Judge Allows Clinic's Antitrust Suit Against KC-Area Hospitals
A federal antitrust lawsuit accusing some of the largest health care operations in Kansas City of trying to drive a physician-owned clinic out of business will be allowed to continue, a federal judge said this week.
U.S. District Judge Monti Belot denied a request from defendants to quash the suit, saying Heartland Spine and Specialty Hospital of Overland Park, whose officials filed the suit in April 2005, had provided enough evidence to let the lawsuit go forward.
A trial is scheduled for April in Wichita.
The case, accusing the group of hospital and managed care networks of working together to prevent Heartland from getting managed-care contracts, has attracted interest as it speaks to the ongoing national debate of how physician-owned specialty clinics are affecting the nation's health care market.
"We're disappointed in the court's ruling, and we do believe our practices are in the best interests of our patients," said Rob Dyer, a spokesman for HCA Midwest, one of the defendants. "We intend to vigorously defend ourselves against the lawsuit."
St. Luke's Health System, another defendant, has asked Belot to reconsider his decision. The health system acknowledged that it discouraged managed-care companies from doing business with Heartland but said such actions aren't prohibited under antitrust law.
It said that even if it had threatened shutting out managed-care providers that did business with Heartland - which St. Luke's described as "irrational on its face" - "that would not create a horizontal conspiracy with other hospitals."
Belot found there wasn't sufficient evidence that defendant Carondelet Health System had conspired with the other hospitals to block contracts to Heartland.
Besides HCA, St. Luke's and Carondelet, Heartland sued Shawnee Mission Medical Center, North Kansas City Hospital and six managed-care providers - Blue Cross and Blue Shield of Kansas City, Aetna Inc., Conventry Health Care of Kansas, Cigna Health Care, Humana Health Plan and United Healthcare. North Kansas City Hospital, Blue Cross, Cigna, Humana and United agreed to confidential settlements earlier this year.
The lawsuit claims the hospitals negotiated agreements meant to exclude physician-owned specialty hospitals such as Heartland, while making sure their own hospital-owned facilities, though competitors, still got contracts.
Heartland alleged the managed-care companies agreed to boycott Heartland in exchange for paying lower reimbursement rates on managed-care contracts.
The hospitals said there was no conspiracy and that they separately realized it was in their interest to limit the number of competitors able to contract with a managed-care company.
But Belot was unconvinced, saying in his order such a rationale "does not explain why the Hospital Defendants were willing to work with their competitors to allow those competitors' majority-owned facilities into the MCO (managed-care organization) networks, while keeping physician-owned facilities out of network."
"If it is in a hospital's best interest to keep new facilities our of a network," he wrote, "then it would appear to be in that hospital's best interest to keep out both majority-owned and physician-owned facilities."
The hospitals haven't denied that they viewed physician-owned clinics as a threat that would "cherry pick" the most lucrative clients while leaving the hospitals to cover the more costly uninsured and emergency care.
Congress dealt with the issue by placing a moratorium on Medicare payments to new physician-owned specialty hospitals from 2003 to last year.
Heartland, opened in September 2003 and owned by about two dozen physicians, focuses on spine and upper-extremity treatment. It said it has struggled because the alleged agreement between the hospitals and managed-care companies has blocked off business.
Despite his refusal to throw out the case, Belot said he didn't think Heartland's evidence was conclusive.
Norman Siegel and Patrick Stueve, Heartland's attorneys, said they were pleased with his decision.