IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
HIGHMARK INC. AND
KEYSTONE HEALTH PLAN WEST, INC.,
Plaintiffs,
Civil Action No. 2:11-CV-00919-CB
ELECTRONICALLY FILED
v.
UPMC D/B/A UNIVERSITY OF
PITTSBURGH MEDICAL CENTER,
UPMC PRESBYTERIAN SHADYSIDE,
MAGEE-WOMENS HOSPITAL OF
UPMC, UPMC NORTHWEST, UPMC ST.
MARGARET, UPMC PASSAVANT,
UPMC HORIZON F/K/A HORIZON
HOSPITAL SYSTEM, INC., UPMC
BEDFORD D/B/A UPMC BEDFORD
MEMORIAL, AND UPMC
MCKEESPORT,
Defendants.
THE UPMC PARTIES’ MEMORANDUM IN OPPOSITION
TO PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
Paul M. Pohl (Pa. No. 21625)
Leon F. DeJulius, Jr. (Pa. No. 90383)
JONES DAY
500 Grant Street, Suite 4500
Pittsburgh, PA 15219
Tel: (412) 391-3939
Fax: (412) 394-7959
Paul H. Titus (Pa. No. 01399)
Thomas S. Gricks III (Pa. No. 51209)
[email protected]
[email protected]
[email protected]
[email protected]
SCHNADER HARRISON SEGAL & LEWIS LLP
Fifth Avenue Place, Suite 2700
Pittsburgh, PA 15222-3001
Tel: (412) 577-5200
Fax: (412) 765-3858
Attorneys for the UPMC Parties
Dated: August 18, 2011
TABLE OF CONTENTS
I.
INTRODUCTION ............................................................................................................. 1
II.
FACTS AND BACKGROUND ........................................................................................ 2
III.
A.
UPMC Has Hospital And Physician Contracts With Highmark ........................... 3
B.
Highmark Never Objected To UPMC’s Proposed Public Statements ................... 5
C.
UPMC’s Further Efforts To Engage Highmark Have Been Rebuffed .................. 9
HIGHMARK’S MOTION MUST BE DENIED ............................................................. 10
A.
Highmark Has Not Shown A Likelihood Of Success On The Merits ................. 10
1.
2.
B.
C.
D.
IV.
Highmark’s Lanham Act Claim Is Meritless ........................................... 11
a.
The UPMC Parties’ Statements Are True .................................... 12
b.
Highmark Mischaracterizes Purported UPMC Statements.......... 13
c.
Statements Interpreting Contracts Are Inactionable .................... 14
Highmark’s Breach Of Contract Claims Are Meritless ........................... 16
a.
Highmark Identifies No “Breaching Act” By The UPMC
Hospitals Violating The “Other Hospital Ventures”
Provisions..................................................................................... 16
b.
All Communications Are “General” And, Therefore,
Permissible ................................................................................... 18
Highmark Has Not Offered A Colorable Factual Basis Of Irreparable
Harm .................................................................................................................... 18
1.
Highmark Has Not Attempted To Meet Its Burden ................................. 19
2.
Highmark’s Cases Are Inapposite ........................................................... 20
3.
A Contract’s Statement That A Breach “Causes Irreparable Injury”
Is Insufficient As A Matter of Law .......................................................... 20
The Balance Of Equities Tips Heavily In The UPMC Parties’ Favor ................. 21
1.
Highmark Sat On Its Rights ..................................................................... 22
2.
An Injunction Would Substantially Harm The UPMC Parties ................ 23
An Injunction Would Not Be In The Public Interest ........................................... 23
1.
It Is Contrary To Public Interest To Stifle The UPMC Parties’
Speech ...................................................................................................... 24
2.
Highmark’s Overbroad Proposed Order Exemplifies The Problems
Inherent In Any Injunction Here .............................................................. 25
CONCLUSION ................................................................................................................ 25
-i-
TABLE OF AUTHORITIES
Page
CASES
ACE Am. Ins. Co. v. Wachovia Ins. Agency, Inc.,
306 F. App’x 727 (3d Cir. 2009) .............................................................................................19
Am. Italian Pasta Co. v. New World Pasta Co.,
371 F.3d 387 (8th Cir. 2004) .............................................................................................11, 12
Arthur J. Gallagher & Co. v. Reisinger,
No. 07-271, 2007 WL 1877895 (W.D. Pa. June 11, 2007) .....................................................21
Belitskus v. Pizzingrilli,
343 F.3d 632 (3d Cir. 2003).....................................................................................................25
Bennington Foods v. St. Croix Renaissance Group,
528 F.3d 176 (3d Cir. 2008).....................................................................................................21
Buchina v. Borough of Elizabeth,
No. 00-2004, 2009 WL 229752 (W.D. Pa. Jan. 29, 2009) ......................................................18
Campbell Soup Co. v. ConAgra, Inc.,
977 F.2d 86 (3d Cir. 1992).......................................................................................................18
Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of New York,
447 U.S. 557 (1980) .................................................................................................................23
Chester v. Grane Healthcare Co.,
Nos. 3:2010-225, 3:2010-244, 2011 U.S. Dist. LEXIS 68977 (W.D. Pa. June 2, 2011) ........10
Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co.,
173 F.3d 725 (9th Cir. 1999) .............................................................................................12, 15
Commonwealth v. BASF Corp.,
No. 3127, 2001 WL 1807788 (Pa. Ct. C.P. Mar. 15, 2001) ....................................................16
Conte Bros. Auto., Inc. v. Quaker State,
165 F.3d 221 (3d Cir. 1998).....................................................................................................16
Dial A Car, Inc. v. Transp., Inc.,
82 F.3d 484 (D.C. Cir. 1996) ...................................................................................................15
Diamond Triumph Auto Glass, Inc. v. Safelite Glass Corp.,
441 F. Supp. 2d 695 (M.D. Pa. 2006) ......................................................................................14
Dice v. Clinicorp, Inc.,
887 F.Supp. 803 (W.D. Pa. 1995) ............................................................................................20
-ii-
Ditri v. Coldwell Banker,
954 F.2d 869 (3d Cir. 1992).....................................................................................................11
Duraco Prods., Inc. v. Joy Plastic Enters.,
822 F. Supp. 1202 (W.D. Pa. 1993) .........................................................................................19
ECRI v. McGraw-Hill, Inc.,
809 F.2d 223 (3d Cir. 1987).....................................................................................................21
Edenfield v. Fane,
507 U.S. 761 (1993) .................................................................................................................11
Electron Energy Corp. v. Short,
597 A.2d 175 (Pa. Super. Ct. 1991) .........................................................................................16
Elrod v. Burns,
427 U.S. 347 (1976) .................................................................................................................23
Epstein Family v. Kmart Corp.,
13 F.3d 762 (3d Cir. 1994).......................................................................................................25
Frank Russell Co. v. Wellington Mgmt. Co.,
154 F.3d 97 (3d Cir. 1998).......................................................................................................10
Frank’s GMC Truck Center, Inc. v. Gen. Motors Corp.,
847 F.2d 100 (3d Cir. 1988)...............................................................................................19, 21
Haymond v. Lundy,
No. 99-5048, 2001 WL 15956 (E.D. Pa. Jan. 5, 2001) ......................................................11, 12
Heartland Payment Sys. v. Verifone Holdings,
No. 09-5654, 2009 U.S. Dist. LEXIS 119477 (D.N.J. Dec. 29, 2009) ....................................19
IMCS, Inc. v. D.P. Tech. Corp.,
264 F. Supp. 2d 193 (E.D. Pa. 2003) .......................................................................................11
In re Arthur Treacher’s Franchisee Litig.,
689 F.2d 1137 (3d Cir. 1982)...................................................................................................19
In re Sch. Asbestos Litig.,
842 F.2d 671 (3d Cir. 1988).....................................................................................................23
Ins. Adjustment Bureau, Inc. v. Allstate,
905 A.2d 462 (Pa. 2006) ..........................................................................................................15
J & J Snack Foods v. Nestle USA,
