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Steward Health Care System LLC v. Blue Cross & Blue Shield of Rhode Island

United States District Court, D. Rhode Island

April 23, 2018




         I. Background[1]

         In this antitrust action, Plaintiffs Steward Health Care System, LLC, Blackstone Medical Center, Inc., f/k/a Steward Medical Holding Subsidiary Four, Inc., and Blackstone Rehabilitation Hospital, Inc. (collectively, “Steward”) claim Defendant Blue Cross & Blue Shield of Rhode Island (“Blue Cross”) unlawfully blocked Steward from entering the Rhode Island health care and health insurance markets, by thwarting its attempt to purchase a failing community hospital in receivership, Landmark Medical Center (“Landmark”), in Woonsocket, Rhode Island. (Pls.' Corrected Statement of Disputed Facts (“SDF”) ¶ 49, ECF No. 171-1.)

         This is a complicated case, and the area of antitrust law governing the claims is, to put it kindly, confused and opaque. As explained in detail below, the Court's view on the outcome of this motion has changed as a result of careful and complete review of the record and the law; and without question, this is a close case - one that highlights the difficulty of applying less-than-clear antitrust doctrines and precedents to one of the most complicated and volatile sectors of the national economy. In the end, the analysis below has convinced the Court that a trial is required on all counts of Steward's Amended Complaint (ECF No. 90), and therefore Blue Cross's Motion for Summary Judgment (ECF No. 157) will be denied in full (Counts I-XVIII).

         A. Landmark

         Landmark Medical Center (“Landmark”) is a “community based” hospital that has served northern Rhode Island since 1988. See Landmark Medical Center, History, https://www.landmarkmedical.or g/About-Us/History.aspx (last visited Apr. 16, 2018). In 2008, facing increasingly difficult financial straits, Landmark entered receivership under the supervision of the Rhode Island Superior Court. (SDF ¶¶ 53, 62.) After entering receivership, Landmark operated under a court-appointed Special Master. (Id. ¶ 62.) Justice Michael Silverstein of the Rhode Island Superior Court oversaw the receivership proceedings and appointed attorney Jonathan Savage as Special Master. (Id. ¶ 63.) Special Master Savage solicited bids for Landmark from prospective buyers, including hospital systems Lifespan, Prime, and Steward. (Id. ¶ 64.)

         As early as 1996, Lifespan sought to potentially acquire Landmark. (Id. ¶ 65.) Lifespan's interest resurfaced in the context of Landmark's receivership proceedings in April 2009 when the Special Master requested that Maria Montanaro, then-CEO of Thundermist Health Center (“Thundermist”), [2] “outline a plan for how health services would be delivered in Woonsocket in the event that Landmark were to close.” (SDF ¶ 66; Dep. of Maria Montanaro (“Montanaro Dep.”) at 38-39, SDF Ex. 27, ECF No. 206-27.) The plan devised by Montanaro “called for the elimination of inpatient acute care at Landmark, and for the facility to provide primarily urgent care, emergency services, and outpatient surgery.” (Id. ¶ 67; SDF Ex. 101, ECF No. 210-13; Dep. of Mary Wakefield (“Wakefield Dep.”) at 31:1-6, SDF Ex. 30, ECF No. 206-30; Montanaro Dep. at 42:1-45:3, SDF Ex. 27; Dep. of George Vecchione (“Vecchione Dep.”) at 14:8-14:14, SDF Ex. 29, ECF No. 206-29.) Underlying the plan was the idea that “a viable way to sustain Landmark hospital given its current financial and operational burdens [did] not appear to exist.” (SDF ¶ 69.)

         B. The Steward Model

         Steward is a for-profit hospital system, [3] which owns and operates multiple hospitals in neighboring Massachusetts.[4] (Id. ¶¶ 9, 11.) In its contracts with Massachusetts health insurance companies, Steward receives compensation on a per-member-per-month (“PMPM”) basis rather than a fee based on individual service(s) performed. (Id. ¶ 15.) As Steward describes it, this is a “risk-based” model, in which Steward shoulders “some amount of financial risk of providing healthcare services to the health insurers' members.” (Id.) To be successful, such a relationship requires a “working, constructive business relationship that involves the sharing of information and other cooperation” between health insurers and Steward.[5] (Id. ¶ 16.) Moreover, the success of Steward's healthcare vision requires that “the payer and provider must together develop a system for sharing the health-care and health-expense history of the insured patient population, also develop an analytic for total medical expense (‘TME') of that population, and agree on reasonable grounds for reducing TME and improving the quality of care.” (Pls.' Statement of Additional Undisputed Facts (“SAUF”) ¶ 196, ECF No. 177-1.)

         Steward's vision was to offer a new, atypical health-care-provider model to Rhode Island. (SDF ¶ 35.) This model was premised on “(1) right-siting care, such that community-based, routine services are performed in community settings, whether hospitals, urgent care centers, ambulatory services centers, or physicians' offices; (2) improving the quality of care provided in the community; [and] (3) negotiating on behalf of an integrated network of physicians and hospitals to drive lower premiums.” (SDF ¶ 40.) In exchange for participation in its own “narrow network, ” Steward would accept lower reimbursement rates. (Id.)

         As a part of Steward's vision, its executives believed it could turn around the quality problems Landmark faced; indeed, “that was the fundamental premise of Steward's turnaround plan for the hospital.” (SDF ¶ 54.) “Landmark quality of care is generally good, although it has room for improvement.” (Id.)

         Steward's long term goals extended beyond Landmark; it wanted to acquire more hospitals in Rhode Island. (SDF ¶ 28.) To this end, Steward petitioned the state legislature to amend the Rhode Island Hospital Conversion Act “to eliminate a three-year waiting period between hospital acquisitions by for-profit hospitals, which would have allowed Steward to buy more than one Rhode Island Hospital in a three year period.” (SAUF ¶ 139.)

         C. The Caritas and Steward Bid To Acquire Landmark

         In August 2010, over one year after the receivership commenced, Caritas, Steward's predecessor, submitted a bid to acquire Landmark.[6] (SDF ¶ 76.) A contract with Blue Cross was a precondition to Caritas's proposed Asset Purchase Agreement (“APA”). (Id. ¶ 77.) Feeling that it lacked the essential partners, including Blue Cross, for a successful transaction over Landmark, Caritas withdrew its bid in December 2010. (Id. ¶ 78.) In a press release following the failed transaction, the Special Master “indicated critical discussions related to reimbursement rates with Blue Cross/Blue Shield of Rhode Island did not produce tangible results.” (Id.) He added, “To date, this has been our biggest hurdle. Unfortunately, attempts to address our inadequate reimbursement rates with Blue Cross were not productive and in fact stalled our negotiations with Caritas.” (Id.)

