Directness Rules the Day: Sixth Circuit Extends Illinois Brick to Indirect Sellers and Recasts Antitrust Standing as Antitrust Injury Plus Proximate Cause

Case: Academy of Allergy & Asthma in Primary Care v. Amerigroup Tennessee, Inc.

Court: U.S. Court of Appeals for the Sixth Circuit

Date: October 10, 2025

Panel: Chief Judge Sutton; Judges Kethledge and Murphy (opinion by Murphy; concurrence by Kethledge)

Introduction

This published decision addresses when an upstream supplier may recover antitrust damages that flow from alleged buyer-side collusion and boycotting in a healthcare market. United Biologics, LLC, doing business as United Allergy Services (“United Allergy”), partnered with primary-care physicians to expand allergy testing and immunotherapy access in Tennessee, supplying technicians, equipment, and materials. United Allergy alleged that Amerigroup and other managed care organizations (as buyers of allergy services) conspired with a dominant allergy practice (Allergy, Asthma and Sinus Center and affiliates) to audit, deny, and recoup reimbursement claims, lower permitted dose reimbursements, and otherwise pressure primary-care competitors out of the market—ultimately causing the physicians not to pay United Allergy’s fees and to terminate their agreements.

United Allergy brought Sherman Act § 1 and § 2 claims and Tennessee-law tort claims (tortious interference with contract, tortious interference with business relations, and civil conspiracy). The district court dismissed the federal antitrust claims on “standing” grounds and later granted summary judgment to defendants on the state tort claims. The Sixth Circuit affirmed, but in doing so clarified the antitrust who-may-sue inquiry, and—crucially—adopted a “reverse Illinois Brick” rule that bars suits by indirect sellers (not just indirect purchasers) who are two or more steps removed in the distribution chain.

Summary of the Opinion

  • Antitrust framework clarified: The court explains that “antitrust standing” is a misnomer. Following Lexmark, courts should analyze (1) antitrust injury (zone of interests) and (2) proximate causation; the ad hoc balancing of multi-factor tests is disfavored.
  • Reverse Illinois Brick adopted: Relying on Apple v. Pepper and Illinois Brick/Hanover Shoe, the court holds that the directness rule barring indirect purchasers also applies “in reverse” to indirect sellers harmed by a buyers’ cartel or monopsony conduct. A party “two or more steps” away in the chain cannot recover § 4 treble damages.
  • Application to United Allergy: United Allergy sold inputs and personnel to physicians. The alleged conspiracy harmed the physicians directly (through reimbursement denials and price reductions) and harmed United Allergy only derivatively when physicians did not pay. United Allergy was thus an indirect seller, two steps removed from the insurers, and could not show proximate causation under § 4—regardless of whether it alleged price fixing, a boycott, or labeled damages as “lost profits.”
  • Exceptions rejected: The court distinguishes Apple’s two-sided platform/direct contracting scenario, McCready’s insurer-as-intermediary holding, and other competitor-entry cases like Crimpers and Potters. None permit recovery here because United Allergy is upstream of, and derivative of, the physicians’ harms.
  • State tort claims: The tortious-interference claims fail because (i) as to Amerigroup, “malice” was absent given legal justification and contractual/regulatory duties to TennCare; and (ii) as to the Center, proximate causation was lacking—no substantial-factor proof connected the Center’s lobbying to specific contract breaches or terminations. The civil conspiracy claim fails for want of a predicate tort.
  • Concurrence: Judge Kethledge concurred in full but lamented that the result appears to harm consumer welfare by insulating a “disguised naked boycott” that expelled an innovative supplier, thereby returning to a less competitive status quo.

Analysis

Precedents Cited and Their Influence

1) Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), and Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968)

  • Hanover Shoe disallows a “passing-on” defense; a direct purchaser recovers the full overcharge even if it passed costs downstream.
  • Illinois Brick is the mirror image: indirect purchasers cannot offensively assert pass-on to recover; § 4 recovery belongs to the direct purchaser to avoid duplicative liability and complex apportionment.
  • Extension here: The court applies the same directness principle to the reverse situation—indirect sellers harmed by a buyers’ cartel/monopsony. Only direct sellers (here, the physicians) can sue for the undercharge and related output effects.