149 F. Supp. 2d 136 (D.N.J. 2001) ....................................................................................21, 22
-iii-
Jackson v. Rohm & Haas,
366 F. App’x 342 (3d Cir. 2010) .............................................................................................10
Jaffee v. Redmond,
518 U.S. 1 (1996) .....................................................................................................................23
Jean Anderson Hierarchy v. Allstate Life Ins.,
2 F. Supp. 2d 688 (E.D. Pa. 1998) ...........................................................................................16
Kos Pharms., Inc. v. Andrx Corp.,
369 F.3d 700 (3d Cir. 2004).....................................................................................................20
Kutztown, Inc. v. Thomas,
No. 98-5695, 1999 U.S. Dist. LEXIS 2463 (E.D. Pa. Feb. 11, 1999) ...............................21, 22
Langston v. Nat’l Media Corp.,
617 A.2d 354 (Pa. Super. Ct. 1992) .........................................................................................16
Lumax Indus. v. Aultman,
669 A.2d 893 (Pa. 1995) ....................................................................................................16, 17
Max Daetwyler Corp. v. Input Graphics, Inc.,
608 F. Supp. 1549 (E.D. Pa. 1985) ..........................................................................................11
Mazurek v. Armstrong,
520 U.S. 968 (1997) .................................................................................................................10
McDavid Knee Guard, Inc. v. Nike USA, Inc.,
No. 08 cv 6584, 2010 WL 3000178 (N.D. Ill. July 28, 2010) .................................................15
Mead Johnson & Co. v. Abbott Labs.,
209 F.3d 1032 (7th Cir. 2000) .................................................................................................12
Novartis Consumer Health, Inc. v. Johnson & Johnson–Merck Consumer Pharms. Co.,
290 F.3d 578 (3d Cir. 2002).....................................................................................................20
Ocasio v. Prison Health Servs.,
979 A.2d 352 (Pa. Super. Ct. 2009) .........................................................................................16
Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc.,
___ F.3d __, 2011 WL 3332604 (3d Cir. Aug. 4, 2011) ...................................................11, 14
Pharmacia Corp. v. GlaxoSmithKline Consumer Healthcare L.P.,
292 F. Supp. 2d 611 (D.N.J. Nov. 24, 2003) ...........................................................................20
Presidio Enters. v. Warner Bros. Distr.,
784 F.2d 674 (5th Cir. 1986) .............................................................................................12, 13
-iv-
Ramsey v. City of Pittsburgh,
764 F. Supp. 2d 728 (W.D. Pa. 2011) ......................................................................................23
Randa Corp. v. Mulberry Thai Silk, Inc.,
No. Civ. 4061, 2000 WL 1741680 (S.D.N.Y. Nov. 27, 2000) ................................................12
Richards v. CNN, Inc.,
15 F. Supp. 2d 683 (E.D. Pa. 1998) .........................................................................................23
Ride The Ducks of Phila., LLC v. Duck Boat Tours, Inc.,
138 F. App’x 431 (3d Cir. 2005) .............................................................................................20
Robert Bosch LLC v. Pylon Mfg. Corp.,
632 F. Supp. 2d 362 (D. Del. 2009) .........................................................................................12
Roberts v. Ferman,
No. 09-4895, 2011 U.S. Dist. LEXIS 16401 (E.D. Pa. Feb. 18, 2011) ...................................11
Rottmann v. Pa. Intersch. Ath. Ass’n,
349 F. Supp. 2d 922 (W.D. Pa. 2004) ..........................................................................11, 19, 20
S.E. Promotions, Ltd. v. Conrad,
420 U.S. 546 (1975) .................................................................................................................23
Sandoz Pharms. Corp. v. Richardson-Vicks, Inc.,
902 F.2d 222 (3d Cir. 1990).....................................................................................................21
Snyder v. Phelps,
131 S. Ct. 1207 (2011) .............................................................................................................18
Springer v. Henry,
435 F.3d 268 (3d Cir. 2006).....................................................................................................23
Stern v. Halligan,
158 F.3d 729 (3d Cir. 1998).....................................................................................................23
United States v. Pennsylvania,
533 F.2d 107 (3d Cir. 1976).....................................................................................................19
Valenti v. Mitchel,
962 F.2d 288 (3d Cir. 1992).....................................................................................................21
Virginia State Bd. v. Virginia Citizens,
425 U.S. 748 (1976) .................................................................................................................23
West Penn Allegheny Health Sys., Inc. v. UPMC and Highmark Inc.,
No. 2:09-cv-0480 (W.D. Pa. Apr. 21, 2009)..............................................................................2
-v-
OTHER AUTHORITIES
Federal Rule of Civil Procedure 65 ...............................................................................................25
-vi-
TABLE OF EXHIBITS
Exhibit 1………..…………UPMC Mercy Facility Agreement excerpts and related Amendments
Exhibit 2 …………...Children’s Hospital Hospital Agreement excerpts and related Amendments
Exhibit 3……………………………………………………….May 5, 2011 Letter from M. Hogel
Exhibit 4 …………………………………………….…...May 10, 2011 Letter from T. McGough
Exhibit 5 ……………………….…………………………….May 17, 2011 Letter from M. Hogel
Exhibit 6 …………………………………………………May 24, 2011 Letter from T. McGough
Exhibit 7 ………………………………………………………..…May 26, 2011 Highmark Email
Exhibit 8 …………………………….….Highmark “Newsroom,” July 13, 2011 Media Statement
Exhibit 9 …………………………………………………..July 8, 2011 Letter from T. McGough
Exhibit 10……………………………………………………July 13, 2011 Letter from M. Hogel
Exhibit 11…………………………...………..July 25, 2011 “Dear Provider” Letter from D. Rice
Exhibit 12………………….July 29, 2011, “Insurers See Opportunity in UPMC-Highmark Split”
Exhibit 13……………………………………………….August 1, 2011 Letter from T. McGough
Exhibit 14……………………………….…………………..August 5, 2011 Letter from M. Hogel
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I.
INTRODUCTION
Highmark Inc. and Keystone Health Plan West, Inc. (together, “Highmark”) ask this
Court to enjoin the UPMC Parties from informing the public about the upcoming end to the
UPMC Parties’ existing relationship with Highmark. But all public communications attributed
to UPMC have been accurate, consistent with the parties’ contracts, and protected by the First
Amendment. Highmark should not be able to gag UPMC, leaving Highmark as the lone public
voice on these end-of-contract issues, particularly when Highmark’s own communications are
misleading patients and the public. Patients have a right to know now how the expiration of the
parties’ contracts will affect them and their relationships with UPMC hospitals and doctors. The
UPMC Parties’ speech on these issues of widespread public interest should not be enjoined.
Highmark’s request to silence UPMC is particularly brazen in that Highmark refused
repeated opportunities to weigh in on the accuracy of the complained-of communications before
they were made. In particular, UPMC proposed to Highmark that they jointly issue an
announcement educating the public about the end of their existing relationship. UPMC’s
proposal previewed for Highmark the UPMC statements that Highmark now contends are false.
Then, when Highmark refused to issue a joint statement, UPMC reiterated its request, notified
Highmark that UPMC planned to use the statements in its internal and external communications,
and invited Highmark to review the accuracy of the statements before publication. Rather than
suggest that the statements were inaccurate, let alone false or misleading, Highmark launched a
preemptive public misinformation campaign. And even more egregiously, Highmark sat back as
the proposed UPMC statements were published, then sued to shut down the communications,
using this lawsuit as a public relations opportunity.
Notwithstanding Highmark’s resort to litigation, UPMC’s offer to sit down with
Highmark to discuss these imminent changes still stands; the UPMC Parties are ready to craft
and publish a joint statement with Highmark regarding the effects that their contracts’ expiration
will have on Highmark members starting next year. In the meantime, the Court should deny
Highmark’s defective preliminary injunction motion for the following reasons:
II.
