Royal Mile Co., Inc. v. UPMC, 2013 WL 5436925, No. 10-1609, slip copy (Sept. 27, 2013).

In Royal Mile Co., Inc. v. UPMC, the District Court for the Western District of Pennsylvania held that the filed rate doctrine barred all of the Plaintiffs antitrust claims. The Court accordingly granted the Defendants motion to dismiss, but permitted the Plaintiffs an opportunity to amend. The Plaintiffs were purchasers of group health insurance from Highmark. The Defendants were Highmark, Inc. (Highmark), a health insurance provider, and the University of Pittsburgh Medical Center (UPMC), a health services provider. The Plaintiffs generally asserted that Highmark and UPMC conspired to protect their respective market shares by refusing to deal reasonably with each others competitors, among other things. The alleged agreement allowed UPMC to impose monopoly rents upon the market by overcharging Highmark, knowing that Highmark would in turn abuse its monopoly status and pass on the excessive monopoly rents to its subscribers, the Plaintiff class. In their motions to dismiss the Plaintiffs second amended complaint, Highmark and UPMC argued that the Plaintiffs did not plead a proper measure of damages . . . because Plaintiffs measure of damages is barred by the filed rate doctrine because Highmark filed the rates it charged to Plaintiffs with the Pennsylvania Insurance Department (PID). The Court found that the Plaintiffs were requesting damages calculated by the difference between the approved rates they paid to Highmark and the rates they would have paid absent the alleged conspiracy. The Court held that the filed rate doctrine as set out in Keogh v. Chicago & Northwestern Ry. Co., 260 U.S. 156 (1922) barred the Plaintiffs claims because the Plaintiffs relied merely on the difference between the approved rates and hypothetical rates the PID would have approved. Such calculation, the Court held, is prohibited under Keogh and its progeny. The Plaintiffs also argued that the filed rate doctrine did not bar their claims, at least against Highmark, because they purchased group health insurance policies for which Highmark was not required to file rates with the PID. Highmark, on the other hand, argued that the law required existing hospital plan corporations, professional health services plan corporations and HMOs to file their initial base rate with PID, and that law applied to Highmark. The Court agreed, taking judicial notice of a certification from the PID, which stated that Highmark was a hospital plan and professional health organization; therefore the Court found that the PID required Highmark to file its initial base rate for group policies with the PID. The Plaintiffs further argued that even if the PID required Highmark to file group rates, the filed rate doctrine did not apply because the Pennsylvania statute at issue allowed Highmark to increase its rates by up to 15% without an additional filing with the PID. The Court disagreed, finding that the PID retained control over the rates charged by Highland, because the PIDs approval of the base rate operated as an inherent approval of the statutorily permitted range of rates. Accordingly, the Court held that it could not engage in ratemaking to determine the rates the PID would have approved but for the alleged UPMC-Highmark conspiracy. Rather, the nonjusticiability strand of the filed rate doctrine required the Court to defer to the PID.

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Even though the Court found that the Plaintiffs sufficiently alleged certain facts that would support their 2 claims at this stage and that some indirect purchases may have standing, the Court found that the filed rate doctrine barred all of the Plaintiffs Sherman Act claims. The Court nonetheless granted the Plaintiffs leave to file an amended complaint. In so doing, the Court cautioned that any measure of damages that would require the court to engage in the ratemaking process or to second guess the determination of the PID with respect to approved legal rates likely would run afoul of the filed rate doctrine.

DM_US 46050509-2.T10085.0010