The purpose of antitrust law is to prohibit those business practices, such as price-fixing or group boycotts, that limit competition and thus, in turn, result in consumer harm. As a result, vigorous enforcement of antitrust law, particularly in the health care arena — where affordable patient access to innovative procedures or drugs can substantially enhance quality of life — remains paramount.
This view has been shared by some key public officials, such as Federal Trade Commission Chairman Jonathan Leibowitz. History has shown, however, that resource-constrained state and federal officials often rely on the private bar to enjoin and/or deter anti-competitive practices. Now, with state and federal legislators pressing for substantial budget cuts to reduce unprecedented government deficits, the public may need to increase its reliance on private antitrust enforcement even further.
If fewer resources are devoted to fighting collusion and monopolization in health care services and private enforcers are not given the opportunity to “fill the breach,” the physical and economic health of millions of American patients will likely be negatively affected. Private enforcement of antitrust law by various medical constituencies becomes even more crucial with government spending cuts.
For private parties to seek remedies under antitrust law, they must demonstrate that they have standing to seek redress. Moreover, because antitrust litigation is often resource-intensive, costing millions of dollars and thousands of attorneys hours to get through the trial phase, plaintiffs often rely on class certification to both catalyze counsel to bear litigation risk and to ensure that the small claims of numerous plaintiffs, who would otherwise not be financially able to sue, can join together in a single lawsuit.
Taking into account the likely future prosecutorial limitations of our government, it becomes apparent that private-party standing and class-certification principles should be liberally interpreted in future antitrust cases, particularly when health care issues are raised. If they are not, the budget crises that we are encountering may effectively turn off the spigot of antitrust enforcement, allowing numerous anti-patient practices to go unchallenged.
In order to demonstrate private-enforcer standing, a plaintiff must show that it has sustained “antitrust injury” — an injury that “flows” from a “harm to competition.” This includes economic loss stemming from practices that affect price, substantially foreclose competition, degrade product quality or limit access to innovative products.
A plaintiff must also show that it is an “efficient enforcer of antitrust law” to have standing. Among the relevant factors that a court may consider in determining antitrust standing is whether a plaintiff has sufficient motivation and resources to stop the anti-competitive effects alleged when compared with other plaintiffs. This purportedly reduces the threat that a defendant will be faced with the prospect of “double recovery” for a single antitrust violation (e.g., overcharge damages to indirect purchasers that are not entirely distinct from overcharge damages to unrelated direct purchasers).
When plaintiffs undisputedly incurred competitive injury as a result of an anti-competitive practice and the lawsuit will not result in a “double recovery,” they should be held to have antitrust standing. This is particularly true when no other plaintiff is motivated or financially able to stop the particular anti-competitive effects that are alleged to have been caused. Under any other rule, patients could be deprived of an antitrust remedy when, for example, insurers collude to withhold medical reimbursements for a particularly innovative, life-saving drug.
If a court wrongly deprived such patients of standing on the ground that pharmaceutical manufacturers, who lost substantial sales as a result of the insurer cartel, are more “proper plaintiffs,” patients would be left without antitrust recourse. This would be a terrible outcome — one that could potentially leave the collusion in place if pharmaceutical entities decided to forgo litigation.
Another issue relevant to overall private enforcement of the antitrust laws, particularly in the health care arena, concerns class certification. Federal Rule of Civil Procedure 23 was enacted to permit the efficient amalgamation of claims of similarly situated plaintiffs, offering a practical means to litigate for plaintiffs whose relatively small individual claims are worth far less than the overall cost of litigation. This helps to provide access to the courts for those who would otherwise have no effective venue for the pursuit of their legal claims.
Importantly, the burden placed upon plaintiffs seeking to certify classes has been raised in the past decade. Plaintiffs, who once could merely rely on allegations that a class was particularly cohesive, must now make factual showings that common issues affect class members and that there will not be significant intraclass conflicts. This weeds out cases that should not be certified as classes — when common issues do not affect members. Such actions cannot be efficiently adjudicated at the trial stage.
Some courts, unfortunately, have seized upon these new standards to make class certification a virtually impossible exercise. They have done this by requiring plaintiffs, in effect, to convince the judge of liability at the class stage, despite the mandate of the Constitution’s Seventh Amendment that such fact-intensive merits-based determinations fall squarely upon the shoulders of the jury.
Fewer meritorious antitrust prosecutions will result if plaintiffs are forced to convince conservative jurists of the merits of their position at the same time that public enforcement efforts are curtailed in order to eliminate deficit spending. This could ultimately undermine the deterrent aspects of antitrust law, causing a greater amount of collusion among competitors and abusive conduct by monopolists and monopsonists in health care markets.
Courts and legislators need to allow private antitrust enforcers to “fill the breach” if government efforts are limited by financial constraints in the future.
Matthew L. Cantor and Gary J. Malone are partners at Constantine Cannon in New York, specializing in antitrust litigation and counseling.