•
Highmark cannot establish a likelihood of success on the merits. All UPMC
statements are truthful and otherwise inactionable under the Lanham Act. In
addition, the “Other Hospital Ventures” clauses that Highmark invokes for its
contract claims apply only to the individual UPMC Hospitals—not UPMC—but
Highmark does not plead that the UPMC Hospitals breached the contracts.
•
Highmark cannot establish irreparable harm. In the midst of the alleged
communications that form the basis of this lawsuit, Highmark admitted in the
press less than two weeks ago that it is suffering no harm, touting instead that
Highmark “had a very good July renewal period, with gains in the small group
business and some new business gains.” Regardless, to the extent that Highmark
has suffered any harm, its claimed injuries are compensable with damages.
•
The balance of equities favors the UPMC Parties. Highmark failed to object
when UPMC invited comments on proposed public statements, and Highmark has
refused to engage in any meaningful discussions with UPMC about the end of the
parties’ contracts. This Court should not reward Highmark’s decision to ambush
the UPMC Parties with a lawsuit rather than engage in civil dialogue. Under
these circumstances, Highmark cannot establish that the equities tip in favor of
the Court granting the extraordinary relief that Highmark now requests.
•
Highmark’s requested injunction contravenes the public interest. As a practical
matter, Highmark asks this Court to allow Highmark, and Highmark alone, to
speak to patients regarding the end of the parties’ contracts. Given the
significance of this issue to patients, doctors, and health care consumers, the
public interest weighs heavily in favor of allowing UPMC to speak with patients
and the public about this issue also.
FACTS AND BACKGROUND
Highmark, for years, has used its position as the largest insurer in Western Pennsylvania,
with over 60% market share in Pittsburgh, to coerce hospitals into accepting reimbursement rates
below market value. See West Penn Allegheny Health Sys., Inc. v. UPMC and Highmark Inc.,
No. 2:09-cv-0480 (W.D. Pa. Apr. 21, 2009) (Compl. ¶ 21). Hospitals are in a no-win situation:
Most hospitals could not survive without the volume of Highmark customers, but because
Highmark’s reimbursement rates are so low, hospitals are financially strapped. It is no
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coincidence that so many hospitals have faced financial difficulty in Western Pennsylvania.
A.
UPMC Has Hospital And Physician Contracts With Highmark.
The UPMC Parties and Highmark have two separate types of relevant commercial
contracts: “Hospital Contracts” and “Physician Contracts.”
Hospital Contracts. The UPMC Hospitals 1 currently provide in-network health services
to Highmark’s members pursuant to a series of contracts. Farner Decl. ¶ 5. These “Hospital
Contracts,” as amended, are ten-year contracts that expire on June 30, 2012. 2 E.g., O’Malley
Decl. (Doc. No. 4), Ex. 3 (Part II, Sec. A). The UPMC Parties sent non-renewal notices to
Highmark stating that the UPMC Parties will allow the Hospital Contracts to expire on June 30,
2012. Id., Ex. 4. The UPMC Parties did so due to Highmark’s decision to compete directly
against UPMC by acquiring the West Penn Allegheny Health System (“WPAHS”).
Hospital Services. Under the Hospital Contracts, the UPMC Hospitals provide “Hospital
Services” to Highmark members subject to a panoply of other conditions, terms, and restrictions.
“Hospital Services” are defined as “the full continuum of comprehensive hospital health care
services which are customarily provided to all patients by, or under the direction and control of,
the Hospital at anytime during the Term of this Agreement.” E.g., id., Ex. 3 (Part I, Sec. C).
Physician Services. In a separate section titled “Physician Services,” the Hospital
Contracts independently define “Physician Services” for Highmark members. Id., Ex. 3 (Part I,
Sec. D). There, the UPMC Hospitals “acknowledge[] and agree[] that at all times during the
Term of this Agreement, the Hospital[s] shall ensure access to Physician Services . . . .” Id. The
1
The UPMC hospital defendants are collectively referred to as “the UPMC Hospitals.”
2
Three other UPMC hospitals (Hamot, Children’s, and Mercy) are governed by contracts
with longer expiration dates. The expiration of these contracts is not at issue in this case.
-3-
Physician Services provisions of the Hospital Contracts do not guarantee access to any specific
physicians.
Expiration. All terms of the Hospital Contracts expire on June 30, 2012, unless
specifically exempted from expiration. This means that, after June 30, 2012, the UPMC
Hospitals will no longer be “Network Hospitals” or participating providers in the Highmark
network. Id., Ex. 3 (Part I, Sec. A). Similarly, the Physician Services provisions of the Hospital
Contracts expire with the contracts on June 30, 2012.
The “Run-Out.” Although the Hospital Contracts contain “run-out” provisions, which
define the parties’ obligations upon expiration, those provisions relate to Hospital Services only:
In the event this Agreement . . . expires on June 30, 2012 . . ., the
Hospital shall continue to provide Hospital Services to all
[Highmark] Members for up to twelve (12) months after the
effective date of such expiration . . ., as requested by [Highmark], .
. . and agrees to accept the [Highmark] payments as hereinafter
prescribed . . . in full satisfaction for such Hospital Services
furnished.
E.g., id., Ex. 2 (Part II, Sec. B) (emphasis added). The “run-out” provisions are expressly limited
in scope; they do not extend all to provisions of the Hospital Contracts. They apply only to
“Hospital Services,” not Physician Services. And they apply to Highmark members “for up to
twelve (12) months” after the expiration, but only if “requested by [Highmark].” Id.
In contrast, Highmark and other UPMC entities have used different language when they
want to provide for continuation of all services, including Physician Services, during a “run-out”
period. For instance, the contract between Mercy Hospital and Highmark provides for the
continuation of all “terms and conditions” of the agreement during the run-out period. See
Farner Decl., Ex. 1 (Sec. 9.4.3). And Mercy does not become a “non-Participating Provider”
until “after the end of the” run-out period. Id. The contract between Children’s Hospital and
Highmark likewise states that, even after termination, Children’s “shall accept the [Highmark]
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payments” set forth in the contract “in full satisfaction for services” until the end of the
Highmark subscriber’s contract year, making no distinction between Hospital and Physician
Services. See id., Ex. 2 (Part II, Sec. B). Highmark knew how to negotiate the inclusion of
Physician Services in the “run-out” period when it so chose to do so, but did not do so here.
Physician Contracts. In addition to the Hospital Contracts, which govern Highmark’s
respective relationships with the UPMC Hospitals, Physician Contracts between Keystone and
physician groups owned by UPMC govern the physician services those groups provide to
Highmark members. Farner Decl. ¶ 7. The Physician Contracts have automatically renewing
one-year terms, but are terminable at any time without cause with 60-days’ written notice. E.g.,
O’Malley Decl., Ex. 9 (Sec. 8.1.). On termination, physicians are not participating providers in
the Highmark network and have no obligation to provide in-network rates or services to
Highmark members, except for the continued care of existing inpatients (until discharge) or those
patients undergoing a course of treatment (until clinically appropriate). Id. (Sec. 8.2.4).
B.
Highmark Never Objected To UPMC’s Proposed Public Statements.
In 2010, the UPMC Parties unsuccessfully sought to renew the Hospital Contracts with
Highmark at market rates. Farner Decl. ¶¶ 4, 8. But, after learning that Highmark would
purchase WPAHS, the UPMC Parties sent non-renewal notices and informed Highmark that they
could not enter into new commercial contracts. Id. ¶ 9. UPMC also publicly stated that it
intended to terminate some Physician Contracts effective June 30, 2012, which would terminate
the participation of those physicians in Highmark’s commercial insurance provider network. Id.
UPMC, nonetheless, stated that UPMC physicians and hospitals would continue to participate in
Highmark’s Medicare Plans. Id.; O’Malley Decl., Ex. 12.
On May 5, 2011, Highmark’s Executive Vice President and Chief Legal Officer,
Maureen Hogel, sent a letter to Thomas McGough, UPMC’s Senior Vice President and Chief
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Legal Officer, asking whether UPMC would negotiate a new contract. Farner Decl. ¶ 12, Ex. 3.