2) Apple Inc. v. Pepper, 587 U.S. 273 (2019)

  • Apple clarified that Illinois Brick’s bright-line rule governs chain-of-distribution pass-through scenarios; but where a defendant directly transacts on both sides (e.g., a two-sided platform), both sides may sue because each is a direct contracting party.
  • Applied here: United Allergy did not directly transact with the insurers, unlike Apple’s consumers and app developers. Apple’s directness logic undergirds the “two steps removed” test the court uses.

3) Associated General Contractors v. California State Council of Carpenters, 459 U.S. 519 (1983) (“AGC”)

  • AGC introduced factors often used under “antitrust standing,” including directness and speculative damages.
  • Reframing: The Sixth Circuit, invoking Lexmark, says courts should avoid amorphous balancing and focus instead on two elements: antitrust injury and proximate cause (directness).

4) Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014)

  • Lexmark reframed “statutory standing” inquiries as zone-of-interests plus proximate cause questions of statutory interpretation, not jurisdictional standing.
  • Here: The Sixth Circuit imports Lexmark’s approach to the Sherman Act’s § 4 private action framework and rejects open-ended “balancing,” emphasizing antitrust injury and proximate causation.

5) Kansas v. UtiliCorp United, Inc., 497 U.S. 199 (1990)

  • Affirmed the bright-line nature of Illinois Brick, even where pass-through was certain; courts should not vary the rule case-by-case.
  • Here: Supports rejecting United Allergy’s attempt to plead around directness by characterizing damages as “lost profits.”

6) Blue Shield of Virginia v. McCready, 457 U.S. 465 (1982)

  • Allowed an insured to sue her insurer for a conspiracy harming psychologists because she suffered direct injury in a direct relationship, not via downstream passing-on.
  • Distinguished: McCready involved an intermediary insurer and direct injury on one side of that intermediary; United Allergy sits upstream of the directly injured sellers (physicians), making it derivative.

7) Holmes v. SIPC, 503 U.S. 258 (1992); Bank of America Corp. v. City of Miami, 581 U.S. 189 (2017)

  • Articulate proximate cause’s “direct relation” requirement and foreseeability-insufficient principle.
  • Here: The court uses this directness lens to hold that United Allergy’s injuries are one step removed from the physicians’ direct injury.

8) Reverse-Illinois-Brick authorities: In re Beef Industry Antitrust Litig., 600 F.2d 1148 (5th Cir. 1979); Zinser v. Continental Grain Co., 660 F.2d 754 (10th Cir. 1981); Howard Hess Dental Labs., Inc. v. Dentsply Int’l, Inc., 424 F.3d 363 (3d Cir. 2005)

  • These decisions and analyses support limiting recovery to direct sellers when buyer-side collusion depresses prices, and reject recharacterizations of damages to circumvent Illinois Brick.
  • Here: The Sixth Circuit aligns with this approach by expressly adopting the reverse-Illinois-Brick bar.

9) Tennessee tort precedents: Riggs v. Royal Beauty Supply, Inc., 879 S.W.2d 848 (Tenn. Ct. App. 1994); HCTec Partners, LLC v. Crawford, 676 S.W.3d 619 (Tenn. Ct. App. 2022); Trau‑Med of America, Inc. v. Allstate Ins., 71 S.W.3d 691 (Tenn. 2002); Cotten v. Wilson, 576 S.W.3d 626 (Tenn. 2019)

  • Inform “malice” as lack of legal justification, and proximate cause’s substantial-factor test.
  • Here: Amerigroup had legal justification under contracts and TennCare obligations; the Center’s alleged conduct was not a substantial factor in any identified breach/termination.

