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July 13, 1998

DR. PHILLIP J. SOLLA, DR. ANDREW LACERENZA and DR. NICHOLAS NAPOLITANO, individually and on behalf of all others similarly situated, Plaintiffs, against AETNA HEALTH PLANS OF NEW YORK INC, et al., Defendants.

The opinion of the court was delivered by: GERSHON


 GERSHON, United States District Judge:

 Plaintiffs, three chiropractors licensed to practice in New York, bring this antitrust action pursuant to the Sherman Act, 15 U.S.C. § 1, and its New York counterpart, the Donnelly Act, N.Y. Gen. Bus. Law § 340(1), alleging that defendants, twelve Health Maintenance Organizations ("HMOs") licensed to operate in New York, engaged in unlawful conspiracies and combinations to exclude chiropractors from providing health care services to HMO enrollees. All defendants seek summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure dismissing plaintiffs' Fourth Amended Complaint. Plaintiffs seek leave to file a Fifth Amended Complaint.


 Unless otherwise indicated, the following facts are undisputed. Plaintiffs are three chiropractors, licensed to practice in New York pursuant to N.Y. Educ. L. § 6554, who maintain their businesses in Suffolk County, NY. *fn1" By statute, the practice of chiropractic is defined as:

detecting and correcting by manual or mechanical means structural imbalance, distortion, or subluxations in the human body for the purpose of removing nerve interference and the effects thereof, where such interference is the result of or related to distortion, misalignment or subluxation of or in the vertebral column.

 N.Y. Educ. L. § 6551(1).

 Defendants are twelve HMOs licensed to operate in New York pursuant to Article 44 of New York Public Health Law. N.Y. Pub. Health L. §§ 4400, et. seq. Two of the defendants, Health Insurance Plan of Greater New York, Inc. ("HIP") and Managed Health, Inc. ("Managed Health"), operate group-model HMOs. This means that they contract with groups of physicians in the localities they serve to provide health care services to their enrollees. HIP contracts with six main constituent groups, and Managed Health contracts predominantly with Community Health Program of Queens-Nassau ("CHP"). The remaining defendants-- Sanus Health Plan of Greater New York, Inc., now known as NYLCare Health Plans of New York, Inc. ("NYLCare"), CIGNA Healthplan of New York, Inc. ("CIGNA"), Empire Blue Cross and Blue Shield ("Empire"), Travelers Health Network of New York, Inc., ("THN of NY"), Oxford Health Plans (New York), Inc. ("Oxford"), ChoiceCare Long Island, Inc, now known as VYTRA Healthcare ("VYTRA"), Aetna Health Plans of New York, Inc. ("AHPNY"), U.S. Healthcare, Inc. ("U.S. Healthcare"), The Prudential Health Care Plan of New York, Inc. ("Prucare"), MetLife HealthCare Network of New York, Inc.("MetLife")-- operate independent practice association ("IPA") model HMOs. As IPA-model HMOs, they contract directly with independent physicians or practice groups for the provision of health care services to their members.

 Under New York law, each HMO is required to provide comprehensive health services to its enrollees. N.Y. Pub. Health L. § 4403(1)(a). The HMOs are also obligated to provide each HMO enrollee with a primary care practitioner ("PCP"). 10 N.Y.C.R.R. § 98.13(b). A PCP is "a physician or other licensed provider who supervises, coordinates and provides initial and basic care to enrollees and maintains continuity of care for enrollees." 10 N.Y.C.R.R. § 98.2(t). With regard to referrals, the HMO or the PCP on behalf of the HMO is responsible for the "identification and selection of an appropriate provider of care in each individual instance where services are determined to be necessary for the enrollee." 10 N.Y.C.R.R. § 98.13(c).

 Defendants offer varying levels of coverage for chiropractic services. Five defendants, AHPNY, THN of NY, CIGNA, MetLife and Prucare, offer chiropractic coverage as part of their basic plan. Three defendants, NYLCare, U.S. Healthcare and Empire offer chiropractic-related services through an optional rider to employers who desire additional coverage. And four defendants, HIP, Managed Health, Oxford and VYTRA, do not offer chiropractic coverage at all.

 The Complaint

 This action arises out of the alleged exclusion of chiropractic doctors from providing health care services to HMO enrollees in the five counties of New York City, and Nassau and Suffolk counties on Long Island. The plaintiffs complain that, even where chiropractors are the most cost-effective providers of treatment for "mechanical-structural disorders of the back and neck," HMOs have failed to "authorize" chiropractors as providers for their enrollees.

 The Fourth Amended Complaint makes three claims under the Sherman Act and under New York's Donnelly Act. One claim is that "in each and every one of the HMOs, two or more persons in power -- whose identities are well known within each said HMO . . . have formed one or more conspiracies [to] boycott . . . chiropractic doctors." The intra-HMO conspiracies are alleged to set policies for the coverage levels of chiropractic care that "withhold[] treatment options from patients and . . . promulgate restrictions on chiropractic services." It is also alleged that, within each intra-HMO conspiracy, "MDs [are] agreeing among themselves to under-refer enrollees to chiropractic doctors in order to bolster overall MD income." According to the complaint, each of the conspirators within each HMO "is excessively driven by objectives that are disparate from those of the HMO-- by an impermissible personal stake" in the outcome. A second claim is that the failure of each HMO to "authorize" chiropractors in such situations renders each HMO "by itself' a "combination in restraint of trade." A third claim alleges the existence of an inter-HMO conspiracy in which "representatives of some or all of the HMOs have conspired with each other to tolerate the aforesaid intra-HMO conspiracies."

 Procedural History

 Plaintiffs amended their complaint three times before their allegations were tested on a motion to dismiss. In an order of June 16, 1995, Judge Spatt denied defendants' motion to dismiss plaintiffs' Section 1 claims, concluding that "the complaint barely pleads a cause of action under Section 1 of the Sherman Act against the defendant HMOs." When plaintiffs sought to amend their complaint again before defendants filed a motion for summary judgment, Judge Spatt adopted the report and recommendation of the Honorable E. Thomas Boyle, Magistrate Judge, in an order dated May 21, 1996, and granted plaintiffs' motion for leave to file the Fourth Amended Complaint on the following conditions:

1) no further amendment will be permitted to the complaint except upon a showing of good cause and upon facts that are not known, or with reasonable diligence could not have been known at the time of the filing of the Fourth Amended Complaint.
2) No Enlargement of Phase I discovery based on any new allegations in the Fourth Amended Complaint.
3) Discovery with respect to the putative class and any motion for class certification is stayed pending the outcome of HMO ...

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