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Health care giants UPMC, Highmark reach agreement over anti-trust suits

| Wednesday, Oct. 23, 2013, 12:27 p.m.

UPMC and Highmark Inc. might finally agree on something: It's time to end a four-year legal battle.

The health care giants on Wednesday tentatively agreed to end a pair of antitrust lawsuits. But that won't keep the contract between them from expiring in December 2014.

“It probably means very, very little to the customers,” said Jim McTiernan, area vice president of Triad USA, which helps employers manage health and welfare benefits.

Pushed by a federal judge, lawyers reached the deal to end a 2009 lawsuit that West Penn filed against UPMC, and a 2012 lawsuit that UPMC filed against Highmark and West Penn.

“It wouldn't be fair” to provide details of the agreement, said Paul Pohl, an attorney for UPMC, when negotiators emerged two hours after the judge sent them to a back room to talk. Pohl said UPMC is ready to sign, but Highmark executives need to review the deal. That's expected to happen on Thursday, said Margaret Zwisler, Highmark's attorney.

The agreement then needs to be ratified by West Penn Allegheny Health System's board, which is set to meet on Oct. 31. Highmark Chairman Robert Baum, a member of the West Penn board, declined to comment on the proposal.

West Penn's antitrust lawsuit named Highmark as a defendant until the insurer agreed to buy West Penn, a deal that closed in April.

Though both sides would spend millions of dollars more in legal costs if the lawsuits continue, those costs are relatively small compared to UPMC and Highmark's operating budgets, McTiernan said.

The real concern for individuals and employers is the contract that sets rates for people covered by Highmark who use UPMC doctors and facilities, he said.

“If you asked most employers, they wouldn't even be aware of these lawsuits,” he said.

UPMC and Highmark agreed to drop the lawsuits as part of a deal Gov. Tom Corbett brokered in May 2012 that extended the insurance contract by 18 months.

U.S. District Judge Joy Flowers Conti has pressed the lawyers to live up to the deal, even asking them to file briefs on who had authority to enforce the agreement.

On Wednesday, she conferred with attorneys from the governor's office and the companies.

Linda Barrett, senior deputy general counsel for the state, told the judge that Highmark and UPMC had agreed not to draw the mediators into any court fight. She said it would be up to Conti to interpret the agreement.

“I'm very disappointed that the governor wasn't willing to stand behind the results of the mediation,” Conti said before telling the attorneys to talk out their differences.

Corbett spokesman Jay Pagni said Highmark and UPMC asked for the governor's help as a neutral party and not an enforcer.

“We are disappointed by the judge's comments,” Pagni said. “This was about a contract extension, not any type of litigation.”

Conti will review the status of the case on Nov. 25, but lawyers for both sides said the lawsuits should be dismissed before then unless the West Penn board rejects the deal.

The proposed agreement wouldn't affect a third antitrust lawsuit naming both companies as defendants.

Royal Mile Co., a Whitehall property management company, Cole's Wexford Hotel Inc. of Pine and a customer claim that a conspiracy between Highmark and UPMC allowed Highmark to charge them excessive premiums. Conti on Sept. 27 threw out the second version of their complaint, giving them 30 days to file another or appeal the decision.

Scott Hare, an attorney for Royal Mile, said they haven't decided which option they'll pursue before the deadline on Monday.

Brian Bowling is a Trib Total Media staff writer. Reach him at 412-325-4301.

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