Fifth Circuit Finds Sherman Act Conspiracy Claims Survive Statute Of Limitations Challenge
06/02/2021On May 18, 2021, the United States Court of Appeals for the Fifth Circuit reversed a district court’s dismissal of claims by the Academy of Allergy & Asthma in Primary Care and United Allergy Services (“plaintiffs”) that Quest Diagnostics (“Quest”) violated §§ 1 and 2 of the Sherman Act. Acad. of Allergy & Asthma in Primary Care v. Quest Diagnostics, Inc., No. 20-50179, 2021 WL 1976666 (5th Cir. May 18, 2021). The district court originally dismissed the claims because Quest did not commit any overt acts within the four-year statute of limitations period. On appeal, the Court found that an email from Quest’s co-conspirator referencing a meeting with a Quest employee provided sufficient evidence of an overt act to extend the statute of limitations period.
United Allergy Services (“UAS”) offers primary care physicians (“PCPs”) a means of testing and treating allergies and asthma. Quest is a leading laboratory that is the beneficiary of PCP referrals, and its alleged co-conspirator, Phadia, is an allergy test producer. Both Phadia and Quest faced the possibility of decreased sales due to UAS’ disruptive business model. Unbeknownst to UAS, Quest and Phadia began discussing ways to curtail competition posed by UAS in 2011. Quest and Phadia allegedly embarked on a smear campaign that targeted UAS’ customers and attempted to convince them to cease their relationships with UAS citing safety, medical liability and fraudulent billing practices. According to plaintiffs, the campaign was so successful that Quest and Phadia account for more than 70% of the local market share in allergy testing and immunotherapy.
In 2014, unaware of Quest and Phadia’s disinformation campaign, plaintiffs filed federal and state antitrust claims against a group of physicians. As discovery progressed, UAS learned of Phadia’s role and amended their complaint to include Phadia. As they sought discovery against Phadia, UAS began to suspect Quest’s involvement and requested documents from Quest in 2015. Because the deadline to add Quest to their original lawsuit had passed by the time Quest responded to their document requests, plaintiffs filed suit against Quest in December 2017.
Quest moved to dismiss the case in March 2018 and the district court granted Quest’s motion in February 2019. The district court found that the antitrust claims were time barred since Quest had not committed any overt acts within the four-year statute of limitations. The district court determined that the last overt act was Quest’s August 2013 meeting with Phadia about UAS’ insurance reimbursement. In reaching this determination, the district court disregarded later actions because they lacked specificity or described mere “aftershocks” of earlier overt acts.
In reaching its decision on the antitrust claims, the Court largely agreed with the district court’s conclusions. It specifically noted various instances where allegations of continued behavior were not specific enough to be considered overt acts and agreed that one more specific policy change by a third-party health plan was a mere “aftershock” of Quest and Phadia’s actions outside the statute of limitations. However, the Court pointed to an email from Phadia that referenced a meeting with a Quest employee during the statute of limitations period. This email was specific enough to constitute an overt act in furtherance of the conspiracy. The Court reversed and remanded the dismissal of the antitrust claims.
This case illustrates that for actions to be considered overt acts that fall within the statute of limitations, there need to be specific allegations and evidence of action by the conspirators themselves. Generalized allegations of continued behavior or responsive actions by third parties are insufficient. Courts can, however, use evidence from non-party co-conspirators to support a claim that an overt acts falls within the statute of limitations.