         In May 2011, Steward submitted a new bid to acquire Landmark. (SDF ¶ 79.) An APA was proposed, and although amended fifteen times, this mostly extended the closing deadlines. (Id. ¶¶ 79, 81, 82.) While the various APA versions included numerous conditions, “[n]ot all important matters were included as conditions in the APA, nor were all conditions in the APA clearly ‘important.'” (Id. ¶ 79.) Rather than rigid requirements, Steward considered the conditions to be “flexible leverage points for negotiations, ” or even “window dressing.” (Id. ¶¶ 79, 82.) Indeed, after realizing certain conditions could not be met, Steward nevertheless plowed ahead in attempting to acquire Landmark. (Id. ¶ 79.)

         For example, the APA submitted in March 2012 included the following conditions: “An agreement to purchase 100% of Rhode Island Specialty Hospital” (“RISH”); a Memorandum of Understanding (“MOU”) with Thundermist; and “[a]n agreement to purchase the interest of 21st Century Oncology (‘21st Century') in Southern New England Regional Cancer Center (‘SNERCC'), a cancer treatment facility owned jointly by 21st Century and Landmark.”[7] (SDF ¶ 81.) Steward made clear that it would consider waiving the Thundermist and SNERCC conditions if and when it became necessary, if that meant Steward would successfully acquire Landmark. (Id. ¶ 82.) (“You know, at the end of the day, it's us and Blue Cross that need to come to an agreement.”).

         The key to Steward's effort to acquire Landmark was an acceptable arrangement with Blue Cross on reimbursement rates, because, as with all Rhode Island hospitals, this was the primary source of income for services rendered at Landmark. (See id. ¶ 98; SAUF ¶ 173.) For about a year from September 2011 to September 2012, with the assistance of various facilitators, Steward and Blue Cross exchanged numerous and detailed reimbursement-rate proposals for Landmark. (SDF ¶ 86.) Over the course of these negotiations, Steward saw Blue Cross as “moving backwards” because its offers of rate increases always included “quality targets that were unrealistic, given Landmark's condition.” (Id.) Blue Cross would not discuss modifying these targets, even though it had done so for other providers. (Id. ¶ 88.) In one of the last mediation sessions the parties had with the Rhode Island Attorney General, the Attorney General informed Steward executives that Blue Cross “just do[es]n't want you to do business in this state.” (Id. ¶ 86.)

         Steward believed Blue Cross's proposed quality metrics (a part of Blue Cross's Standard Quality Program) were unattainable, so over the long course of negotiations, it proposed quality metrics different than those Blue Cross advanced, but which it believed to be achievable. (SDF ¶ 100.) For example, in September 2011, Steward introduced a proposal for quality metrics “based on year-over-year improvement at Landmark, as opposed to targets based on national averages.” (Id.) At every turn, Blue Cross rejected Steward's proposals and refused to stray from its Quality Program's methodology.[8] (Id.)

         Beyond the financial issues, Steward needed and wanted Blue Cross to be a “‘willing partner.'” (Id. ¶ 88.) After all, the viability of Steward's proposed model turned on a “non-hostile relationship” with Blue Cross. (Id.) Although not expressly set out as an APA condition, everyone involved understood that an agreement with Blue Cross was essential for a successful contract over Landmark. (SDF ¶ 112.)

         On August 6, 2012, negotiations being facilitated by the Attorney General came to an acrimonious stop when Steward's team walked away in response to what it viewed as an unproductive, obstinate negotiating approach by Blue Cross. (Id. ¶ 86.) Steward's decision to walk away was met with considerable anger because at the time, some viewed Steward as petulantly abandoning a process that so many people had invested in deeply.[9] Nonetheless, with some prodding, the parties reengaged. (SDF ¶ 87.)

         On September 4, 2012, Steward sent a letter to Justice Silverstein that offered two, alternative paths to finalizing the Landmark acquisition. (SDF ¶ 114.) One path consisted of “satisfying the three conditions, with or without an agreement with Blue Cross.” (Id.) The other required an agreement with Blue Cross but waived the RISH and Thundermist conditions, and allowed Steward to “deal with SNERCC later.” (Id.) A final mediation session with retired Chief Justice Frank Williams of the Rhode Island Supreme Court occurred on September 12, 2012. (Id. ¶ 89.) Alas, this mediation too was unsuccessful. (See id.) Steward publicly announced its decision to withdraw its Landmark bid on September 27, 2012. (Id.) Steward announced,

In order to move forward with Steward's model of care several conditions needed to be met. These conditions were clearly spelled out in the Asset Purchase Agreement and accepted by the Court. These conditions have not been met. When we were notified that these conditions could not be met, we presented a second path by which we would waive two of these conditions. This alternate condition was also not met.

(Id. ¶ 117.) The difference between Steward's and Blue Cross's rate proposals is the subject of considerable dispute, but, as calculated by Steward, was $3 million. (See SDF ¶ 97.)

         D. The “Red Team”

         Blue Cross's Chief Financial Officer (“CFO”) Michael Hudson, an individual involved in Steward negotiations from August to September 2012, spearheaded what Blue Cross called the “Red Team” in July 2012. (SDF ¶ 87.) The Red Team was a group of Blue Cross employees charged with identifying and analyzing potential competitive threats. (SDF ¶ 87; SAUF ¶ 142.) One of those employees was Linda Winfrey, an Assistant Vice President at Blue Cross responsible for gauging “risks to the enterprise up to and including disruption of services.” (SDF ¶ 87.) AVP Winfrey had been considering these issues for Blue Cross since at least May 2012, when she circulated (and later presented at an executive leadership meeting) a document that highlighted Blue Cross's most pressing threats; at the top of that list was the “potential of new competitors entering the market including Accountable Care Organizations (ACO), ” which could “result in significant enrollment losses and could negatively affect our long term viability as a health plan.” (Id.) In a similar presentation in July 2012, “Competition in the Post-PPACA World, ” “ACO: Supplier Leverage” and “Limited Network Carrier (Steward/Fallon?)” were pinpointed as “new threats” with a high “likelihood of entry to RI market” and a substantial “adverse impact on BCBSRI.” (Id.) AVP Winfrey also approved the idea of analyzing Steward's prospective threat in the first round of the Red Team's analysis. (Id.) In that analysis, the Red Team included “a map to show just how well positioned [Steward is] in the southeast part of MA . . . they have St. Anne's, Good Sam's, Morton, Norwood . . . they basically have RI bordered. Then Landmark would be the tip of the spear.” (Id.)

