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A lawsuit considered by many mental health care practitioners to be a landmark in the battle against the managed care industry when it was filed in 1996 was dismissed in late May on technical grounds. If the class-action suit against the country's nine largest managed behavioral health care firms had succeeded, it could potentially have imposed enormous financial consequences on the industry.
The suit accused the so-called "carveout" companies with conspiring to control the mental health care market by fixing prices and secretly agreeing on the terms to which practitioners would have to adhere to belong to the provider networks the companies control (Psychiatric News, February 7, 1997).
Judge Kimba Wood of the U.S. District Court for the Southern District of New York dismissed the case on the grounds that it did not contain sufficient detail of an alleged conspiracy on the part of the nine companies to allow the suit to go forward, according to New York attorney Joseph Sahid.
Joseph Sahid, who represents the plaintiffs who brought the antitrust suit, has filed an appeal of Judge Wood's ruling with the Second Circuit Court of Appeals in New York.
The basis of the appeal is that the lawsuit did meet the legal requirements of providing sufficient details of the alleged violation, he told Psychiatric News, and that the judge did not grant the plaintiffs the traditional privilege of refiling their complaint with additional information relevant to the charges. An opportunity to amend a filing with additional information "is almost mandated" when a dismissal is not based on the case's merits, Sahid said. New York courts have looked unfavorably on class-action suits in the last few years, he added.
Oral arguments to the appeals court are scheduled for September.