SUSAN SYKES d/b/a ADVANCED CHIROPRACTIC AND HEALTH CENTER, DAWN PATRICK, TROY LYNN, LIFEWORKS ON LAKE NORMAN, PLLC, BRENT BOST, and BOST CHIROPRACTIC CLINIC, P.A.
BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, CIGNA HEALTHCARE OF NORTH CAROLINA, INC., MEDCOST, LLC, and HEALTHGRAM, INC.
in the Supreme Court on 5 March 2019.
pursuant to N.C. G.S. § 7A-27(a) from an order and
opinion entered on 5 April 2018 by Judge James L. Gale, Chief
Business Court Judge, in Superior Court, Forsyth County,
after the case was designated a mandatory complex business
case by the Chief Justice under N.C. G.S. § 7A-45.4.
City Law LLP, by Samuel Pinero II and Robert E. Fields III;
and Doughton Blancato PLLC, by William A. Blancato, for
Kilpatrick Townsend & Stockton LLP, by Adam H. Charnes,
Elizabeth L. Winters, Peter M. Boyle, pro hac vice, and
Christina E. Fahmy, pro hac vice, for Blue Cross and Blue
Shield of North Carolina; Fox Rothschild LLP, by D. Erik
Albright, and Kirkland & Ellis LLP, by Joshua B. Simon,
pro hac vice, Warren Haskel, pro hac vice, and Dmitriy
Tishyevish, pro hac vice, for Cigna Healthcare of North
Carolina, Inc.; and Ellis & Winters LLP, by Stephen D.
Feldman, for Medcost, LLC, defendant-appellees.
a companion case to Sykes v. Health Network Solutions,
Inc., __ N.C. __, __S.E.2d __(2019) (No. 251PA18)
(hereinafter Sykes I). Like its companion, this case
raises questions of civil liability based on insurer conduct
affecting chiropractic services. Relying on and incorporating
its reasoning in Sykes I, the trial court dismissed
all claims in this case. Our Court has now issued its opinion
affirming the trial court's decision in Sykes I.
Because the decision in Sykes I meets the criteria
for collateral estoppel, we affirm the trial court's
order and opinion in this case.
case is one of two putative class actions alleging, inter
alia, that defendant insurers contract with Health
Network Solutions, Inc. (HNS) to provide or restrict insured
chiropractic services in violation of North Carolina's
insurance and antitrust laws. Instead of amending the
complaint in the companion case, plaintiffs chose to bring
this action against defendant insurers separately from their
action against HNS and its individual owners. Nevertheless,
both actions present essentially the same claims and rely
upon the same theories.
facts relevant to this case are fully recited in this
Court's opinion in Sykes I. HNS is an integrated
independent practice association consisting of approximately
one thousand, or approximately one-half, of North
Carolina's active chiropractors. To enroll in HNS,
chiropractors must agree to provide in-network care to
patients who are covered by various insurers, namely,
defendants in the present action, and with whom HNS has
entered into exclusive agreements to provide in-network care.
Chiropractors who contract to participate in the HNS network
pay fees to HNS based on a percentage of the fees that
insurers pay for in-network services.
governing its chiropractors and the services they provide,
HNS uses a utilization management (UM) program. Through UM,
HNS and defendants review and manage enrolled chiropractors
based on the cost per patient. The HNS-enrolled chiropractors
may be put on probation and subject to potential termination
if their average cost per patient exceeds by more than 50% a
mean cost that HNS calculates.
of their lawsuits, plaintiffs allege that chiropractors must
go through HNS to be deemed "in-network" providers
for patients covered by defendant insurers. Plaintiffs
contend that HNS's exclusive contracts with defendants
enable a "scheme that reduces the number of medically
necessary and appropriate treatments" that HNS
chiropractors may provide, which has the effect of
restricting their output. Plaintiffs contend that these
practices allow defendants to avoid paying for medically
necessary treatments and appropriate care.
April 2013, plaintiffs initiated Sykes I. In that
action plaintiffs asserted five claims for relief: (1)
requests for a declaratory judgment on certain facts and law
referenced in the complaint, including that the agreements
described in the complaint "between HNS and
Providers" and "between HNS and the Insurers"
are "an illegal restraint of trade and
anti-competitive"; (2) antitrust claims based on price
fixing, monopsony, and monopoly, alleging that HNS, its
owners, and insurers have illegally conspired by
"[u]sing the Insurers' market power to fix the price
of chiropractic services in North Carolina" and
"[u]sing its utilization review procedures to
continuously lower the availability of chiropractic services
in North Carolina"; (3) claims under North Carolina
General Statutes section 75-1.1 asserting unfair and
deceptive trade practices and acts; (4) breach of fiduciary
duties that HNS owners and HNS allegedly owe to the providers
by, inter alia, "promoting a scheme to impede
competition and restrict prices"; and (5) a request for
punitive damages. Plaintiffs later amended their complaint to
add a sixth claim for civil conspiracy.
outlined four separate product markets in support of their
antitrust claims: (1) "the market in which in-network
managed care chiropractic services . . . are provided to the
Insurers and their North Carolina patients through HNS"
(HNS Market); (2) "the market for in-network
chiropractic services provided to individual and group
comprehensive healthcare insurers and their patients in North
Carolina" (Comprehensive Health Market); (3) "the
market for insurance reimbursed chiropractic services in
North Carolina" (Insurance Health Market); and (4)
"the market for chiropractic services provided in North
Carolina" (North Carolina Market).
trial court denied the defendants' initial motion to
dismiss the claims in Sykes I and stayed additional
proceedings pending full discovery on market definition.
After discovery, plaintiffs decided to pursue the present
case separately in addition to their suit against HNS. Thus
on 26 May 2015, plaintiffs filed this action against certain
North Carolina insurers, specifically, Blue Cross and Blue
Shield of North Carolina, Cigna Healthcare of North Carolina,
Inc., and Medcost, LLC (Insurers). The case was designated as a
mandatory complex business case on 2 June 2015.
their Sykes II complaint plaintiffs asserted
essentially the same six claims from Sykes I but
this time against Insurers: (1) requests for a declaratory
judgment on certain facts and law referenced in the
complaint, including that the agreements described in the
complaint "between HNS and Providers" and
"between HNS and the Insurers" are "an illegal
restraint of trade and anti-competitive"; (2) antitrust
claims, namely, claims for price fixing, monopsony, and
monopoly; (3) claims under North Carolina General Statutes
section 75-1.1 asserting unfair and deceptive trade practices
and acts based on ...