         Blue Cross expressed concern about ACOs and risk-based contracting, which could strip some or all of an insurance company's traditional functions, and the profits associated with insurance companies bearing risk. (See, e.g., SAUF ¶ 146; SAUF Ex. 35, ECF No. 177-36 at 12 (“[T]he possibility exists for the ACO to develop a level of integration that makes an outside insurer redundant”); Dep. of Dorothy Coleman (“Coleman Dep.”) at 435:3-13, 437:18-438:5, SAUF Ex. 7, ECF No. 214-7 (highlighting risk that ACO might team up with an insurance company, which could severely test Blue Cross's relevance)). Blue Cross viewed these issues, referred to as “disintermediation, ” and the process of “providers becoming payers, ” as existential threats. (See SAUF ¶ 146.) Blue Cross CEO Peter Andruszkiewicz testified in his deposition that “disintermediation, ” i.e., “providers becoming payers” and “eliminat[ing] the intermediary known as the payer” “was a concern among my team, me, and every health insurance executive in the United States at this time frame.” (Dep. of Peter Andruszkiewicz (“Andruszkiewicz Dep.”) at 93, SAUF Ex. 6, ECF No. 214-6.) Likewise, Mark Waggoner, a member of Blue Cross's Executive Leadership Team (“ELT”) and a key participant in Caritas discussions, recalled “discussion at Blue Cross at about this same time about the possibility that the ACO model or integrated delivery system could in some sense replace a conventional insurance company” because “you saw some of that happening in some parts of the country” and disintermediation was the “trend in [nationwide] conversations at that point in time.” (Dep. of Mark Waggoner (“Waggoner Dep.”) at 298, SAUF Ex. 11, ECF No. 214-11.)

         The Red Team also analyzed other prospective scenarios, including one in which Prime entered Rhode Island. (SAUF ¶ 147; SAUF Ex. 37, ECF No. 177-38; SAUF Ex. 38, ECF No. 177-39.)

         E. Blue Cross's Contract with Landmark

         Under the twelfth amendment to Landmark's Hospital Participation Agreement with Blue Cross, the Landmark-Blue Cross contract was set to expire July 16, 2012. (SDF ¶ 102.) With negotiations faltering, on May 21, 2012, Blue Cross filed an application for a material modification with the Rhode Island Department of Health (“DOH”), which included draft notice letters informing Blue Cross's subscribers and providers that Landmark might go “out of network.” (Id. ¶ 104.) Upon receipt of Blue Cross's material-modification application, the DOH informed Blue Cross that it should send “revised member and physician notification letters” detailing “that until the Department completes its review of this potential change and issues its determination, members will be able to continue to receive covered services at [Landmark and RHRI] at the in-network benefit level, if [the material modification] is not approved prior to the termination of the contract.” (Id. ¶ 105.)

         This material modification request sent shock waves through the receivership players. On July 2, 2012, Special Master Savage, noting the critical stage of negotiations between Steward and Blue Cross, sought a temporary restraining order (“TRO”) from Justice Silverstein to stop Blue Cross from putting Landmark out of network and distributing the letters to subscribers and providers. The Superior Court denied the TRO on July 6, 2012; and on July 9, 2012, Blue Cross mailed letters to providers and subscribers explaining that Landmark might soon be “out of network.”[10] (Id. ¶¶ 107-08.) On July 16, 2012, Blue Cross's contract with Landmark terminated; thereafter Blue Cross compensated subscribers directly for healthcare services provided at Landmark. (Id. ¶ 109.) Landmark remained out of network until August 31, 2012, when Blue Cross and Landmark agreed to extend the terms of their participation contract until three months after a buyer acquired the hospital. (Id. ¶ 110.) In agreeing to extend the Landmark contract with Blue Cross as part of a settlement approved by Justice Silverstein, the Special Master felt he had no choice but to bend to Blue Cross's will given the hopsital's precarious condition. With court approval, on September 12, 2012, Landmark was officially back in network. (Id.)

         In June 2012, Blue Cross's contracting group considered the risks facing Blue Cross if it chose not to renew any of its contracts with various community hospitals, including Landmark. (SAUF ¶ 179.) Blue Cross knew that removing a hospital from its network could substantially cost Blue Cross because it would force its subscribers to access other, more expensive, in-network hospitals (such as Rhode Island Hospital, Miriam Hospital, or Women's & Infants Hospital). (Id.) Blue Cross also knew that without a contract, Landmark might be forced to close. (Id.) Steward suggests, and Court accepts as true for purposes of this motion, that “Blue Cross knew that the material modification process typically took 4-6 months, and that the cost of being out of contract with [Landmark/]Steward in advance of DOH approval would cost Blue Cross an estimated $3 million per month.” (Id. ¶ 180.) Even without contemplating this cost, Steward adds, it would cost Blue Cross much more to remove Landmark from its network than “what Steward was then seeking in terms of reimbursement rate increases.” (Id. ¶ 181.) Nevertheless, in spite of knowing full well the short term costs of its decision, Blue Cross concluded that the “path forward for Landmark was to ‘hold our position since the material modification ha[d] already been filed.'” (Id.)

         Steward states: “Despite the financial risk to Blue Cross of pursuing the material modification, Blue Cross' demands in exchange for a swift resolution on the material modification were those that it believed were necessary to end Steward's bid for the hospital. As Mike Hudson, Blue Cross' CFO and then lead negotiator with Steward explained, he was not going to even talk further with Steward until he learned whether Landmark accepted Blue Cross' terms, since those terms ‘[c]ould force Steward's hand - if they [Landmark] agreed to the contract, then Steward is likely out.” (Id. ¶ 184.)

