in North Carolina and provides laboratory services nationwide. (Id. ¶¶ 5, 17-18). For several years, LabCorp provided laboratory services to patients of a Delaware nonprofit named Connections Community Support Programs, Inc. (“Connections”). (Id. ¶¶ 26, 28). In January 2018, Connections entered into a Laboratory Services Agreement with Prescient to replace LabCorp as Connections' laboratory services provider. (Id. ¶ 32). According to the Complaint, LabCorp's Michael Schooley told Connections that Medicaid would not reimburse claims for laboratory services provided by Prescient, because Prescient was not an “in-network” provider with AmeriHealth. (Id. ¶¶ 34, 35, 37). After learning that AmeriHealth had denied Prescient's application to be an in-network provider, Connections decided to keep LabCorp as its laboratory services provider. (Id. ¶ 40).

         II. STANDARD OF REVIEW

         To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must plead facts sufficient to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Courts must accept all well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. In re Rockefeller Ctr. Prop., Inc. Sec. Litig., 311 F.3d 198, 215 (3d Cir. 2002). The court's review is limited to the allegations in the complaint, exhibits attached to the complaint, documents incorporated by reference, and items subject to judicial notice. Siwulec v. J.M. Adjustment Serv., LLC, 465 Fed.Appx. 200, 202 (3d Cir. 2012).

         III. DISCUSSION

         To plead an antitrust claim, the complaint must allege sufficient facts to show (1) antitrust standing and (2) a relevant market. Ethypharm S.A. France v. Abbott Labs., 707 F.3d 223, 232 (3d Cir. 2013) (stating that an antitrust injury is threshold requirement); Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 435 (3d Cir. 1997) (stating that a relevant market is “a basic pleading requirement”). Defendants argue that Counts I-III of the Complaint fail to satisfy either of these threshold requirements. (D.I. 15 at 9-12; D.I. 17 at 3-8). The Court agrees.[2]

         A. ...


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