Disregarding the significance of Highmark’s decision to compete with UPMC, Ms. Hogel
insisted that a contract with UPMC was possible, “[w]hether or not [Highmark is] talking to, or
ultimately contract[s] with, WPAHS . . . .” Id.
Mr. McGough responded on May 10, 2011. Id. ¶ 13. In his letter, he stated that
Highmark’s decision to become a provider ended the possibility of future commercial contracts.
Id., Ex. 4. Under such circumstances, Mr. McGough explained, Highmark would be the
“dominant payer while it simultaneously spent hundreds of millions of dollars to acquire or build
a competing provider network. . . . Highmark would inevitably use its dominance in the
insurance market to favor providers it owned, to the detriment of UPMC. . . .” Id. Mr.
McGough thus suggested that the parties should “agree [on] the importance of communicating
clearly and accurately with all interested constituencies about the effects of non-renewal—and
doing so as soon as possible.” Id. He proposed that Highmark and UPMC jointly craft a
statement educating the public about the effect of non-renewal of the Hospital Contracts. Mr.
McGough then set forth the contents of a statement UPMC and Highmark might jointly issue:
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Id. Mr. McGough invited Highmark’s comments on the proposed messaging. Id.
On May 17, 2011, Ms. Hogel responded, thanking Mr. McGough for UPMC’s “very
clear response.” Id. ¶ 14, Ex. 5. She did not object to the truth of the proposed messages. Id.
Nor did she object to UPMC delivering those messages to its patients and other affected parties.
Id. Instead, she stated, “[w]hile I agree that we want our messages to our members and your
patients to be clear and honest, at this time Highmark cannot join with UPMC in delivering those
messages.” Id.
Mr. McGough responded on May 24, 2011. Id. ¶ 15, Ex. 6. He indicated that he was
“disappointed that [Highmark] declined to help craft a consistent message to give to our various
constituencies about the expiration of our contracts.” Id. Mr. McGough made clear that “prompt
and candid communications regarding the impact of the non-renewals are critical” and again
provided bullet points that UPMC intended to use, this time individually, “for [UPMC]
communications, both internal and external, beginning May 27:”
-7-
Id. Again, Mr. McGough stated, “[i]f you believe those bullet points are incorrect in any way, or
if you have any other concerns about UPMC using them as a foundation for internal and external
communications regarding the non-renewal, please let me know in writing by the close of
business on May 26.” Id.
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Highmark never responded. Instead—at 4:51 PM on May 26 (the date UPMC asked for a
response from Highmark)—Highmark launched a misinformation campaign to try to convince
employers and members that nothing will change. In an email blast to Pittsburgh employers,
Highmark erroneously asserted that Highmark members will have “full access to UPMC
facilities” and that all “copayments, deductibles and plan provisions will be applied during the
run-out period in exactly the same manner as they are applied today,” even though (1) the UPMC
Parties’ obligations to provide Physician Services expire on June 30, 2012, (2) the Physician
Contracts do not contain a “run-out” period, and (3) Highmark must request continuation of
Hospital Services at in-network rates. Id. ¶ 16, Ex. 7; see also id., Exs. 8, 11.
C.
UPMC’s Further Efforts To Engage Highmark Have Been Rebuffed.
Having been totally rebuffed by Highmark, UPMC thereafter began to inform the public
of the effects of the expiring Hospital Contracts, drawing on the very messages that UPMC
previewed to Highmark. And, once again, on July 8, 2011, UPMC’s Mr. McGough reached out
to Highmark, proposing “that the appropriate representatives of our two companies meet to
discuss how to manage the necessary transition in the best interests of patients and the
community.” Id., Ex. 9. Mr. McGough explained why Highmark’s statements about the
expiration of the Hospital Contracts are “misleading and incorrect” and suggested that “[t]here
are numerous other issues that we could resolve regarding the non-renewal of our contracts were
we to approach them cooperatively.” Id. In response, Ms. Hogel rejected the invitation to meet,
suggesting it was “nothing more than a request” for Highmark to “become complicit in”
unidentified UPMC “violations of the law.” Id., Ex. 10. She enclosed a copy of Highmark’s
Complaint initiating this lawsuit, a transparent attempt to silence UPMC and generate publicity.
Highmark, in fact, made sure to publicize the Complaint on its website. Id. ¶ 17, Ex. 8.
On August 1, 2011, Mr. McGough sent further correspondence to Ms. Hogel, requesting
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a meeting under the Hospital Contracts to discuss specific contract terms about which the parties
disagree. Id. ¶ 21, Ex. 13. Ms. Hogel responded that Highmark had no interest in any such
meeting and refused to participate in a meaningful fashion. Id. ¶ 22, Ex. 14. Instead, Ms. Hogel
stated that “if [UPMC] insist[s] on having such a meeting, [Highmark] will simply provide you
with another copy of our legal proceedings . . . .” Id. Highmark, therefore, has repeatedly
refused to engage with UPMC about the expiration of the Hospital Contracts or to work out a
joint message to the community.
III.
HIGHMARK’S MOTION MUST BE DENIED.
“[A] preliminary injunction is an extraordinary and drastic remedy, one that should not be
granted unless the movant, by a clear showing, carries the burden of persuasion.” Mazurek v.
Armstrong, 520 U.S. 968, 972 (1997) (citation omitted). “A plaintiff seeking a preliminary
injunction must establish that he is likely to succeed on the merits, that he is likely to suffer
irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor,
and that an injunction is in the public interest.” Chester v. Grane Healthcare Co., Nos. 3:2010225, 3:2010-244, 2011 U.S. Dist. LEXIS 68977, at *12 (W.D. Pa. June 2, 2011) (quoting Winter
v. Natural Res. Def. Council, 555 U.S. 7, 20 (2008)). 3
A.
Highmark Has Not Shown A Likelihood Of Success On The Merits.
A likelihood of success on the merits means a “reasonable probability” of success at trial.
Frank Russell Co. v. Wellington Mgmt. Co., 154 F.3d 97, 101 (3d Cir. 1998). To proceed
beyond a motion and secure a hearing, the movant must demonstrate a “sustain[able]” legal
3
This Court should decide the UPMC Parties’ Motion to Dismiss before deciding this
motion. If the Court dismisses Highmark’s claims, this Court need not decide Highmark’s
preliminary injunction motion. See Jackson v. Rohm & Haas, 366 F. App’x 342, 348–49 (3d Cir.
2010) (dismissal of claims underlying preliminary injunction motion moots motion).
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theory and “a colorable factual basis to support the claim on the merits.” Roberts v. Ferman,
No. 09-4895, 2011 U.S. Dist. LEXIS 16401, at *18 (E.D. Pa. Feb. 18, 2011); Rottmann v. Pa.
Intersch. Ath. Ass’n, 349 F. Supp. 2d 922, 928 (W.D. Pa. 2004). Highmark has done neither.
1.
Highmark’s Lanham Act Claim Is Meritless.
Highmark’s Lanham Act claim fails because the statements Highmark attributes to
UPMC are true or otherwise inactionable as a matter of law. Section 43(a) of the Lanham Act
requires a plaintiff to prove false or misleading statements of fact in commercial advertising
about its or another’s goods or services. E.g., Ditri v. Coldwell Banker, 954 F.2d 869, 872–73
(3d Cir. 1992). Lanham Act claims cannot be based generally on an advertising campaign, but
must be founded upon identified statements of fact with associated descriptions of claimed
falsehoods. E.g., id. (upholding dismissal of claim based on “the general aura of [defendant’s]
national advertising scheme,” not particular statements); Max Daetwyler Corp. v. Input
Graphics, Inc., 608 F. Supp. 1549, 1556 (E.D. Pa. 1985).
As the Third Circuit recently held, if a complained-of statement of fact is literally true
and clear on its face when read in context, then a false advertising claim fails as a matter of law.
See Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., ___ F.3d __, 2011 WL 3332604, at *6–7
(3d Cir. Aug. 4, 2011); Haymond v. Lundy, No. 99-5048, 2001 WL 15956, at *4 (E.D. Pa. Jan. 5,
2001). True statements are protected by the First Amendment and are not actionable. E.g.,
Edenfield v. Fane, 507 U.S. 761, 766 (1993) (holding First Amendment is designed to safeguard
“broad access to complete and accurate commercial information”); IMCS, Inc. v. D.P. Tech.
Corp., 264 F. Supp. 2d 193, 197 (E.D. Pa. 2003).
The same is true of statements that could not mislead a reasonable consumer. Pernod,
2011 WL 3332604, at *6–7. A true statement that is simply “misunderstood” is not actionable.
Id. (relying on Am. Italian Pasta Co. v. New World Pasta Co., 371 F.3d 387, 392–94 (8th Cir.
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2004) (dismissing claim because “the Lanham Act protects against misleading and false
statements of fact, not misunderstood statements”) and Mead Johnson & Co. v. Abbott Labs.,
209 F.3d 1032, 1034 (7th Cir. 2000) (“[I]nterpreting ‘misleading’ to include factual propositions
that are susceptible to misunderstanding would make consumers as a whole worse off by
suppressing truthful statements . . . . ‘Misleading’ is not a synonym for ‘misunderstood.’”));
Haymond, 2001 WL 15956, at *4 (“The Lanham Act makes misleading statements actionable,
but a misunderstood statement is not the same as a misleading one.”).
Moreover, “[o]nly statements of fact capable of being proven false are actionable under
the Lanham Act.” Robert Bosch LLC v. Pylon Mfg. Corp., 632 F. Supp. 2d 362, 366 (D. Del.
2009) (emphasis added); see also Am. Italian Pasta, 371 F.3d at 391 (finding statements are
actionable only if “specific and measurable” and “capable of being proved false”). “Statements
of opinion are not generally actionable.” Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co.,
173 F.3d 725, 731 (9th Cir. 1999). And contingent statements, such as predictions about the
future, are inactionable opinions, because they are “neither true nor false.” Presidio Enters. v.
Warner Bros. Distr., 784 F.2d 674, 680 (5th Cir. 1986); Randa Corp. v. Mulberry Thai Silk, Inc.,
No. Civ. 4061, 2000 WL 1741680, at *2–3 (S.D.N.Y. Nov. 27, 2000).
a.
The UPMC Parties’ Statements Are True.
Notwithstanding Highmark’s many references to supposed UPMC communications in its
Complaint, Highmark’s Lanham Act claim turns on only four categories of statements that
allegedly violate the Lanham Act. See Compl. ¶¶ 50–64. Not one of those statements, however,
is a false or misleading statement of fact that is actionable under the Lanham Act.
•
Some UPMC hospitals and many UPMC physicians will be out-of-network after
June 30, 2012, and care may be billed at out-of-network rates. Prelim. Inj. Br. (Doc.
No. 3) at 11. The Hospital Contracts expire on June 30, 2012. E.g., O’Malley Decl.,
Ex. 3 (Part II, Sec. A). After June 30, 2012, the UPMC Hospitals will no longer be
“Network Hospitals,” and Highmark cannot publicize them as such. E.g., id., Ex. 3 (Part
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I, Sec. A). In addition, although Hospital Services are subject to a one-year “run-out”
clause, Physician Services are not. The Physician Contracts are terminable on 60-days’
notice. Id., Ex. 9 (Sec. 8.1). UPMC intends to terminate some Physician Contracts
effective June 30, 2012, and Highmark customers who use a UPMC physician whose
contract has been terminated, either in or out of the hospital, may incur higher, out-ofnetwork charges starting on July 1, 2012.
•
Of the major insurance plans in Western Pennsylvania, only Highmark will have
UPMC “out-of-network” after June 30, 2012. Prelim. Inj. Br. at 11. UPMC providers
will be in-network for UPMC Health Plan, CIGNA, Aetna, HealthAmerica, and
UnitedHealthcare for all of 2012. Farner Decl. ¶ 10. As noted, many UPMC providers
Highmark will not be in-network for Highmark commercial plans starting July 1, 2012.
The provisions of the Hospital Contracts making the UPMC Hospitals “Network
Hospitals” and participating providers expire on June 30, 2012.
•
Highmark members may need Highmark’s approval to use certain UPMC facilities
or services. Prelim. Inj. Br. at 11. While the “run-out” clause provides in-network
pricing for Hospital Services, it does so only “as requested.” O’Malley Decl., Ex. 2 (Part
II, Sec. B). Highmark has not made any such request to UPMC under the Hospital
Contracts, and Highmark refuses to discuss with UPMC any post-expiration process for
approving patient use of the UPMC Hospitals at that in-network rate. Moreover,
UPMC’s statements regarding approvals are contingent, stating what “may be required”
in the future, and as such, are not actionable. E.g., Presidio Enters., 784 F.2d at 679–80.
•
Contract terminations will not affect Medicare patients. Prelim. Inj. Br. at 12.
Regardless of the planned termination of Physician Contracts, UPMC has stated that it
intends to honor in-network access for Highmark Medicare members. See Farner Decl.
¶ 9; O’Malley Decl., Ex. 12. And Highmark, likewise, has publicly stated that it will
ensure continued access to UPMC facilities for its Medicare patients. See Highmark
“Choice Matters” Website, http://highmarkchoicematters.com/people-with-medicare/.
There is no indication that any change to commercial contracts will affect Medicare
patients, and any such statements therefore are true.
b.
Highmark Mischaracterizes Purported UPMC Statements.
Highmark also incorrectly alleges that UPMC has violated the Lanham Act by conveying
that “Highmark does not currently offer full access to UPMC doctors and hospitals.” Prelim. Inj.
Br. at 10. But UPMC has made no such statement. Instead, any UPMC statements have
provided the public with information on the upcoming changes to the region’s health care
industry. For example, the informational website, www.keepyourdoc.com, states “the
commercial insurance landscape is changing in Western Pennsylvania and there are important
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things you need to know to maintain, uninterrupted in-network access.” O’Malley Decl., Ex. 14
(emphasis added). As the website explains, “[w]hen these insurance changes go into effect,
there will be several insurance carriers that will allow uninterrupted in-network access to UPMC
physicians, hospitals, and facilities.” Id. (emphasis added). The website encourages people to
“[c]heck with your employer to ensure that it will offer a plan that provides in-network
access . . . .” Id. (emphasis added). The website also makes clear that “UPMC Hamot, UPMC
Mercy, and Children’s Hospital of Pittsburgh of UPMC are not affected at this time.” Id.
The “Keep Your Doctor. Check Your Plan” newspaper placement similarly states:
So remember, when it’s time to choose your health insurance you
can keep your doctor. This group of health insurance companies is
proud to provide access to UPMC: Aetna, Cigna, HealthAmerica,
UnitedHealthcare, UPMC Health Plan.
See id., Ex. 15 (emphasis added). And, likewise, the Q&A Flyer discusses in-network access to
hospitals and physicians squarely in the context of the upcoming open enrollment period. See id.,
Ex. 17. Because in-network choices have been limited in the past, the flyer explains that there
are now several insurers that include UPMC in-network. Id. The flyer recommends, “[b]e sure
you select a plan that includes your UPMC doctor . . . .” Id.
Each of these messages, when viewed in their full context, communicates that the
conditions of Highmark members’ access may change during the next year. Pernod Ricard,
2011 WL 3332604 at *7 (words must be interpreted “in the context of the entire accused
advertisement”). Such statements are not actionable. Id. at *7–8; Diamond Triumph Auto Glass,
Inc. v. Safelite Glass Corp., 441 F. Supp. 2d 695, 710–11 (M.D. Pa. 2006).
c.
Statements Interpreting Contracts Are Inactionable.
