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PeaceHealth v. Health Net Health Plan of Oregon, Inc.

United States District Court, D. Oregon

October 21, 2019

PEACEHEALTH, a Washington non-profit corporation, Plaintiff,
v.
HEALTH NET HEALTH PLAN OF OREGON, INC., an Oregon corporation; and TRILLIUM COMMUNITY HEALTH PLAN, INC., an Oregon corporation, Defendants.

          TEMPORARY RESTRAINING ORDER/PRELIMINARY INJUNCTION

          MICHAEL J. MCSHANE UNITED STATES DISTRICT JUDGE

         Plaintiff PeaceHealth “operates hospitals and other healthcare services in the Northwest, including Oregon and Washington.” Hodgkinson Decl. ¶ 2; ECF No. 4. PeaceHealth “is the largest health care provider in Lane County, Oregon and Clark County, Washington.” Id. Defendants Trillium Community Health Plan, Inc. (“Trillium”) and Health Net Health Plan of Oregon, Inc. (“Health Net”) offer Medicare Advantage (“MA”) plans to eligible consumers. Id. at ¶ 3. PeaceHealth alleges defendants violated the Lanham Act, 15 U.S.C. § 1125 by making false or misleading statements regarding PeaceHealth's status as an in-plan provider on defendants' 2020 MA plans. PeaceHealth moved for an emergency temporary restraining order, arguing that absent injunctive relief, PeaceHealth faces the likelihood of irreparable harm, largely on the basis of a loss of goodwill. The Court heard oral arguments just three days after PeaceHealth filed its complaint. Given the somewhat rushed nature of the proceedings, the Court emphasizes that none of the findings or conclusions outlined below are final rulings on the merits. That said, the Court concludes PeaceHealth is entitled to injunctive relief at this time.

         STANDARDS

         A party seeking a preliminary injunction “must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Resources Defense Council, Inc., 129 S.Ct. 365, 374 (2008). The mere possibility of irreparable harm is not enough. Rather, the plaintiff must establish such harm is likely. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). The standards for issuing a temporary restraining order are similar to those required for a preliminary injunction. Lockheed Missile & Space Co., Inc. v. Hughes Aircraft Co., 887 F.Supp. 1320, 1323 (N.D. Ca. 1995). The court's decision on a motion for a preliminary injunction is not a ruling on the merits. See Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984).

         DISCUSSION

         To prevail on a claim for false advertising under the Lanham Act, PeaceHealth must demonstrate:

(1) a false statement of fact by the defendant in a commercial advertisement about its own or another's product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to defendant or by a lessening of the goodwill associated with its products.

Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997).

         At this stage, based on the limited record before the Court, I conclude PeaceHealth has demonstrated a reasonable likelihood of success on their claim that defendant's false or misleading statements violated the Lanham Act. Some background is necessary to understand the context of the current dispute.

         In 2004, PeaceHealth and Health Net entered into an agreement where PeaceHealth would provide hospital services as an in-network provider to Health Net's Medicare Advantage enrollees. Hodgkinson Decl. ¶ 4; ECF No. 4. In 2012, PeaceHealth entered into a similar agreement with Trillium. “The terms of [these agreements] were periodically renegotiated.” Id. at ¶ 6.

         In April 2019, Kimberly Hodgkinson, PeaceHealth's Executive VP and CFO, informed defendants' president (via telephone call and letter) that because the parties were unable to reach an agreement regarding the Medicare Advantage plans, PeaceHealth would terminate the agreements effective January 1, 2020. Id. at ¶¶ 7-8. In similar conversations in June and July 2019, Hodgkinson “again confirmed that PeaceHealth would no longer be an in-network provider with [defendants' Medicare Advantage] plans beginning January 1, 2020. Id. at ¶¶ 9-10.

         On September 30, 2019 and again on October 1, 2019, Hodgkinson called defendants' newly appointed President and “reiterated that PeaceHealth would not be an in-network provider under the 2020 MA Plans. I expressed concern that Health Net and Trillium appeared to be representing to brokers that PeaceHealth would be in-network under the 2020 MA Plans.” Id. at ¶¶ 12-13. Also on October 1, 2019, PeaceHealth sent letters to defendants. The letter to Health Net stated:

This letter is to remind you that, as of January 1, 2020, PeaceHealth will not be contracted with Health Net Health Plan of Oregon, Inc's (Health Net) Medicare Advantage (MA) plans. As of that date, our PeaceHealth Medical Group provider panels will be closed to patients enrolled in non-contracted MA plans.
Unfortunately, it has come to our attention that your website still lists PeaceHealth as in-network, and that your company has informed brokers in Lane and Clark Counties that PeaceHealth is in-network, notwithstanding that we terminated our MA contracts with you in April 2019. As you know, the Centers for Medicare and Medicaid Services Medicare Communications and Marketing Guidelines prohibit communications activities that are materially inaccurate, misleading, or otherwise make misrepresentations or communications that could confuse beneficiaries. We also note that MA plans are responsible for ensuring their agents/brokers abide by all applicable state and federal laws, regulations, and requirements.
According we request that you do not list PeaceHealth as being in-network with any Health Net MA plan and that you communicate PeaceHealth's non-contracted status clearly to your members, agents, and brokers. Further, we request that you clarify any false, inaccurate, or potentially misleading statements or materials provided to your members or brokers to clearly indicate that PeaceHealth is not in-network beginning January 1, 2020. With open enrollment beginning October 15, 2019, time is of the essence. Please confirm in writing by ...

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