PROVIDENCE — Steward Healthcare’s 2013 lawsuit against Blue Cross Blue & Shield of Rhode Island alleging a conspiracy with Thundermist Health Center and Lifespan to prevent the Massachusetts hospital system from entering the Rhode Island market by blocking their bid to purchase Landmark Medical Center in Woonsocket, is headed to trial.
On April 23, U.S. District Court Judge William Smith dismissed BCBSRI’s motion for summary judgement on all 18 counts in the suit, Steward Health Care Sys., LLC v. Blue Cross & Blue Shield of R.I.
Smith states that for the purposes of his judgement on the motion to dismiss, he must consider the facts of the case as presented by Steward at face value.
Steward alleges BCBSRI violated state and federal antitrust law, and illegally interfered with contractual relations, engaging in a series of anti-competitive steps designed to block Steward’s acquisition of Landmark and its entry into the Rhode Island markets for the sale of commercial health insurance and the purchase of commercial hospital services.
Blue Cross contends it acted legally when it refused to accept the reimbursement rates at Landmark that Steward was offering, (which the suit alleges was 5 percent below their usual rate) and otherwise operated within its rights in order to promote its business interests.
Steward Healthcare ended its pursuit of Landmark Medical Center in September of 2012.
In dismissing BCBSRI’s motion for summary judgement, Smith wrote, “Steward sets forth an abundance of evidence that points toward a ‘distinctly anticompetitive bent,’ which could in turn persuade a reasonable jury that Blue Cross unlawfully monopolized the relevant markets by excluding Steward from Rhode Island.”
Part of the evidence, Smith wrote, includes an agreement between Blue Cross, Lifespan, and Thundermist to block Steward from Rhode Island premised on a treat-and-transfer plan proposed as an alternative to Steward acquiring Landmark. The plan would make Landmark a less than full-service hospital as an alternative to a combined Steward-Caritas Christi Health Care bid to acquire the hospital in 2010.
According to Steward’s presented documents on the case, Smith writes, “Before meeting with the judge, Blue Cross first huddled with Lifespan and Thundermist. Notes from that meeting indicate that discussion topics included: (1) undermining Caritas’s efforts to acquire Landmark; and (2) underscoring treat and transfer as the preferred alternative. In 2012, CEO Peter Andruszkiewicz of Blue Cross ([CEO James] Purcell’s successor) and CEO George Vecchione of Lifespan discussed the treat-and-transfer plan in the context of Andruszkiewicz’s calculation that Landmark would not go to Steward.
Montanaro [Maria Montanaro, then-CEO of Thundermist Health Center], who by then had left Thundermist to become a Blue Cross consultant, reported to Chuck Jones, her successor as Thundermist CEO: “Peter (Andruszkiewicz) tells me that he believes Steward will fail to acquire here in Rhode Island. He has no intention of giving into their demands. He has talked with [Lifespan CEO] George [Vecchione], who has told him ‘with as much certainty as he has ever heard George use’ that Lifespan WILL step in and take over the hospital, following the model we developed with them years ago. Peter wants to see Care NE then do the OB piece. He talked with George and his leadership about this yesterday.”
Lifespan Vice President Jane Bruno noted Lifespan is not a party to the lawsuit, and also pointed out the judgement is not a ruling on the facts of the case.
“At this juncture of the suit, the Judge is required to assume the facts as claimed by the plaintiff to be true. A trial yet to be conducted will ultimately determine the actual facts. As such, we are confident that once the case goes to trial and the parties have the opportunity to fully present their respective cases, it will be determined that Lifespan was not involved in any conspiracy,” Bruno said.
“Blue Cross & Blue Shield of Rhode Island is disappointed with the Court’s decision to deny our motion for summary judgment. We remain confident, however, that Steward Health Care’s claims are without merit, and that we will prevail at trial. We will continue to defend our mission to provide high-quality, affordable health insurance to Rhode Islanders,” said spokeswoman Jill Flaxington.
Thundermist Health Center did not reply to a request for comment.
Rob Borkowksi is a PBN staff writer. Email him at Borkowski@PBN.com.