In addition, even assuming, arguendo, that the Hospital and Physician Contracts do not
unambiguously support UPMC’s statements, at best, the contracts are ambiguous as to what
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occurs following expiration. See Ins. Adjustment Bureau, Inc. v. Allstate, 905 A.2d 462, 468–69
(Pa. 2006) (“A contract is ambiguous if it is reasonably susceptible of different constructions and
capable of being understood in more than one sense.”).
Under the Lanham Act, a party’s statements interpreting an ambiguous contract are not
actionable. See McDavid Knee Guard, Inc. v. Nike USA, Inc., No. 08 cv 6584, 2010 WL
3000178, at *3 (N.D. Ill. July 28, 2010). This is because “a layman’s statements expressing an
interpretation of a contractual agreement are opinions . . . .” Id.; see also Coastal Abstract, 173
F.3d at 731 (“Absent a clear and unambiguous ruling from a court . . ., statements by laypersons
that purport to interpret the meaning of a statute or regulation are opinion statements, and not
statements of fact.”); Dial A Car, Inc. v. Transp., Inc., 82 F.3d 484, 488–89 (D.C. Cir. 1996).
The Hospital Contracts do not contain a “run-out” clause for Physician Services, and the
Physician Contracts do not have any “run-out” clause at all. E.g., O’Malley Decl., Ex. 2 (Part II,
Sec. B); id., Ex. 9. In other contracts, Highmark specifically negotiated for Physician Services,
as well as Hospital Services, to be covered during any “run-out” period. Farner Decl., Ex. 1 (Sec.
9.4) and Ex. 2 (Part II, Sec.B). Highmark did not do so here. Instead, the “run-out” clauses in
the Hospital Contracts provide for extension of in-network Hospital Services only as “requested.”
O’Malley Decl., Ex. 2 (Part II, Sec. A). The best reading of the Hospital Contracts is that
Physician Services are not covered by the “run-out” clause and that Highmark must approve
continued use of the UPMC Hospitals. But, at a minimum, the alleged statements are based on a
reasonable interpretation of the Hospital and Physician Contracts and, therefore, cannot be the
basis of a Lanham Act claim. 4
4
As explained in UPMC’s brief supporting its motion to dismiss (see III.B.), Highmark’s
Lanham Act allegations fail to establish prudential standing because Highmark here alleges
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2.
Highmark’s Breach Of Contract Claims Are Meritless.
A breach of contract claim requires a duty imposed by contract, breach of that duty by a
party, and resultant damages. E.g., Ocasio v. Prison Health Servs., 979 A.2d 352, 355 (Pa.
Super. Ct. 2009). “[F]undamental contract law” provides that “one cannot breach a contract,” or
a provision of a contract, “that one is not a party to.” Electron Energy Corp. v. Short, 597 A.2d
175, 178 (Pa. Super. Ct. 1991); see Langston v. Nat’l Media Corp., 617 A.2d 354, 358–59 (Pa.
Super. Ct. 1992). This rule holds true for parent, subsidiary, and other related corporations. See
Langston, 617 A.2d at 358–59; Lumax Indus. v. Aultman, 669 A.2d 893, 894–95 (Pa. 1995).
Neither a parent nor a subsidiary corporation is liable for the contractual obligations or acts of
the other, even if the subsidiary is wholly-owned. E.g., Commonwealth v. BASF Corp., No.
3127, 2001 WL 1807788, at *13 (Pa. Ct. C.P. Mar. 15, 2001); see also Jean Anderson Hierarchy
v. Allstate Life Ins., 2 F. Supp. 2d 688, 692 (E.D. Pa. 1998) (finding parent and subsidiary not
liable for sister subsidiary’s contract).
a.
Highmark Identifies No “Breaching Act” By The UPMC Hospitals
Violating The “Other Hospital Ventures” Provisions.
These fundamental principles preclude Highmark’s breach of contract claims here
because Highmark alleges “breaching acts” only against UPMC—a non-party to the provisions
allegedly breached. Highmark asserts eight contract claims against each of the UPMC Hospitals
arising from purported violations of the “Other Hospital Ventures” provisions of the Hospital
Contracts. Compl. ¶¶ 77–140. But the “Other Hospital Ventures” clauses, on their face, apply
(continued…)
injury as a party in contractual privity with the UPMC Parties and a consumer of the health care
services offered by the UPMC Parties. The contract dispute between the UPMC Parties and
Highmark is simply not the type of competitive injury that Congress sought to redress with the
Lanham Act. E.g., Conte Bros. Auto., Inc. v. Quaker State, 165 F.3d 221, 225–34 (3d Cir. 1998).
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only to the individual UPMC Hospitals: “The parties agree that the Hospital may . . . .
However, . . . the Hospital shall not . . . .” O’Malley Decl., Ex. 2 (Part I, Sec. D). Highmark so
concedes in its preliminary injunction brief. Prelim. Inj. Br. at 8 (describing the “non-solicitation
provision prohibiting the Hospital from soliciting”). The provisions, therefore, govern conduct
by the individual UPMC Hospitals—not the parent company, UPMC. This makes sense because
the parent, UPMC, is a party to only select provisions of the Hospital Contracts—not the “Other
Hospital Ventures” provisions. See O’Malley Decl., Ex. 2 (Part IV, Sec. K).
Yet Highmark fails to identify any statements allegedly made by any of the UPMC
Hospitals—as opposed to UPMC itself—except for UPMC Presbyterian. 5 As such, because
Highmark has identified no statement by a UPMC Hospital that contravenes the “Other Hospital
Ventures” provisions, Highmark has failed to present a colorable basis that it is likely to succeed
on the merits of its contract claims.
Nor can Highmark impute UPMC’s alleged actions to the Hospitals. The Hospital
Contracts expressly provide that “[n]either the Hospital nor [Highmark] shall be liable to any
other party for any act, or any failure to act of any other party to this Agreement.” Id., Ex. 2
(Part II, Sec. D). This express limitation on imputed liability among the UPMC Hospitals and
UPMC is wholly consistent with Pennsylvania law respecting the sanctity of the corporate form
and precluding imputed liability for the acts of parent, subsidiary, or other related corporations.
See Lumax, 669 A.2d at 895. Therefore, because Highmark fails to allege any improper
5
Highmark has identified only one communication even arguably presented by a UPMC
Hospital: a “Dear Valued Patient” letter and a Q&A flyer that Highmark alleges John Innocenti,
President of UPMC Presbyterian, distributed to his medical staff. Compl. ¶ 55. Highmark,
however, does not allege this statement was published to the public, any patient or any Highmark
member, and any claim based on this letter fails because it is general advertising not soliciting
Highmark members to disenroll from coverage. See O’Malley Decl., Ex. 13 (stating that
communication is “for distribution to patients,” not Highmark members).
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activities by the UPMC Hospitals themselves, Highmark’s contract claims have no merit.
b.
All Communications Are “General” And, Therefore, Permissible.
Furthermore, no UPMC entity actually breached the “Other Hospital Ventures”
provisions. The Hospital Contracts only preclude solicitation of Highmark members “(i) to
disenroll from coverage, or (ii) to participate in or subscribe to another health plan.” O’Malley
Decl., Ex. 2 (Part I, Sec. D). The Hospital Contracts expressly provide that “[g]eneral
advertising shall not violate” the provisions. Id. Any alleged statements have provided
information about the upcoming changes in the industry and were made generally—not targeted
at Highmark members.
To the extent that the Hospital Contracts are ambiguous as to allowable speech, the Court
should not construe the “Other Hospital Ventures” provisions so broadly as to prevent
dissemination of truthful information to the public regarding an issue of intense public scrutiny
and importance. See Buchina v. Borough of Elizabeth, No. 00-2004, 2009 WL 229752, at *2
(W.D. Pa. Jan. 29, 2009) (declining to interpret contract in “a broad manner” when such
interpretation would “threaten public health, safety, morals or welfare”). Such a gag order would
violate public policy, as well as the UPMC Parties’ First Amendment rights to speak on matters
of public concern. See Snyder v. Phelps, 131 S. Ct. 1207, 1215–16 (2011).