Legal Reasoning

  1. Antitrust “standing” distilled: The court repudiates open-ended balancing. Two inquiries govern a § 4 damages claim:
    • Antitrust injury: a type of harm the antitrust laws aim to prevent (consumer welfare/competition-reducing harm).
    • Proximate causation: a direct relation between the violation and the plaintiff’s injury (direct purchasers/sellers rule).
    Although the panel finds antitrust injury a close question for an upstream supplier integrated in competition with a dominant downstream provider, it does not decide it; the case turns on proximate cause.
  2. Reverse Illinois Brick controls causation: United Allergy is “two steps removed” in the distribution chain—selling to physicians who sold services to insurers. The alleged conspiracy directly harmed physicians (denials/undercharge) and only indirectly harmed United Allergy (unpaid fees, contract terminations). Under Illinois Brick/Hanover Shoe as read through Apple, that indirectness defeats proximate cause.
  3. Labeling and damage theory do not alter directness:
    • Calling the conduct a “boycott” rather than “price fixing” does not evade Illinois Brick; the rule is a proximate-cause rule tied to § 4’s “by reason of” language.
    • Reframing damages as “lost profits” (from reduced output) rather than “overcharge/undercharge” does not salvage the claim. The bright-line rule is plaintiff-specific, not remedy-specific; courts avoid complex price/output apportionment and duplicative liability irrespective of labels.
    • The “intended target” theory cannot circumvent directness; conspirators often foresee and intend downstream effects, but indirect victims still cannot sue under § 4.
  4. Exceptions inapplicable:
    • Apple/two-sided platforms: No direct privity between United Allergy and insurers.
    • McCready: United Allergy is not the direct counterparty on one side of the insurer; it is upstream of the directly harmed physicians.
    • Potters and Crimpers: Those cases involved same-level competitors or direct injury to a disintermediating competitor; United Allergy is neither.
  5. State-law torts:
    • Tortious interference with contract (Amerigroup): “Malice” requires lack of legal justification. Amerigroup acted under contractual and regulatory obligations to TennCare (utilization control, fraud prevention), and reasonably interpreted its provider agreements (subcontracting restrictions) when auditing and denying claims—thus no malice as a matter of law.
    • Tortious interference with contract (the Center): Causation fails; the record did not allow a finding that the Center’s lobbying was a substantial factor in any specific late payment or breach, especially in light of TennCare’s independent initiatives and Amerigroup’s subcontract rationale.
    • Tortious interference with business relations: Even assuming an “identifiable class” (prior contracting physicians), Amerigroup lacked improper motive/means (same “legal justification” rationale); the Center again failed on causation.
    • Civil conspiracy: No predicate tort remained; conspiracy liability therefore fails.

Impact

On antitrust private enforcement in the Sixth Circuit

  • New clarity and constraint: The court cements a directness requirement for § 4 damages that bars suits by indirect sellers injured by monopsony/buyer-cartel conduct. Plaintiffs two or more steps removed must expect dismissal on proximate-cause grounds, even if their losses are foreseeable or intended.
  • Practical plaintiff channeling: The “preferred” plaintiffs are the direct sellers (here, the physicians), who may seek undercharge and lost-sales damages. Upstream suppliers must either:
    • structure transactions to be in direct privity with the alleged violator (rare in insurance reimbursement settings), or
    • pursue relief via contract or tort against their direct counterparties, not antitrust damages against the alleged conspirators.
  • No “lost profits” workaround: Recharacterizing damages cannot rescue indirect sellers; litigants should not expect to evade Illinois Brick by pleading output-reduction harms.
  • Limited role for exceptions: Apple’s two-sided-platform carveout is narrow. McCready’s rationale applies when the defendant is an intermediary and the plaintiff is a direct counterparty on that intermediary’s side—conditions not met by upstream suppliers to direct sellers.
  • Legislative/state law angle: Some states have “Illinois Brick repealers” for indirect purchasers. This opinion addresses federal § 4 damages in the Sixth Circuit and does not change state-law regimes; however, most repealers focus on purchasers, not indirect sellers, and many do not extend to monopsony contexts. Plaintiffs should evaluate state antitrust statutes carefully.
  • Open issues: The panel did not decide antitrust injury for vertically related suppliers who function competitively with an integrated downstream monopolist. A future case with direct privity or different integration facts might test the limits of antitrust injury for upstream competitors.