         F. Blue Cross Reaches a Deal with Prime over Landmark

         Once Steward withdrew from the process, Prime[11] submitted a proposed APA for Landmark to the Special Master on September 26, 2012. (SDF ¶ 119.) After lengthy negotiations, Prime acquired Landmark on December 31, 2013. (Id. ¶¶ 122, 125.) The quality program Blue Cross reached with Prime included provisions that it would not accept when presented by Steward, namely evaluating Landmark “based on improvement in Landmark's performance against past performance” rather than national averages. (Compare SDF Ex. 195 at 6-7, ECF No. 203-16, and SDF Ex. 198 at 14, ECF 204-1 (“Blue Cross Blue Shield of Rhode Island Hospital Quality Program 2014”) (“BCBSRI compares each hospital . . . to the threshold targets established using the national average results from a selected comparison measurement period . . . unless otherwise determined by contract.”), with SDF Ex. 197 at 11, ECF No. 203-18 (Blue Cross and Prime agreement over Landmark) (“Both parties to establish mutually agreeable improvement targets based on Landmark's own baseline CY 2013 data . . . .”)). Although Prime has succeeded to some degree in righting the ship for Landmark by increasing patient volume and revenue, (see SDF ¶ 127), it is hotly disputed whether Prime brought efficiency and innovation to Rhode Island through Landmark. (See id.; SDF Ex. 37 at 25, ECF No. 171-38 (noting Landmark's operating expenses under Prime increased from $109.3 million in 2013 to $130.6 million in 2015 and $130.4 million in 2016). Indeed, Prime has not developed an ACO, a significant physician network, or risk-based contracts. (See SAUF ¶ 197; Prime 30(b)(6) Dep. of Richard R. Charest (“Charest Dep.”) at 74:10-76:5, 85:10-15, SAUF Ex. 14, ECF No. 214-14 (“We don't have risk-based contracts.”); SAUF Ex. 102 at 3, ECF No. 215-27 (Jones of Thundermist recalling meeting with Prime CEO, where “it was clear to me that the Prime model does not consider health care efficiency as an overall goal.”)). Although at Landmark now “[t]here's a nice piano in the entrance” and “[i]t's looking nicer, ” Prime has not made substantive improvements “in terms of quality or community partnership.” (SAUF ¶ 201; Dep. of Charles “Chuck” Jones (“Jones Dep.”) 286:18-287:4, SAUF Ex. 12, ECF No. 214-12.)

         G. Procedural History

         Steward filed its first complaint against Blue Cross on June 4, 2013, in which Steward alleged that Blue Cross's unilateral conduct violated Section 2 of the Sherman Act and Section 6-36-5 of the Rhode Island Antitrust Act. (Compl. ¶¶ 62-114, ECF No. 1.) On July 15, 2013, Blue Cross moved to dismiss Steward's complaint (ECF No. 16); this Court denied Blue Cross's motion on February 19, 2014 (ECF No. 34); see also Steward Health Care Sys., LLC v. Blue Cross & Blue Shield of R.I., 997 F.Supp.2d 142 (D.R.I. 2014) (“Steward I”). Following the commencement of discovery, Steward filed an amended complaint on August 26, 2015, adding claims under Section 1 of the Sherman Act, suggesting Blue Cross's conduct was part of a conspiracy with Lifespan and Thundermist to keep Steward out of Rhode Island.

         On July 14, 2017, Blue Cross moved for summary judgment on all counts of Steward's amended complaint. Steward filed a response in opposition (ECF No. 172) on August 11, 2017, to which Blue Cross replied (ECF No. 219) on August 25, 2017. The Court heard oral argument by the parties on September 26, 2017 (ECF No. 229). With a firm trial date approaching in January 2018, on November 29, 2017, the Court issued a Notice Regarding Defendant's Motion for Summary Judgment (ECF No. 338) indicating that it tentatively had decided to grant Blue Cross's summary-judgment motion on all counts, and cancelling the trial date. The Court noted that an Opinion and Order would be forthcoming. Since that Notice, the Court's assessment of Blue Cross's motion has evolved; this Opinion and Order sets forth the reasons for the Court's determination that summary judgment should be denied.

         II. Legal Standard

         Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.'” Evergreen Partnering Grp., Inc. v. Pactiv Corp., 832 F.3d 1, 7 (1st Cir. 2016) (quoting Matsushita Elec. Ind. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986)). The Court “draws all reasonable inferences in favor of the non-moving party while ignoring conclusory allegations, improbable inferences, and unsupported speculation.” Id. (quoting Alicea v. Machete Music, 744 F.3d 773, 778 (1st Cir. 2014)).

         The onus is on the moving party to demonstrate that no genuine dispute of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “Once the moving party makes this showing, the nonmoving party must point to specific facts demonstrating a trialworthy issue.” United States v. Giordano, 898 F.Supp.2d 440, 447 (D.R.I. 2012). Rather than rest “upon the mere allegations or denials in the pleading, ” the nonmovant “must set forth specific facts showing that there is a genuine issue of material fact as to each issue upon which [it] would bear the ultimate burden of proof at trial.” Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 53 (1st Cir. 2000). “[E]vidence illustrating the factual controversy cannot be conjectural or problematic; it must have substance in the sense that it limns differing versions of the truth which a factfinder must resolve at an ensuing trial.” Mack v. Great Atl. & Pac. Tea Co., 871 F.2d 179, 181 (1st Cir. 1989).

         III. Discussion

         A. The Refusal-To-Deal Claim (Counts I, II, V, VI, IX, X, XIII, and XIV)[12]

         In 1980, Judge Keith of the Sixth Circuit Court of Appeals complained that the question of when “a monopolist ha[s] a duty to deal . . . is one of the most unsettled and vexatious in the antitrust field.” Byars v. Bluff City News Co., 609 F.2d 843, 846 (6th Cir. 1980). Although nearly forty years of ink has spilled on the topic - including the Supreme Court's - Judge Keith's lament is as apt today as it was when Jimmy Carter was President.[13] As one commentator succinctly put it, “There is a problem with Section 2 of the Sherman Act: nobody knows what it means.” Thomas A. Lambert, Defining Unreasonably Exclusionary Conduct: The “Exclusion of a Competitive Rival” Approach, 92 N.C. L. Rev. 1175, 1177 (2014). Nevertheless, this Court must resolve the difficult (and admittedly close) Sherman Act section 2 question posed by this case: has Steward raised a triable issue as to whether Blue Cross engaged in a predatory refusal to deal by blocking Steward from entry into the Rhode Island health care and health insurance markets? While the question is close - and indeed the Court was initially inclined to grant summary judgment - careful consideration of the case law, facts, and the applicable antitrust policy objectives, has convinced the Court that the answer is yes, and therefore Blue Cross's motion must be denied.

         Section 2 of the Sherman Act makes it unlawful to “monopolize, or attempt to monopolize . . . any part of the trade or commerce among the several States, or with foreign nations.” 15 U.S.C. § 2. “The elements of monopolization are ‘(1) possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.'”[14] Diaz Aviation Corp. v. Airport Aviation Servs., Inc., 716 F.3d 256, 265 (1st Cir. 2013) (quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966)). “In the absence of any purpose to create or maintain a monopoly, the act does not restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal . . . .”[15] United States v. Colgate & Co., 250 U.S. 300, 307 (1919). “However, ‘[t]he high value that we have placed on the right to refuse to deal with other firms does not mean that the right is unqualified.'” Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 408 (2004) (quoting Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 601 (1985)). That is, “[u]nder certain circumstances, a refusal to cooperate with rivals can constitute anticompetitive conduct and violate § 2.” Id.; see also Pacific Bell Tel. Co. v. Linkline Commc'ns, Inc., 555 U.S. 438, 448 (2009) (“[T]here are rare instances in which a dominant firm may incur antitrust liability for purely unilateral conduct.”).