B.
Highmark Has Not Offered A Colorable Factual Basis Of Irreparable Harm.
To secure a preliminary injunction, Highmark must also show that injunctive relief is “the
only way of protecting” it “from [irreparable] harm.” Campbell Soup Co. v. ConAgra, Inc., 977
F.2d 86, 91 (3d Cir. 1992). “Establishing a risk of irreparable harm is not enough.” Id.
Highmark must make a clear showing of immediate harm that is not compensable by money
damages: “Mere injuries, however substantial, in terms of money, time and energy . . . are not
enough. The possibility that adequate compensatory or other corrective relief will be available at
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a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable
harm.” United States v. Pennsylvania, 533 F.2d 107, 110 n.9 (3d Cir. 1976) (citation omitted).
To avoid summary dismissal, the movant must demonstrate “a colorable factual basis to
support . . . the contention of irreparable harm” in its motion. Rottmann, 349 F. Supp. 2d at 928.
1.
Highmark Has Not Attempted To Meet Its Burden.
Highmark has not even attempted to provide a factual basis to suggest irreparable harm.
Bald assertions of potential lost renewals or loss of goodwill are not enough. See ACE Am. Ins.
Co. v. Wachovia Ins. Agency, Inc., 306 F. App’x 727, 731 (3d Cir. 2009); In re Arthur
Treacher’s Franchisee Litig., 689 F.2d 1137, 1143–48 (3d Cir. 1982). And Highmark publicly
has admitted that it is not suffering any harm: Highmark told the press just two weeks ago that
Highmark “had a very good July renewal period, with gains in the small group business and
some new business gains.” See Farner Decl. ¶ 20, Ex. 12. Such public statements, in light of a
total lack of evidence suggesting irreparable harm, preclude any preliminary injunction here. See
Duraco Prods., Inc. v. Joy Plastic Enters., 822 F. Supp. 1202, 1211 (W.D. Pa. 1993) (denying
preliminary injunction where “[Plaintiff’s] sales have been at healthy levels,” even after the
allegedly unlawful activity began); Heartland Payment Sys. v. Verifone Holdings, No. 09-5654,
2009 U.S. Dist. LEXIS 119477, *47–48 (D.N.J. Dec. 29, 2009) (no evidence of lost customers).
Regardless, in the event Highmark somehow succeeds on the merits of its claim, any
appropriate award of lost profits or other damages could compensate Highmark adequately. See
Frank’s GMC Truck Center, Inc. v. Gen. Motors Corp., 847 F.2d 100, 102 (3d Cir. 1988) (“Even
assuming for purposes of argument that [its] assertions are true and that it will in fact suffer
substantial lost profits…, the harm flowing therefrom is compensable by money damages.”);
ACE Am. Ins., 306 F. App’x at 731 (affirming denial of preliminary injunction because loss of
goodwill and reputation was provable as money damages). Highmark has not demonstrated any
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colorable factual basis to suggest money damages are not sufficient and, thus, the Court should
reject Highmark’s motion. See Rottmann, 349 F. Supp. 2d at 928.
2.
Highmark’s Cases Are Inapposite.
The few cases Highmark cites in support of its Lanham Act irreparable harm argument
are inapposite. Two of those cases do not address false advertising claims. See Ride The Ducks
of Phila., LLC v. Duck Boat Tours, Inc., 138 F. App’x 431, 434 (3d Cir. 2005) (trespass and
tortious interference); Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 726 (3d Cir. 2004)
(trademark infringement). Another case involves a single advertisement directly comparing two
competing products—a context where irreparable harm is presumed. Pharmacia Corp. v.
GlaxoSmithKline Consumer Healthcare L.P., 292 F. Supp. 2d 611, 617–18, 621 (D.N.J. Nov. 24,
2003) (“The commercial directly compares the two products . . . . The ad lines up two products
and compares them.”). And the final case involves a “completely unsubstantiated” statement
about the efficacy of a medication, where the plaintiff proffered a consumer survey from an
expert witness and proved actual loss of market share. Novartis Consumer Health, Inc. v.
Johnson & Johnson–Merck Consumer Pharms. Co., 290 F.3d 578, 590–97 (3d Cir. 2002). None
of Highmark’s cases support a preliminary injunction where, as here, the plaintiff has no
evidence of lost market share and no consumer survey tied to the alleged statements, but instead
seeks to cut off all public communication about the end of contracts that will affect patients’
health care, insurance, and relationships with hospitals and physicians.
3.
A Contract’s Statement That A Breach “Causes Irreparable Injury”
Is Insufficient As A Matter of Law.
Contrary to Highmark’s assertion, a contract provision that a breach will result in
irreparable harm is not dispositive. Dice v. Clinicorp, Inc., 887 F.Supp. 803, 810 (W.D. Pa. 1995)
(“Absent any other evidence . . ., the contractual provision . . ., standing alone, does not provide
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an adequate basis for a finding of irreparable harm.”); Arthur J. Gallagher & Co. v. Reisinger,
No. 07-271, 2007 WL 1877895, at *24 (W.D. Pa. June 11, 2007) (same). A breach of contract
alone does not constitute irreparable injury. See Frank’s, 847 F.2d at 102; cf. Bennington Foods
v. St. Croix Renaissance Group, 528 F.3d 176, 178–79 (3d Cir. 2008) (“[A] plaintiff . . . cannot
convert monetary harm into irreparable harm simply by claiming that the breach of contract . . .
will harm the plaintiff’s reputation.”). Courts find irreparable harm in contract actions only
when (1) “the subject matter of the contract is of . . . a special nature or peculiar value” or
(2) “special and practical features of the contract . . . [make it] impossible to ascertain the legal
measure of loss.” ECRI v. McGraw-Hill, Inc., 809 F.2d 223, 226 (3d Cir. 1987).
Highmark has not presented any colorable factual basis that the subject matter of the
Hospital Contracts is of a special nature or peculiar value or that it is impossible to ascertain the
legal measure of loss. Nor, as explained above, has Highmark proffered any other colorable
basis of irreparable harm to proceed beyond the motion stage. Id.
C.
The Balance Of Equities Tips Heavily In The UPMC Parties’ Favor.
Highmark fares no better on the third prong of its preliminary injunction request. In
deciding whether to issue a preliminary injunction, the Court must “engag[e] in a balancing of
the equities.” Sandoz Pharms. Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 232 n.13 (3d Cir.
1990). Equitable remedies are only available to a party that has been diligent in asserting its own
rights and who has not otherwise itself engaged in inequitable conduct. As the Third Circuit has
said, “equity aids the vigilant, not those who rest on their rights.” Valenti v. Mitchel, 962 F.2d
288, 299 (3d Cir. 1992). When the equities tip in defendants’ favor, a preliminary injunction
motion must be denied. See J & J Snack Foods v. Nestle USA, 149 F. Supp. 2d 136, 158–59
(D.N.J. 2001); Kutztown, Inc. v. Thomas, No. 98-5695, 1999 U.S. Dist. LEXIS 2463, at *6 (E.D.
Pa. Feb. 11, 1999).
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1.
Highmark Sat On Its Rights.
On two occasions prior to publishing the communications at issue here, UPMC
outlined—in writing—for Highmark’s Chief Legal Officer, specific points that would serve as
the foundation for communications about the non-renewal of the Hospital Contracts. UPMC
asked Highmark’s Chief Legal Officer to advise if she believed the statements were “incorrect in
any way, or if [she had] any other concerns about UPMC using them as a foundation for internal
and external communications regarding the non-renewal . . . .” Farner Decl., Ex. 6. Highmark
identified no inaccuracies and expressed no concerns or objections. Nor did Highmark claim
that the proposed statements would breach the Hospital Contracts or somehow violate the law.
Instead, Highmark responded only that it “cannot join with UPMC in delivering those
messages.” Id., Ex 5.
