Lawsuit Claims Blockchain Technology Played Key Role in Massive Antitrust Conspiracy in Healthcare Industry

On Thursday, January 11, 2024, VHS Liquidating Trust filed an amended complaint in the Superior Court of California against Multiplan Corporation and affiliated entities alleging violations of California’s Cartwright Act and Unfair Competition Law.

The complaint alleges that Multiplan acted as a “hub” to facilitate anticompetitive agreements among over 700 health insurers to unlawfully fix prices and exchange sensitive business information related to processing and reimbursing claims for out-of-network medical services. According to the complaint, Multiplan used a proprietary algorithm and blockchain distributed ledger technology to centrally reprice over 370,000 out-of-network health insurance claims per day for the insurers involved in the alleged scheme.

By accessing and analyzing competitor pricing data submitted to the blockchain network in real-time, Multiplan’s algorithm purportedly produced a single repriced reimbursement amount for each claim. Nearly all health insurers participating in the scheme then allegedly agreed to follow the fixed prices generated by Multiplan without independently evaluating claims, resulting in total underpayments to healthcare providers of around $22 billion per year.

The plaintiff, a bankruptcy liquidating trust for defunct California hospital network Verity Health, claims it suffered antitrust injuries as both an out-of-network and in-network provider due to the suppressed pricing environment created by Multiplan’s conduct. The complaint states that in-network rates are also lowered as they are typically set as a discount from out-of-network prices.

If proven, the allegations could have significant implications for the healthcare industry. According to the complaint, Multiplan’s scheme extended its control over repricing to encompass pricing for the majority of private health insurance claims nationwide. The use of blockchain technology to facilitate real-time data sharing and automated repricing among competitors at such scale potentially raises serious anticompetitive concerns, based on the theory laid out in the complaint.

It remains to be seen how Multiplan and the named insurers will respond to the allegations. But the case presents novel issues at the intersection of healthcare regulation, antitrust law and distributed ledger technology that are sure to be closely watched as the litigation proceeds.

Please contact BlockTribune for access to a copy of this filing.