         The two leading cases in this area - Aspen Skiing and Trinko - are well-known, often-cited, and require detailed discussion. Aspen Skiing involved the Aspen ski area, which comprised four distinct mountains. The defendant owned three mountain areas, and the plaintiff owned the fourth. For more than fifteen years, the parties had arranged to issue a joint-ski pass for access to all four mountains. So when the defendant suddenly terminated the joint-ski-pass agreement, the plaintiff - concerned that skiers would no longer frequent its mountain without a joint-ski pass available - “tried a variety of increasingly desperate measures to re-create the joint ticket, even to the point of in effect offering to buy the defendant's tickets at retail price.” Trinko, 540 U.S. at 408-09 (citing Aspen Skiing, 472 U.S. at 593-94). The defendant steadfastly refused to recreate the joint-ski-pass arrangement. Aspen Skiing, 472 U.S. at 594. The issue before the Aspen Skiing Court was whether defendant Ski Co., in terminating its four-mountain ticket with plaintiff Highlands, was “attempting to exclude rivals on some basis other than efficiency.” Id. at 605. The Court concluded that there was sufficient evidence to suggest that the defendant “was not motivated by efficiency concerns and that it was willing to sacrifice short-run benefits and consumer goodwill in exchange for a perceived long-run impact on its smaller rival, ” and therefore upheld a jury verdict for the plaintiff. Id. at 610-11.

         Several years later, in Trinko, the Court reconsidered Aspen Skiing and distinguished it. 540 U.S. at 408-11. Trinko involved firms regulated under the Telecommunications Act of 1996, which required that incumbent local exchange carriers (“ILECs”), like defendant Verizon, share (i.e., “unbundle”) aspects of its network with prospective entrants, competitive local exchange carriers (“CLECs”). 540 U.S. at 402. The plaintiff lodged a class action pursuant to § 2 on behalf of CLECs, which complained that Verizon filled rivals' orders in a slow and discriminatory manner so as to discourage customers from choosing its competitors' services. Id. at 404-05. The Court held that the facts of Trinko were not comparable to those in Aspen Skiing. Id. at 408-11. In doing so, it noted that the Aspen Skiing Court “found significance in the defendant's decision to cease participation in a cooperative venture, ” adding that the “unilateral termination of a voluntary (and thus presumably profitable) course of dealing suggested a willingness to forsake short-term profits to achieve an anticompetitive end.” “Similarly, the defendant's unwillingness to renew the ticket even if compensated at retail price revealed a distinctly anticompetitive bent.” Id. at 409.

         Both Aspen Skiing and Trinko provide significant guidance on what a refusal-to-deal claim might (Aspen Skiing) - or might not (Trinko) - look like. But neither dictated what such a claim must look like. As this Court reads these cases, they do not specify granular factual predicates that must be present for a refusal-to-deal claim to move forward; rather, the Supreme Court identified facts that, in the circumstances of each case, pointed toward conduct that may or may not be characterized as “exclusionary” or “anticompetitive.” Aspen Skiing, 472 U.S. at 603-04. In Aspen Skiing, the Supreme Court concluded “Ski Co.'s decision to terminate the all-Aspen ticket” could “fairly be characterized as exclusionary . . . .” 472 U.S. at 604. When the Court discussed and distinguished Aspen Skiing in Trinko, it noted that “[t]he Court there found significance in the defendant's decision to cease participation in a cooperative venture.” 540 U.S. at 409 (citing 472 U.S. at 608, 610-11); the Court added, “[t]he unilateral termination of a voluntary . . . course of dealing suggested a willingness to forsake short-term profits to achieve an anticompetitive end.” Id. (emphasis added); and finally, “the defendant's unwillingness to renew the ticket even if compensated at retail price revealed a distinctly anticompetitive bent.” Id. (second emphasis added). The Court's descriptive, provisional language makes clear that it regarded Aspen Skiing as a paradigmatic example of - not a paint-by-numbers kit for - unlawful refusals to deal. See Trinko, 540 U.S. at 411 (“Antitrust analysis must always be attuned to the particular structure and circumstances of the industry at issue.”).

         Much of the confusion over Aspen Skiing and Trinko results from courts of appeals that either misread or deliberately extend the holdings of these cases, construing them in a rigid fashion to require, for example, an explicit prior course of dealing.[16] See, e.g., Novell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1074 (10th Cir. 2013) (“First, as in Aspen, there must be a preexisting voluntary and presumably profitable course of dealing between the monopolist and rival.”) (emphasis added); In re Elevator Antitrust Litig., 502 F.3d 47, 52 (2d Cir. 2007) (requiring “alleg[ation] that defendants terminated any prior course of dealing” as “the sole exception to the broad right of a firm to refuse to deal with its competitors”); Covad Commc'ns Co. v. BellSouth Corp., 374 F.3d 1044, 1049 (11th Cir. 2004) (“Trinko now effectively makes the unilateral termination of a voluntary course of dealing a requirement for a valid refusal-to-deal claim under Aspen.”). Novell (authored by now-Justice Gorsuch) and In re Elevator Antitrust Litigation, in particular, use emphatic language to describe the “mandatory” holding of Trinko; Covad uses less strident words (“effectively makes . . . unilateral termination . . . a requirement”). But without sugar-coating it, Aspen Skiing and Trinko just do not say what these courts say they do. And while there may be antitrust policy reasons that support pulling back the reins on refusal-to-deal claims, it is up to the Supreme Court to take this step. Until then, Aspen Skiing and Trinko, in this Court's view, should be applied as written, in concert with the instructive holdings of the First Circuit.[17]

         The First Circuit has not had occasion to interpret Trinko, but what it has said about Aspen Skiing is instructive. In Data General Corp. v. Grumman Sys. Support Corp., the court interpreted Aspen Skiing as “casting serious doubt on the proposition that the Court has adopted any single rule or formula for determining when a unilateral refusal to deal is unlawful.” 36 F.3d 1147, 1183 (1st Cir. 1994), abrogated on other grounds by Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010). Indeed, the court recognized that under Aspen Skiing “a monopolist's unilateral refusal to deal” may arise “in . . . very different situation[s].” Id.