Highmark had its chance to object. Many of the statements Highmark now claims as
false or misleading are virtually identical to the ones that UPMC provided to Highmark for
comment before publication. 6 Yet, Highmark did nothing. And even after this lawsuit was filed,
Highmark has refused UPMC’s invitation to engage in meaningful discussion about the end of
the parties’ relationship. Highmark cannot deliberately choose not to participate in the process,
sit on its rights, allow statements to be published, and then run to this Court. Equity does not
reward such gamesmanship. See J & J, 149 F. Supp. 2d at 158–59 (denying plaintiff’s motion
because balance of equities tipped in defendant’s favor); Kutztown, 1999 U.S. Dist. LEXIS 2463,
6
Compare Farner Decl., Ex. 6 (proposing communication that, “[a]s of [July 1, 2012],
Highmark Commercial Members will be required to obtain Highmark’s approval to use nonparticipating UPMC Hospitals, in addition to obtaining required authorizations of medical
necessity from Highmark for certain designated services”), with Prelim. Inj. Br. at 11 (alleging
Lanham Act violation to communicate that “Highmark members may need approval to use
‘nonparticipating UPMC hospitals’ and/or receive certain services after June 30, 2012”).
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at *6 (same, where plaintiff knew of activity for three years but did nothing until defendant had
already invested in reliance on plaintiff’s failure to object).
2.
An Injunction Would Substantially Harm The UPMC Parties.
Particularly in matters of public concern, prior restraints on speech are highly suspect
and almost always unconstitutional. S.E. Promotions, Ltd. v. Conrad, 420 U.S. 546, 558–59
(1975). “The loss of First Amendment freedoms, for even minimal periods of time,
unquestionably constitutes irreparable injury.” Elrod v. Burns, 427 U.S. 347, 373 (1976); In re
Sch. Asbestos Litig., 842 F.2d 671, 679 (3d Cir. 1988). Should the Court enjoin the UPMC
Parties from speaking publicly about how and under what terms individuals will be able to
access health care providers, the harm to the UPMC Parties, which would be prohibited from
fulfilling their essential mission to protect public health, would be irreparable. Springer v.
Henry, 435 F.3d 268, 275 (3d Cir. 2006) (“[S]tatements by health care providers regarding
patient care involve[] matters of public concern.”); see also Jaffee v. Redmond, 518 U.S. 1, 11
(1996) (health is a “public good of transcendent importance”); Stern v. Halligan, 158 F.3d 729,
732 (3d Cir. 1998) (protecting health is “plainly in the public interest”).
D.
An Injunction Would Not Be In The Public Interest.
Finally, Highmark cannot demonstrate that an injunction would be in the public interest.
The public unquestionably has an interest in access to truthful speech, commercial or otherwise.
Virginia State Bd. v. Virginia Citizens, 425 U.S. 748, 763 (1976); see also Cent. Hudson Gas &
Elec. Corp. v. Pub. Serv. Comm’n of New York, 447 U.S. 557, 561–62 (1980). There is “a
significant public interest in upholding First Amendment principles.” Ramsey v. City of
Pittsburgh, 764 F. Supp. 2d 728, 735 (W.D. Pa. 2011). “The public interest in having free and
unhindered debate on matters of public importance” is “the core value of the Free Speech Clause
of the First Amendment.” Springer, 435 F.3d at 276; Richards v. CNN, Inc., 15 F. Supp. 2d 683,
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695 (E.D. Pa. 1998) (denying preliminary injunction that “would stifle the free expression of an
important global voice” and noting “the public interest in the free exchange of ideas”).
1.
It Is Contrary To Public Interest To Stifle The UPMC Parties’ Speech.
It would be manifestly contrary to the public interest to stifle the UPMC Parties’ speech.
To do so would deprive the public of access to important information bearing on individuals’
abilities to see their physicians, under what terms, and at what cost. These health care and
insurance matters are of significant public interest. The UPMC Parties welcome Highmark’s
partnership with WPAHS and believe that the partnership, together with UPMC’s contracts with
other national insurers and the end of the Hospital Contracts, will promote competition and
choice in health care and insurance. But Highmark cannot forestall the natural reaction to its
decision to compete in the future against the UPMC Parties. The UPMC Parties must be
permitted to talk with patients and the public about the end of the Hospital Contracts to ensure an
orderly unwinding process and minimize any disruption to patient care. The Court should not
prevent the UPMC Parties from now informing people—before it is too late for patients to act—
about the impact of changes to the relationships between the UPMC Parties and Highmark.
Moreover, Highmark itself is publishing false and misleading advertisements about the
expiration of the Hospital Contracts. E.g., Farner Decl. ¶ 16, Ex. 7. Highmark’s advertisements
are in newspapers and mass letters to doctors, employers, insurance brokers, and members. Id.,
Exs. 8, 11. Every day, Highmark’s website claims that there will be no impact in 2012 to
Highmark members and that their coverage and in-network access to UPMC doctors and
hospitals will not change until 2013. O’Malley Decl., Ex. 34; see also Highmark “Choice
Matters” Website, http://highmarkchoicematters.com/. Highmark cannot be the lone public
voice heard on these issues. Highmark should not be permitted to pull the wool over the public’s
eyes until it is too late for people to preserve relationships with UPMC doctors and hospitals.
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2.
Highmark’s Overbroad Proposed Order Exemplifies The Problems
Inherent In Any Injunction Here.
Injunctions can be “no broader than necessary.” Belitskus v. Pizzingrilli, 343 F.3d 632,
649-50 (3d Cir. 2003). And Federal Rule of Civil Procedure 65(d) requires that every order must
“state the reasons why it is issued,” “state its terms specifically,” and “describe in reasonable
detail—and not by referring to the complaint or other document—the act or acts restrained or
required.” Fed. R. Civ. P. 65(d)(1). A bond is necessary (Fed. R. Civ. P. 65(c)), and there must
be “‘fair and precisely drawn notice of what the injunction actually prohibits.’” Epstein Family
v. Kmart Corp., 13 F.3d 762, 771 (3d Cir. 1994).
But Highmark does not seek an order complying with these express requirements.
Highmark, instead, asks for a broad prohibition of the “Keep Your Doctor. Check Your Plan”
campaign—regardless of any statement’s content or context. See Proposed Order (Doc. No. 2-1)
at 2. Highmark, at bottom, asks the Court to prevent any public discourse about the Hospital
Contracts’ expiration, leaving Highmark as the sole mouthpiece on the issue. Highmark’s
proposed order actually forces UPMC to sponsor ads endorsing Highmark—a result seen in none
of Highmark’s cited cases. Id. at 3–4. Highmark’s preliminary injunction request, therefore,
violates Rule 65(d), prohibits truthful commercial speech, and is contrary to the public interest in
knowing about and understanding health care and insurance options now and in the near future.
IV.
CONCLUSION
For all of these reasons, the Court should summarily reject Highmark’s preliminary
injunction request without a hearing. 7
7
Highmark’s submissions are insufficient on their face for the Court to grant the
requested relief, and Highmark does not seek a hearing. To the extent, however, that the Court
finds a hearing necessary, the UPMC Parties ask for a conference to plan for expedited discovery
on facts within Highmark’s control, including for example, its claims of harm and confusion.
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Dated: August 18, 2011
Respectfully submitted,
/s/ Leon F. DeJulius, Jr.
Paul M. Pohl (Pa. I.D. No. 21625)
Leon F. DeJulius, Jr. (Pa. I.D. No. 90383)
JONES DAY
500 Grant Street, Suite 4500
Pittsburgh, PA 15219-2502
Telephone: (412) 391-3939
Fax: (412) 394-7959
[email protected]
[email protected]
Paul H. Titus (Pa. I.D. No 01399)
Thomas S. Gricks III (Pa. I.D. No. 51209)
SCHNADER HARRISON SEGAL &
LEWIS LLP
Fifth Avenue Place, Suite 2700
Pittsburgh PA 15222-3001
Telephone: (412) 577-5200
Fax: (412) 765-3858
[email protected]
[email protected]
Attorneys for UPMC Parties