We continue to take notice of recent antitrust litigation
activity in the healthcare industry involving specialty and
physician-owned hospitals. In one such case, four
Dayton-area hospital systems and their shared managing agent,
Premier Health Partners, moved to dismiss a specialty
hospital's complaint that alleged a conspiracy to orchestrate a
per se illegal group boycott. Seeing no need for oral argument, an
Ohio federal judge refused to dismiss the complaint.
Medical Center at Elizabeth Place (MCEP), a 26-bed acute-care
hospital located in Dayton, Ohio, alleged violations of Section 1
of the Sherman Act, including claims that defendants conspired to
prohibit managed care providers, representing more than 70 percent
of Dayton area insureds, from contracting with MCEP and to provide
financial incentives for physicians who refused to work with MCEP
and financial consequences for those physicians that did.
Defendants moved to dismiss the complaint on three grounds: (1)
plaintiff's group boycott claim does not qualify for per se
treatment, (2) defendants constituted a single-entity incapable of
conspiring, and (3) plaintiff failed to allege antitrust
injury.1
The court rejected each of the defendants' arguments. First,
it held that the per se standard — the method of analysis
governing horizontal agreements that are plainly anticompetitive
and likely to have no redeeming value — applied to the
plaintiff's claims because organizing a group boycott and
taking actions to further the boycott did not promote any
legitimate objective or any precompetitive benefits. Second, the
court held that the hospital systems were not sufficiently
integrated through their Joint Operating Agreement to constitute a
single entity that is incapable of joint conduct in violation of
Section 1. Third, the court found that MCEP alleged sufficient
facts to establish an antitrust injury, including that Dayton-area
consumers were forced to pay higher prices and that denying MCEP
access to managed care plans injured both MCEP and competition in
general.
The court's order allows MCEP to continue to pursue treble
damages for their alleged injuries. The case merits continued
attention from hospital systems, especially those systems operating
in conjunction with other systems under a Joint Operating
Agreement.
Footnotes
1Med. Ctr. at Elizabeth Place, LLC, v.
Premier Health Partners, No. 3:12-cv-00026-TSB, at
2 (S.D. Oh. Aug. 30, 2012).
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