         Other Courts have likewise acknowledged that refusal-to-deal law generally - and Aspen Skiing and Trinko specifically - is concerned with harm to competition without a valid business justification, which can manifest itself in myriad ways. See, e.g., In re Thalomid & Revlimid Antitrust Litig., No. 14-6997 (KSH) (CLW), 2015 WL 9589217, at *15 (D.N.J. Oct. 29, 2015) (“[The defendant] reads Aspen Skiing and Trinko too narrowly. The termination of the dealing between Ski Co. and Highlands was used as circumstantial evidence of Ski Co.'s demonstrated anticompetitive motivation, along with its lack of legitimate business justifications for doing so.”); Helicopter Transp. Servs., Inc. v. Erickson Air-Crane Inc., No. CV 06-3077-PA, 2008 WL 151833, at *9 (D. Or. Jan. 14, 2008) (“That Erickson and HTS had no prior course of dealing is immaterial. The Supreme Court has never held that termination of a preexisting course of dealing is a necessary element of an antitrust claim. It was merely one of several facts in Aspen Skiing that supported a finding that the refusal to deal was intended to exclude competition rather than to advance a legitimate business interest.”).[18]

         The question this Court must decide on summary judgment, then, is whether a genuine and material factual dispute exists as to whether Blue Cross's conduct, which Steward characterizes as a unilateral refusal to deal with Steward, amounts to illegal exclusionary conduct as opposed to lawful, vigorous competition. Data General provides a rubric to assess this question. There, the court set forth a burden-shifting framework that requires a plaintiff to prove a prima facie case that includes showing “a monopolist's unilateral refusal to deal with its competitors (as long as the refusal harms the competitive process).” Data General, 36 F.3d at 1183. Once proved, the monopolist “may nevertheless rebut such evidence by establishing a valid business justification for its conduct.”[19] Id. at 1183. The court added:

In general, a business justification is valid if it relates directly or indirectly to the enhancement of consumer welfare. Thus, pursuit of efficiency and quality control might be legitimate competitive reasons for an otherwise exclusionary refusal to deal, while the desire to maintain a monopoly market share or thwart the entry of competitors would not. In essence, a unilateral refusal to deal is prima facie exclusionary if there is evidence of harm to the competitive process; a valid business justification requires proof of countervailing benefits to the competitive process.

Id. (internal citations omitted).

         Blue Cross has not structured its summary judgment argument to correspond to the Data General burden shifting rubric; it has instead directed its argument almost exclusively at Steward's theory at the prima-facie stage, while peppering its argument here and there with legitimate business reasons for its behavior. Likewise, the Court will not attempt to frame its analysis along a strict Data General framework, but will deal with the arguments, essentially as presented by Blue Cross. The bottom line is that the evidence Steward has presented meets its prima facie burden, and Blue Cross's claim of legitimate business reasons - to the extent the Court can identify them[20] - is sufficiently rebutted by Steward.

         Aspen Skiing and Trinko, properly read, provide useful guidance as to whether Blue Cross's conduct amounted to a refusal to deal motivated by anticompetitive animus. While the indicators of anticompetitive animus here vary somewhat from what the Supreme Court identified in Aspen Skiing and Trinko, those differences are reflective of the very different marketplaces at issue (healthcare and health insurance as opposed to ski resorts and regulated telecommunications). Potentially anticompetitive behavior by market participants is bound to manifest itself differently in different markets. See Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 466-67 (1992) (“Legal presumptions that rest on formalistic distinctions rather than actual market realities are generally disfavored in antitrust law.”).

         Here, 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.

         Some of the evidence that supports Steward's theory, viewed in the light most favorable to Steward, is as follows.[21] The first category of evidence that points toward exclusionary conduct concerns Blue Cross's conduct with respect to Landmark itself and whether Blue Cross terminated its prior course of dealing with Landmark to keep Steward out of Rhode Island. The evidence suggests that Blue Cross terminated a longstanding, presumably profitable course of dealing with Landmark in order to block Steward. It is of no consequence that Blue Cross did not have or terminate a prior course of dealing directly with Steward at Landmark, for the reasons discussed above; the critical question is how Blue Cross dealt with Landmark in the context of the effort by Steward to purchase it.

         It is undisputed that Blue Cross and Landmark entered into a hospital-participation agreement in 2006, which had been routinely extended multiple times. (SDF ¶ 57.) That all ended when Blue Cross allowed its contract with Landmark to expire on July 16, 2012. (See id. ¶¶ 102, 109.) In May 2012, while in the midst of difficult negotiations with Steward in connection with Steward's bid to acquire Landmark through the receivership, Blue Cross filed the necessary papers with the DOH for a “material modification” - i.e., official permission to remove Landmark from its provider network. (SDF ¶ 104; SDF Ex. 202, ECF No. 212-45.) This step was not necessarily unusual, as Blue Cross had, on other occasions, taken steps to institute the material modification process with the DOH when negotiations with other hospitals stalled. (SAUF ¶ 175.) Blue Cross, however, did not stop there. Although it had not yet received DOH approval, on July 9, 2012, Blue Cross informed subscribers via letter that the Landmark contract would expire on July 16, and “[i]f the [DOH] approves the network change, Landmark Medical Center will be considered out of network on August 1, 2012 . . . .” (SAUF Ex. 84 at 2, ECF No. 215-9.) Blue Cross added, “Despite our continued efforts to resolve the current situation, we feel it's important to notify our members that a resolution is doubtful at this time.” (Id.)

         Never before had Blue Cross mailed a letter to doctors and subscribers notifying them of the immediate and impending removal of a member hospital from its network. To be clear, it was not just the notification that was remarkable; never before or since has Blue Cross kept true to its initial material modification application promise by actually allowing a hospital to go “out of network.”[22]

         The consequences of Blue Cross permitting a hospital to - for the first time ever - go “nonparticipating, ” and of sending a letter to members about it were significant; so significant, in fact, that the Special Master tried to put a halt to it and to extend Blue Cross's contract with Landmark. (SDF ¶ 103; SDF Ex. 90, ECF No. 210-2; SDF Ex. 219, ECF No. 213-14.) On July 2, 2012, the Special Master moved for an emergency TRO “to preserve the status quo by restraining Blue Cross . . . from notifying subscribers or the public that it has filed a request for material modification of health insurance plans in order to remove Landmark Medical Center . . . from its provider network.” (SAUF ¶ 177; SAUF Ex. 83 at 3, ECF No. 215-8.) In that filing, the Special Master argued that, “[s]ending a letter to subscribers and providers notifying them that LMC and RHRI will be out-of-network providers after August 6, 2012 is premature and very likely misleading and inaccurate. . . . [g]iven the hurdles that Blue Cross must overcome to obtain DOH approval and such additional federal approvals that may be needed.” (SAUF Ex. 83 at 5-6.) He added, “Injunctive relief is further warranted to protect Landmark, patients and physicians from the chaos and confusion that will result from a letter that incorrectly advises them that [Landmark] and RHRI will be out-of-network providers as of August 6, 2012.”[23] (Id. at 9.)