On healthcare and managed care disputes

  • Managed-care defenses strengthened: When an MCO acts under documented utilization management, anti-fraud duties, and plausible contract interpretations, tortious-interference claims premised on reimbursement audits/denials will face “legal justification” defenses. Well-developed records linking actions to contractual/regulatory obligations are critical.
  • Supplier strategy recalibration: Vendors providing turnkey clinical services through physicians should anticipate that their antitrust damages claims will be funneled to the physician level. To preserve remedies, suppliers may need robust payment/security terms, clearer allocation of reimbursement risk, or dispute-resolution mechanisms in their physician agreements.
  • Evidence demands for tort claims: For interference claims, plaintiffs must show a substantial-factor causal link to specific breaches or terminations, not general lobbying or market-level pressure. Aggregated proof is disfavored without tying causation to identified counterparties and events.

Judicial method

  • Lexmark-ization of antitrust who-may-sue: The Sixth Circuit joins a trend of reframing “antitrust standing” as statutory interpretation—zone of interests (antitrust injury) plus proximate cause—reducing reliance on open-ended, multi-factor balancing.

Complex Concepts Simplified

  • Monopoly vs. monopsony: A monopoly is a dominant seller raising prices; a monopsony is a dominant buyer lowering prices. Both reduce output. A buyers’ cartel mimics monopsony by agreeing to pay less and purchase less than in competitive markets.
  • Overcharge/undercharge and pass-on: If a sellers’ cartel charges $120 for a product worth $100, the direct purchaser’s overcharge is $20. If a buyers’ cartel pays $80 for a service worth $100, the direct seller’s undercharge is $20. “Pass-on” means the direct victim shifts some loss to someone else downstream or upstream; federal antitrust damages law generally ignores pass-on for who-may-sue.
  • Illinois Brick bright-line rule: Only the direct purchaser (or direct seller, in reverse) can sue for federal antitrust damages tied to a distribution chain. Indirect victims—two steps away—cannot collect § 4 damages, even if the harm was foreseeable or intended.
  • Two-sided platforms (Apple): Where a platform directly contracts with both sides (e.g., cardholders and merchants; iPhone users and app developers), both are direct victims and can sue; they are not “indirect” merely because there are two sides.
  • Antitrust injury vs. proximate cause: Antitrust injury asks whether the harm is the kind the antitrust laws protect against (consumer-welfare, competition-reducing harm). Proximate cause asks whether the plaintiff’s harm is directly linked to the violation, without speculative chains through others.
  • Tennessee tort “malice” in interference claims: Not spite; rather, a willful violation of a known right, typically requiring lack of legal justification. Acting under contracts or legal duties (e.g., to prevent fraud) can defeat malice.
  • Proximate cause in tort: Requires more than “but for” causation. The defendant’s conduct must be a substantial factor in the harm, foreseeable, and not contrary to policy limits on liability.

Conclusion

The Sixth Circuit’s decision establishes two significant guideposts for antitrust litigation in the circuit. First, it reframes the “antitrust standing” analysis to focus on two determinate requirements: antitrust injury and proximate causation, consistent with Lexmark and Holmes. Second, it expressly extends Illinois Brick’s direct-purchaser rule to the reverse setting: indirect sellers harmed by buyer-side collusion cannot pursue § 4 damages when they are “two or more steps” removed in the distribution chain.

On the facts alleged, United Allergy’s injuries were derivative of the direct harm suffered by the physicians who billed the insurers; United Allergy could not satisfy proximate causation even if antitrust injury might be arguable. Efforts to reframe the theory as a boycott, or to relabel damages as lost profits, could not overcome the bright-line directness rule. The state tort claims failed for independent reasons—Amerigroup’s legal justification under TennCare and provider contracts negated malice, and the Center’s alleged lobbying was not shown to be a substantial factor in specific contractual breaches or terminations.

The concurrence underscores the disquieting policy outcome: a plausible “disguised naked boycott” allegedly expelled an innovative supplier and returned the market to a less competitive equilibrium. Yet the court’s adherence to doctrinal directness and administrability reflects the Supreme Court’s insistence on bright lines in private antitrust damages. Going forward, direct sellers will be the principal private enforcers in such schemes, and upstream suppliers must protect themselves by contract or seek relief through direct-privity structures or alternative legal theories. The opinion thus contributes a clear and consequential precedent to the antitrust remedial landscape while signaling the limits of federal treble-damages recovery for vertically remote victims.