A district judge on Friday partially granted and partially denied Epic's motion to dismiss antitrust claims brought against it by startup Particle Health.
The ruling means Particle Health's legal fight against the electronic health record giant lives on.
Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York allowed Particle's claims under Section 2 of the Sherman Act to proceed, indicating the court found that Particle sufficiently alleged an antitrust injury resulting from Epic's conduct. Along with Particle's core monopolization claims under the Sherman Act, the judge also allowed the company's claim for tortious interference with contracts as Particle alleges that Epic interfered with its customer contracts.
But the judge dismissed five out of the nine claims. Buchwald tossed Particle's claim that Epic used its influence to obtain an unfavorable ruling from Carequality, an organization that operates a nationwide health data exchange service. Buchwald found that the corrective action plan imposed on Particle was "entirely reasonable." The court also dismissed Particle's allegations of defamation against Epic.
Particle Health accuses Epic of monopolistic practices aimed at eliminating competition in the market for payer platforms—technology that facilitates access to patient data for health insurers.
In its motion to dismiss, Epic was unable to convince Buchwald to fully dismiss the case. But Epic asserts the judge's ruling is a victory for the EHR company.
"The Court dismissed the majority of Particle’s claims. The ruling included the observation that Carequality’s 'imposition of the corrective action plan [on Particle] was entirely reasonable.' Epic has worked and will continue to work to protect the privacy of patients' data. We look forward to the opportunity to present evidence to prevail on the remaining claims," the company said in a statement.
Particle Health also claimed victory. Jason Prestinario, the company's CEO, said he was "very pleased at the outcome" in the court's ruling in its antitrust case against Epic.
"While a few of the claims didn't survive, Epic's motion to dismiss was denied on all three of the core monopolization antitrust claims," he said. "This is the first time in Epic's history that an antitrust case has gotten to this point. It's the next step to a bigger victory for better patient care and more patient control of their medical info."
Health tech company Particle filed an antitrust lawsuit against Epic last September in the Southern District of New York alleging that the company is trying to muscle out competition. Particle is a data platform that aggregates health information for digital health companies through APIs, providing access to more than 300 million patients’ medical records. With a 42% market share of the hospital sector, EHR giant Epic is a dominant force in the health IT industry.
Starting last year, Particle expanded its services to payers to assist so-called "pay-viders" with accessing patients records for “secondary” purposes more typically associated with health insurance, like population health analytics or processing claims, which is allowed under HIPAA and the rules of health information networks, Particle said in its lawsuit.
The 81-page lawsuit (PDF) alleges Epic engaged in monopolistic, anticompetitive practices, using its "power over EHRs to expand its dominance into the fledgling market for payer platforms," according to the lawsuit.
In late December, Epic Systems asked a district court to throw out Particle's antitrust lawsuit, arguing the startup failed to present the EHR company's anticompetitive conduct in its suit and also failed to define a relevant market.
Particle, in turn, responded in early January with a 46-page argument laying out its claims that Epic is stifling competition in the payer interoperability market.
"This case is about Epic’s unlawful and widespread campaign to eliminate competition in the payer-platform market. As alleged in the complaint, Epic has targeted Particle—an innovative start-up improving accessibility and affordability in healthcare—because it has threatened Epic’s chokehold over payer-platforms, which it was previously able to impose and maintain due its dominance over electronic health records," Particle Health wrote in its motion back in January.
Particle also said in its motion that Epic has made it "commercially impossible for any payer platform (other than its own) to access EHRs stored in its EHR software, effectively blocking potential competitors from entering the market—until recently.”
In its motion to dismiss filed in December, Epic said Particle failed to state an antitrust claim because it failed to plead a relevant antitrust product market and failed to plausibly allege that Epic engaged in anticompetitive conduct.
Health IT executives tracking the lawsuit say the entire case now hinges on whether Particle Health can prove to the court that payer platforms are a separate market.
"Market definition is the whole ballgame (for now)," Brendan Keeler, an interoperability and data liquidity practice lead at HTD Health, wrote on LinkedIn. "The judge let this claim survive only because Particle’s alleged 'payer platform' market is plausible at the pleading stage. If Particle can’t prove payer platforms are distinct from broader EHR products, the case could collapse (as we've discussed all along)."
In her ruling on the motion to dismiss, Keeler noted, Buchwald limited discovery to three questions: Who counts as a payer versus a payvider? What exactly do Epic’s and Particle’s products do (retrieval, storage, analytics)? What alternatives are available to payers?
"In other words, no fishing expedition into Epic’s broader conduct until market definition is nailed down (which is the real unlock for Particle to get to). This is huge and flips it from 'big Particle win' to 'Particle survives,'" Keeler wrote.
In her ruling, Buchwald also voiced skepticism about Particle Health's claim on market definition. "This disagreement regarding one of the foundational facts in this case—whether the parties’ products perform the same basic functions—is frustrating," the judge wrote in the ruling.
According to Bill Russell, a health IT executive and founder of This Week Health, healthcare antitrust cases typically favor defendants when market definition is disputed, he wrote in a LinkedIn post.
How the feud between Epic, Particle Health unfolded
Particle's lawsuit, in part, stems from developments in the spring of 2024 and growing tensions between the two companies over access and use of patients' clinical data. The dispute centered on who is accessing patients' health data, for what purposes and the proper gatekeeping process to safeguard medical data.
Both Epic and Particle are connected to Carequality, which operates a nationwide health data exchange service used by more than 600,000 care providers, 50,000 clinics and 4,200 hospitals to access patients’ medical records. Carequality says it supports the exchange of 1 billion clinical documents each month.
Epic filed a formal dispute with Carequality in March 2024, claiming that Particle was sharing patient data with some companies that were then using the data for reasons unrelated to treatment. "This poses potential security and privacy risks, including the potential for HIPAA Privacy Rule violations in the event disclosures of protected health information were made under the Treatment Permitted Purpose when the requesting entities did not have treatment relationships with the patients to whom the records related,” Epic said in the notice to its customers, which was viewed by Fierce Healthcare.
Tensions between the two companies got heated a month later in April when Epic cut off data requests from some Particle customers, citing concerns about potentially inappropriate disclosures of protected health information and privacy risks to patients’ medical data, according to a notice sent to Epic customers April 10.
In the ensuing months, there was a closed-door resolution process involving Carequality’s steering committee that aimed to settle the internal conflict over healthcare data exchange practices.
Carequality confidentially issued a resolution in late August, according to Epic's court filing. The organization then released a redacted version of its dispute resolution to the public in October.