         Blue Cross's conduct in removing Landmark from its network and prematurely notifying subscribers about such a possibility strayed far from its ordinary course of dealing with Landmark, or any other hospital for that matter. A reasonable jury could conclude that Blue Cross's uniquely hard-core approach with respect to Landmark, just as negotiations with Steward were at a critical stage, was not a legitimate business decision, but was designed to kill the Steward acquisition. Indeed, Blue Cross itself implicitly recognized this in its application for material modification to the DOH: “Despite our best efforts to provide Steward with a fair and reasonable rate . . . we are concerned that we may not be able to come to an agreement with Steward . . . . If we are not able to come to agreement with Steward by [July 16, 2012], Landmark will then become non-participating in the BCBSRI network.” (SDF Ex. 202 at 2.)[24] It is undisputed that Landmark remained out of network until August 31, 2012, at which point the Special Master and Blue Cross agreed to extend the terms of the hospital participation contract until three months after a buyer acquired Landmark. (SDF ¶ 110.) The Special Master agreed to this settlement, however, only because Landmark's condition once removed from network left him no other choice but to accept whatever terms Blue Cross demanded. (SDF Ex. 205 at 3, 4, ECF No. 204-8 (in Special Master's emergency petition to superior court for instructions on September 6, 2012, explaining that Landmark going out of network caused “the cash receipts of Landmark” to “decline[] precipitously” and “a substantial loss of patients” and “The Special Master believes that the very survival of Landmark and RHRI is at stake and that he had no other alternative but to execute the MOU on the conditions imposed by Blue Cross . . . .”); Dep. of Jonathan N. Savage at 143:4-5, SDF Ex. 28, ECF No. 206-28 (Special Master describing his agreement to Blue Cross's MOU as “an absolute and total capitulation” to Blue Cross's terms)).

         Blue Cross knew how its demands could impact Steward. As Blue Cross CFO (and then-lead negotiator) Mike Hudson made clear in an email leading up to Landmark moving back in network and in the midst of the Blue Cross-Steward negotiations: “Landmark asked the judge to have us pay them instead of the member and was willing to accept the prior contracted rates. . . . Could force Steward's hand - if [Landmark] agree[s] to the contract, then Steward is likely out.” (SDF Ex. 91, ECF No. 210-3.) And it appears that's precisely what happened.

         Next, and perhaps most importantly, Steward presents plethora evidence that Blue Cross sacrificed short-term profits for the longer-term benefit of eradicating potential competition from Steward. For example, in June 2012, Blue Cross conducted a “Contract Renewal Risk Analysis & Strategic Assessment, ” in which it “identif[ied] and weigh[ed] the risks to BCBSRI and [its] members associated with the failure to reach agreement [with] four community hospitals currently in negotiation” including Landmark.[25](SAUF Ex. 71 at 2-3, ECF No. 214-71.) Blue Cross identified a number of financial “risks” in the event of non-renewal or termination of a community-hospital contract, including “[f]inancial exposure of non-participation status and flow of services to other entities.” (Id. at 3.) These financial exposure risks included: (1) “payment to full charge exposure upon non- participation, ” i.e., having to pay hospitals at regular, undiscounted rates for patients who still used the now out-of-network hospital; and (2) the cost of “moving services to higher cost hospitals, ” i.e., having to pay higher reimbursement rates at the other in-contract hospitals where subscribers would now seek care because Blue Cross removed their previous top-choice hospital from the network. (Id.) This latter category was most potentially impactful because, Blue Cross recognized, “[a]ll” of the four community hospitals with contracts set to expire in 2012 (including Landmark) “are in dire financial trouble and all are likely to fail if their BCBSRI agreement is not renewed.” (Id.)

         In its internal analysis, Blue Cross calculated exactly how much it would cost to pay the reimbursement rate increases Steward was seeking (i.e., the “[p]osition [v]ariance based on current [negotiation] positions”) and compared it to how much it would cost to allow Landmark to go out of network, and likely shut its doors. (Id. at 4-5.) Blue Cross estimated that Landmark going out of network and/or closing would cost Blue Cross $9.8 million. (Id. at 5.) This exceeded by over $4 million the amount Blue Cross estimated it would lose if it accepted the rate increases proposed by Steward for Landmark, which would cost $5.4 million.[26] (Id. at 4.)

         In one presentation slide titled “Risk Factors Integrated View, ” Blue Cross uses a graphic to assess and value the various “risk factors” for each of the four community hospitals, assigning each risk factor a value between one and four points. (Id. at 8.) In the “Financial Impact” category evaluated by Blue Cross, Landmark was the only hospital of the four to receive a full four points. (Id.) With respect to the three other community hospitals, Blue Cross assessed that “[b]ecause of [the] significant risk, ” it would consider additional rate increases and work toward achieving contracts to keep these hospitals in network. (See id. at 9.) Despite identifying an out of contract or closed Landmark as its most serious risk, Blue Cross elected to stay the course: “We recommend that we continue to hold our position with Landmark since the material modification has already been filed.” (Id.) Blue Cross had on occasion before filed papers to initiate material modification for negotiation leverage when discussions with other hospitals lagged, but in those instances Blue Cross always reached an agreement before taking the extreme and unusual step of announcing to its members that a hospital would be out-of-network and allowing a contract to terminate. (See SAUF ¶ 175; Hudson Dep. at 146:21-148:16, SAUF Ex. 9; Donahue Dep. 310:2-13, SAUF Ex. 8 (“There's been contentious negotiations adversarial, but they generally get resolved before they get to this phase.”)).

         This evidence more than suffices to create a trial-worthy issue as to whether Blue Cross sacrificed short-term profits (by letting the Landmark contract lapse) for the long-term benefit of keeping Steward out of Rhode Island. And if more were needed, which it is not, Steward's experts confirm this point. (See SAUF ¶ 182; Expert Report of Professor Leemore Dafny, SAUF Ex. 22 at 13, ECF No. 214-22 (“[T]hese analyses corroborate BCBSRI's contemporary analyses showing that rejecting Steward's offers was costly to BCBSRI.”)).

