By Greg Hammond, J.D.
A health care corporation and its subsidiaries were denied summary judgment over allegations that they attempted to establish a vertically integrated, self-reinforcing, illegally-maintained health care monopoly in Southern Brevard County, Florida. The federal district court in Orlando determined that various physicians and physician groups created genuine issues of material fact in whether the health care corporation monopolized, attempted to monopolize, and conspired to monopolize the markets for physician services, Medicare Advantage, and ancillary services (Omni Healthcare, Inc. v. Health First, Inc., August 13, 2016, Dalton, R.).
Omni Healthcare, Inc. and other physicians and physician practice groups filed suit against “fully integrated” health care corporation Health First, Inc. and three of its wholly owned subsidiaries: Holmes Regional Medical Center, Inc. (HRMC), Health First Health Plans, Inc. (HF Health Plans), and Health First Physicians, Inc. (HF Physicians). Omni alleged that the defendants have been engaging in an anticompetitive scheme to monopolize Southern Brevard County’s interrelated health care markets for years and that the scheme has largely been successful. The defendants moved for summary judgment.
Statute of limitations. The court first considered the defendants’ contention that the plaintiffs could not seek any damages predicated on the termination of certain provider agreements that were terminated outside of the statute of limitations period. This argument was rejected, however, under the continuing violation doctrine because the plaintiffs produced evidence demonstrating that HF Health Plans considered reinstating a physician, but continued to exclude that physician from the HF Health Plans network despite the physician’s requests for reinstatement during the limitations period. This could be construed as new injuries under the continuing violation doctrine, the court concluded.
Impermissible merger. The court denied the motion for summary judgment concerning the MIMA merger, finding that a genuine issue of material fact existed as to whether the acquisition substantially lessened competition or tended to create a monopoly in Southern Brevard County. The plaintiffs presented evidence demonstrating that HF Physicians were required to refer patients to Health First facilities or providers and an expert report concluding that Health First had foreclosed more than 25 percent of the physician services market by its exclusive referral practice. A document called “HFMG Medicare Advantage Transition Plan Summary” also was produced, which outlined a plan for eliminating all non-HFHP Medicare Advantage plans, as established during the MIMA acquisition.
Monopolization. Allegations that Health First and HRMC monopolized the acute care inpatient hospital services market in Southern Brevard County also survived summary judgment. The court concluded that the evidence of the defendants’ 86.8 percent market share in the inpatient hospital services market, coupled with the plaintiffs’ evidence demonstrating the existence of high barriers to entry into the relevant market, presented a jury question as to whether the defendant held monopoly power in the relevant market. A fact issue was also raised on whether the defendants willfully acquired or maintained that monopoly power, because there was witness testimony stating the specific ways in which the defendants engaged in exclusionary practices through its exclusive referral practice, as well as evidence that these exclusionary practices resulted in antitrust injury—the diversion of referrals from providers.
Attempted monopolization. With regard to the physician services market, the court agreed with the plaintiffs that a reasonable juror could infer that Health First and HF Physicians possessed the specific intent to monopolize based on the unfair or predatory nature of their tactics, particularly in coercing market participants to maximize referrals within the Health First system and minimize referrals outside of it. In addition, the combined effect of Health First’s 86 percent market share in the inpatient hospital services market, its 27 percent market share in the physician services market, and its ability to exclude competitors throughout, was sufficient to create a jury question as to Health First and HF Physicians’ dangerous probability of achieving market power.
The motion for summary judgment against the attempted monopolization of the ancillary services market claim was also denied. An expert report, which was corroborated by a physician’s declaration, concluded that Health First foreclosed 39 percent of radiologists in Southern Brevard County through its exclusive relationship with a physician group and that Health First’s exclusive dealing arrangements have harmed competition in the physician and ancillary services markets. In addition, the court found that a reasonable juror could conclude that Health First possessed the specific intent to achieve monopoly power in the ancillary services market and that Health First did in fact commit such anticompetitive conduct. Lastly, the interrelated nature of Health First’s alleged exclusionary treatment, location, and referral practices supported the plaintiffs’ contention that Health First has the ability to control productive capacity in the ancillary services market, demonstrating a dangerous probability of success.
In addition, the motion for summary judgment was denied with regard to the attempted monopolization claim of the Medicare Advantage market. The court found that there was sufficient evidence to raise a jury question as to the intent element of an attempted monopolization claim, because unilateral termination of a voluntary and presumably profitable course of dealing could be indicative of anticompetitive intent where it suggests a willingness to forsake short-term profits to achieve an anticompetitive end. Health First’s exclusion of HRMC—a “must have” hospital in Southern Brevard County —from all competing Medicare Advantage plans evidenced anticompetitive exclusive dealing on the part of Health First and HF Health Plans. Lastly, the court found that, although the plaintiffs conceded that Health First’s market share (which is 50 to 60 percent of the Medicare Advantage market) has declined, it was still within the range associated with a dangerous probability of achieving monopoly power.
Conspiracy claims. The court next concluded that the plaintiffs adequately alleged that the defendants participated in a common scheme with co-conspirators to restrain trade and exclude competition in the three markets by engaging in exclusive dealing arrangements, tying arrangements, and a group boycott/concerted refusal to deal. Emails and deposition testimony created a genuine dispute of material fact as to whether an illegal conspiracy existed between MIMA and Health First to refer patients only to Health First physicians and admit patients only to Health First hospitals. The motion for summary judgment was also rejected with regard to the conspiracy to monopolize claim.
The case is No. 6:13-cv-1509-Orl-DAB.
Attorneys: Damien Hunter Prosser (Whatley Kallas, LLC) for Omni Healthcare Inc. Anna T. Neill (Kenny Nachwalter, PA) and Dominic C. MacKenzie (Holland & Knight, LLP) for Health First, Inc.
Companies: Omni Healthcare Inc.; Health First, Inc.
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