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.