         Steward also presents evidence to suggest that the proposals made and rejected by Blue Cross amounted to a refusal to deal, because Blue Cross negotiated in bad-faith. This evidence is complicated in light of what both parties acknowledge is the “complex and highly differentiated” aspect of hospital services, (see Def.'s Mem. in Supp. of Mot. for Summ. J. (“Def.'s Mem.”) 29, ECF No. 157); Pl.'s Resp. in Opp'n to Def.'s Mot. for Summ. J. (“Pls.' Resp.”) 32, ECF No. 172-1); but Blue Cross cannot hide behind this complexity to escape the material factual disputes that Steward has effectively uncovered. For present purposes, the Court need not decide the proper methodology to assess appropriate hospital reimbursement rates (indeed, both parties have different takes on this subject, which itself suggests it is a matter for trial). It is sufficient that Steward has sufficiently created a factual dispute as to whether Blue Cross refused to deal with Steward over Landmark by proposing rates below the averages it paid to other Rhode Island hospitals, and rejecting proposals consistent with what it accepted for other hospitals, essentially negotiating in bad faith with Steward.

         The evidence Steward sets forth is as follows. It is not disputed that Blue Cross pays a range of reimbursement rates to various hospitals in Rhode Island. In 2010 when Caritas (Steward's predecessor) first attempted to acquire Landmark, an OHIC study titled “Variations in Hospital Payment Rates by Commercial Insurers in Rhode Island” reported that the rates paid to Landmark were twenty-two percent below the average for all Rhode Island hospitals, and even farther below the rates that some Lifespan and CNE-affiliated hospitals received. (SDF Ex. 67 at 16 & Fig. 10, ECF No. 208-11.) Steward argues the highest rate increase it proposed to Blue Cross (in May 2012) was for Landmark to be reimbursed at ninety-five percent of the average Blue Cross paid to all hospitals in Rhode Island, with an option to receive an additional five percent based on quality, which practically amounted to about a fifteen percent rate increase.[27] (See SAUF Ex. 106, ECF No. 215-31; SAUF ¶ 203.) What is important is that Steward has produced evidence that it proposed reimbursement rates for Landmark at a level lower than what Blue Cross was paying other hospitals (based on averaging the rates).

         Blue Cross argues that “the undisputed evidence shows that the rates Blue Cross offered Steward at Landmark were higher than the rates Blue Cross paid comparable hospitals for comparable services.” (Def.'s Mem. 29-30.) At summary judgment this Court need not accept at face value what Blue Cross contends are the appropriate hospital comparators. Indeed, Blue Cross undermines its own position on this point in its brief: after suggesting what the proper hospital-rate comparison should be, i.e., which hospitals Landmark can and cannot be compared to for calculating reimbursement rates, in other parts of its brief it argues that because hospital services are so different, no two hospitals can really be compared for these purposes at all. (See id.) Then, remarkably, Blue Cross pivots again to argue that the appropriate comparison is actually between Steward and Prime, the entity that ultimately acquired Landmark.[28] (See, e.g., id. at 34.)

         Regardless of what it now asserts for purposes of this motion, Blue Cross's own evidence and analysis supports the premise that Blue Cross had been comparing Landmark to other hospitals - including Lifespan and CNE hospitals that Blue Cross more generously reimbursed - because patients would be leaving Landmark for those hospitals upon Landmark's closure. (See, e.g., SAUF Ex. 71.) The upshot is that, at trial, Steward and Blue Cross will have the opportunity to argue which hospitals Landmark should and should not properly be compared to for rate-increase purposes. While Blue Cross's view of this world of rate setting may ultimately persuade a jury that it was operating in good faith and not refusing to deal, summary judgment is not appropriate.

         Although the Court is satisfied that the above discussion explains why Steward's refusal-to-deal claim must advance to trial, Blue Cross has raised several additional arguments to rebut Steward's Section 2 claim. None of these arguments change the outcome.

         First, Blue Cross argues that it could not have refused to deal because “it was Steward that walked away from negotiations and refused to deal.” (Def.'s Mem. 17.) As a matter of law, it does not matter that Steward “walked away” from the negotiating table, if Blue Cross made an offer that it knew could not be accepted. See MetroNet Servs. Corp. v. Qwest Corp., 383 F.3d 1124, 1132-33 (9th Cir. 2004) (“An offer to deal with a competitor only on unreasonable terms and conditions can amount to a practical refusal to deal.”). Blue Cross's own belief in its good faith and its suggestion that it invested “enormous effort to try to get a deal done with Steward at Landmark, ” (Def.'s Mem. 20), is not dispositive at summary judgment; the record contains sufficient evidence from which a reasonable juror could conclude otherwise, i.e., that Blue Cross was moving backwards in negotiations with Steward, including imposing knowingly unattainable quality metrics on Steward. Specifically, Steward contends that Blue Cross responded to Steward's proposals with counter-proposals that moved backwards then requested a response, effectively attempting to force Steward to bargain against itself. (See, e.g., SDF Ex. 155, ECF No. 211-12; SDF Ex. 179, ECF No. 212-22; SDF Ex. 180, ECF No. 212-23; see also Rich Dep. 193:24-194:6, SDF Ex. 11, ECF No. 206-11 (“I think this is part of the fundamental problem in Mark [Waggoner's] email, his last sentence. . . . ‘We welcome a proposal.' We had already bid. They gave us a bid that was effectively lower, and they're asking us for a counter, what we believe to be [bargaining] against ourselves.”). Next, Steward cites comments by Andruszkiewicz in an August 6, 2012 Providence Business News article, indicating that Blue Cross might offer a “limited-network” product that could exclude certain hospitals, including Landmark. (See SDF Ex. 181, ECF No. 212-24.) And finally, Steward points to an email from Mark Hudson of Blue Cross to Mark Rich of Steward - both lead negotiators for the respective entities - in which Hudson writes,

You reiterated your demand that Landmark be included in all BCBSRI products, including those that may have a limited or tiered network. In the event BCBSRI offers products with tiers in the future, the tiers will be determined based on cost and quality. Granting preferred status to providers who otherwise wouldn't qualify would impair the quality of any tiered product, especially when granting such status was made to an organization that refuses to participate in quality improvement initiatives.

(SDF Ex. 182 at 3, ECF No. 212-25.) A jury will have to decide if this was, as Steward contends, bad faith, backward negotiations, or as Blue Cross says, just good business.

         Next, Blue Cross argues that in order for Steward's claim to move forward, this Court must “impose on a state-regulated insurer a novel antitrust duty to purchase hospital services.” (Def.'s Mem. 34.) In suggesting that Steward's legal theory is “unprecedented, ” Blue Cross argues that “Steward asks this Court to find that Blue Cross had an antitrust duty to accept particular reimbursement rates proposed by the acquirer of a failing Rhode Island hospital.” (Id. at 35.) This is melodrama, as are Blue Cross's unsubstantiated assertions that to allow Steward's claim to clear summary judgment requires the Court to ÔÇťassum[e] the role of a regulator of ...

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