Pittsburgh-Area Health Care Antitrust War Opens New Front In Mediation

A high-profile battle between two Pittsburgh-area health care networks that has already been fought in federal district and appellate courts is now headed to mediation.

In West Penn Allegheny Health System, Inc., v. UPMC, Judge Arthur Schwab of the U.S. District Court for the Western District of Pennsylvania ordered the parties to try an alternative form of dispute resolution after West Penn Allegheny Health System moved for leave to file a second amended complaint alleging an antitrust conspiracy against the larger University of Pittsburgh Medical Center (“UPMC”).    

In 2009, West Penn sued UPMC and Highmark, a dominant health insurance provider in western Pennsylvania, for damages stemming from an alleged agreement with Highmark to reimburse UPMC at a higher rate than West Penn.  West Penn argued that such an agreement put it at a competitive disadvantage against UPMC.  West Penn has struggled financially.  It recently agreed to be acquired by Highmark, which led to West Penn dropping Highmark from the lawsuit.

Judge Schwab had dismissed West Penn’s complaint in October 2009, finding that West Penn had not alleged any antitrust injury.  The U.S. Court of Appeals for the Third Circuit, however, reversed the dismissal and remanded for further proceedings.

Before deciding on West Penn’s motion for leave to file a second amended complaint, Judge Schwab ordered the parties to try mediation, which is to be concluded by the end of January 2012.  If the parties have not resolved their dispute by that time, Judge Schwab has ordered the parties may engage in expedited discovery on the motion to replead, focusing on the issues of prejudice, delay, and futility.