MultiPlan is celebrating a state court victory over a bankrupt health system that alleged the claims data analytics firm’s business model illegally contributed to its demise.
The liquidating trust for Verity Health System of California, a six-hospital nonprofit that filed for bankruptcy in 2018, named MultiPlan alongside several of its insurance industry partners in a September 2021 complaint.
An amended version of the complaint filed earlier this year alleged anticompetitive behaviors between the partners, including horizontal price fixing through “hub-and-spoke” agreements and unlawful exchange of competitively sensitive business information. The arrangements allowed payers to artificially reduce out-of-network payments to providers like Verity, a portion of which are paid out to MultiPlan, Verity wrote.
The case has now been tossed by the Superior Court of California, a development a representative of the embattled company described as “a positive development” in light of the similar claims made in subsequent health system litigation.
“We have consistently stated that these lawsuits are without merit and would ultimately increase prices for patients and employers,” the company told Fierce Healthcare in an emailed statement. “We were pleased to see that last Friday the Superior Court of California granted MultiPlan’s motion to dismiss against the Verity Health System Liquidating Trust, in a case raising antitrust claims similar to those in the multi-district litigation in the Northern District of Illinois.”
MultiPlan’s statement refers to a class action filed in April by Louisiana-based for-profit health system Allegiance Health Management. The data company is also contending with a 2023 lawsuit from AdventHealth and a May 2024 complaint from Community Health Systems that outline millions in losses for hospitals. Alongside their similar anticompetitive claims, these complaints have cited Verity’s bankruptcy and litigation in their arguments against MultiPlan.
The company has also found itself in the public’s crosshairs following a critical New York Times investigation published this spring. Influential senators have since sent demands for information on the company’s business model and called for federal agencies to investigate potential collusion. The American Hospital Association, which had filed a friend-of-the-court brief for AdventHealth’s case, has also called for a Department of Labor investigation of the company.
The health systems’ complaints cite about $22 billion and $23 billion in payment reductions to providers in 2022 and 2023, respectively, generated by MultiPlan’s services and payer partnerships.
MultiPlan filed a demurrer, or objection, to Verity’s amended complaint that was sustained without leave to amend.
In the Aug. 9 order, Superior Court Judge Anne-Christine Massullo wrote that Verity failed to state a cause of action for violation of California’s principal antitrust law.
The judge also did not find that MultiPlan’s out-of-network service reimbursement rates weren’t subject to price fixing or tampering and that Verity did not sufficiently allege unlawful exchange of competitively sensitive business information or a violation of the state’s Unfair Competition Law.
The legal win lands as MultiPlan faces an uphill battle with its investors. MultiPlan’s stock is down over 80% from the start of 2024, with much of that drop coming after the publication of the NYT’s investigation. Analysts and MultiPlan leadership alike have suggested that the scrutiny has pushed investors and clients away from the company.