Hospital Wins First Round Against Largest Rival In Antitrust Suit Alleging Illegal Exclusive Dealing Agreements With Insurers

The waves of change affecting health care providers include reimbursement and funding developments, the impact of the Affordable Care Act, technological and medical advances, provider network design transformations imposed by payors — and antitrust. The Federal Trade Commission's ("FTC") and Department of Justice's increased focus on enforcement in health care markets is well documented. What is sometimes forgotten is that the antitrust laws also allow private causes of action brought by competitors, payors, or customers. It will likely be a historical footnote that the FTC's seminal St. Luke's case began as private litigation brought by a rival hospital before the FTC or the Idaho Attorney General ever showed up.

Another example of this dynamic is playing out in Peoria, Illinois. There, a small regional hospital's antitrust suit alleging illegal exclusive dealing and attempted monopolization against its largest competitor will move forward following a district court's denial of the defendant hospital's motion for judgment on the pleadings. Methodist Health Svcs. Corp. v. OFS Healthcare System, d/b/a Saint Francis Med. Ctr., No. 1:13-cv-01054 (C.D. Ill. Mar. 25, 2015). The complaint alleges that defendant is a "must have" for health insurers, and that defendant leverages that status to prevent health insurers from contracting with the plaintiff and other competing hospitals.

In 2013, Methodist Health Services Corporation ("Methodist") filed a $300 million antitrust suit accusing its largest rival, Saint Francis Medical Center ("Saint Francis"), of using exclusionary contracting tactics to effectively prohibit health insurers from doing business with competing hospitals. Saint Francis, a 616-bed hospital that is part of the OSF Healthcare System, is the largest hospital in the Peoria, Illinois region, and the only provider of certain essential medical services in Peoria, Tazewell, and Woodford Counties (the alleged relevant geographic market). Methodist, a smaller health care delivery system, includes a 329-bed acute care hospital in Peoria. In addition to Saint Francis and Methodist, there are four other hospitals in the relevant geographic area.

Methodist's suit claims Saint Francis engaged in exclusive dealing in violation of Section 1 of the Sherman Act, monopolization and attempted monopolization in violation of Section 2 of the Sherman Act, and similar state law violations. Methodist asserts that Saint Francis, as the largest hospital...