Seventh Circuit Holds that HMOs Not Separate Market Under Antitrust Law

Extract

On September 18, 1995, the U.S. Court of Appeals for the Seventh Circuit handed down a decision in Blue Cross & Blue Shield United of Wisconsin v. Marshfield Clinic (65 F.3d 1406 (7th Cir. 1995)) that sets two important precedents regarding the status of health maintenance organizations (HMOs) under antitrust law. Chief Judge Posner, writing for the court, concluded that HMOs do not constitute a market separate from the general market for medical services and that agreements, between HMOs in a region, to operate in separate areas constitute a prohibited form of market splitting.

This case primarily involves two HMOs in north central Wisconsin: one a subsidiary of Blue Cross, the other a subsidiary of the Marshfield Clinic. The Blue Cross HMO claimed that the Marshfield HMO had an illegal monopoly in the region's HMO market and therefore violated the Sherman Act (15 U.S.C. § 2 (1990)).