Seventh Circuit Affirms that Omnicare’s “Gun Jumping” Claim Missed the Mark

On January 10, 2011, the Seventh Circuit affirmed the district court's decision in Omnicare v. UnitedHealth Group, Inc., et al., that granted summary judgment on Omnicare's antitrust and fraud claims that health insurers UnitedHealth and PacifiCare conspired to depress the reimbursement rate they paid Omnicare, an institutional pharmacy, for drugs dispensed under the Medicare Part D program. Omnicare claimed that the defendants exchanged competitively sensitive information during pre-merger due diligence that allowed them to coordinate their negotiations with Omnicare and dupe the pharmacy into signing a bargain-basement contract with PacifiCare. After the companies merged, UnitedHealth abandoned its higher-rate contract and used PacifiCare's. The problem with Omnicare's antitrust theory, according to the district court and the Seventh Circuit, was that it rested on evidence that was consistent with independent, lawful action. That is, the information UnitedHealth and PacifiCare exchanged during due diligence did not support an inference of a conspiracy. Judge Pallmeyer of the Northern District of Illinois scrutinized the factual support for Omnicare's claim that the insurance companies had conspired during pre-merger talks and determined that the "exchange of information was necessary to due diligence and was performed in a reasonably sensitive manner." Judge Tinder, writing for a unanimous panel, affirmed without the fact-intensive analysis, but similarly found that Omnicare's evidence "demonstrates only a circulation of generalized and averaged high-level pricing data, policed by outside counsel, that is more consistent with independent than collusive action."

Robins, Kaplan, Miller & Ciresi L.L.P. defended UnitedHealth during the discovery and summary-judgment phases of the litigation, which involved millions of pages of document production, sixty-two depositions, and a dozen expert reports. Judge Pallmeyer's summary-judgment opinion is now one of the leading authorities on when "gun jumping" can trigger liability under Section 1 of the Sherman Act.

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