In a landmark case for antitrust law and the dental industry, roughly 240,000 dentists and dental practices have initiated a class action lawsuit against Delta Dental, the United States’ largest dental insurance system.
The case, formally known as In Re Delta Dental Antitrust Litigation, Civil Action No. 1:19-CV-06734, MDL No. 2931, filed in the U.S. District Court for the Northern District of Illinois, alleges that Delta Dental and its related entities have artificially lowered the reimbursem*nt rates for dental goods and services, in direct violation of federal antitrust laws. The plaintiffs sought class certification from the district court last month.
The dental providers claim that Delta Dental cost themsome $13 billion, according to an article in Law360.
Essence of the lawsuit
At the core of the lawsuit are the allegations that Delta Dental has engaged in a series of anticompetitive agreements to stifle competition and maintain its dominance in the dental insurance market. These alleged practices include:
Market Allocation: Plaintiffs argue that Delta Dental divided the U.S. market into exclusive territories for its state insurers, effectively eliminating competition within those territories.
Price Fixing: The lawsuit accuses Delta Dental of unlawfully setting reimbursem*nt rates for dental services at artificially low levels, forcing dentists and dental practices to accept below-market rates.
Revenue Restrictions: Additionally, the complaint highlights alleged revenue restrictions that limit the amount of revenue Delta Dental state insurers can derive from non-“Delta Dental” branded dental insurance or from administering Delta Dental plans.
Plaintiffs’ argument
The plaintiffs, consisting of dentists and dental practices participating in Delta Dental’s Premier or PPO networks, claim that Delta Dental’s actions constitute a cartel and per se violations of Section 1 of the Sherman Act. They allege that Delta Dental has suppressed reimbursem*nt rates and harmed dental providers through territorial restrictions, price-fixing for specific dental goods and services, and competition restrictions.
The case seeks class certification under Rule 23(a) and Rule 23(b)(3), with plaintiffs arguing that evidence common to the class can prove the existence of the conspiracy and the harm it has caused, with an economic model suggesting over 97% of the proposed class has been impacted.
Implications
The outcome of the case could have significant implications not just for the plaintiffs and defendant but also for antitrust law, particularly regarding class certification and the assessment of, per se, antitrust violations. The case also raises critical questions about the balance between market dominance and competition, especially in specialized insurance markets like dental insurance.
Should the plaintiffs prevail, the lawsuit could compel Delta Dental to dismantle its alleged anticompetitive practices, potentially leading to a more competitive and fair dental insurance market. Moreover, this case could set a precedent for how antitrust laws are applied within specialized insurance markets, signalling to other dominant players in similar markets that anti-competitive practices will not go unchecked.
