Methodist Health Servs. Corp. v. OSF Healthcare Sys. – March 2015 (Summary)

ANTITRUST

Methodist Health Servs. Corp. v. OSF Healthcare Sys., Case No. 1:13-cv-01054-SLD-JEH (C.D. Ill. Mar. 25, 2015)

The U.S. District Court for the Central District of Illinois ruled that the plaintiff Methodist health services corporation provided services through various operating provisions, including acute care hospitals. Meanwhile, Saint Francis Medical Center, the largest hospital in the region, was the fourth largest medical center in the State of Illinois. According to Methodist, Saint Francis received approximately 53 percent of the market share for inpatient services, and over 50 percent of the market share for outpatient services. In order to retain this percentage, Methodist alleged that Saint Francis threatened insurers that they will withdraw from the insurance provider’s network if the insurer engaged with a competing health care provider, such as Methodist. These exclusionary agreements were alleged to cut off Methodist from 60 percent of the health insurance market in the region. Methodist filed complaints against Saint Francis, stating that Saint Francis engaged in exclusive dealing, monopolization, attempted monopolization, tortious interference with prospective economic advantage, and unfair and deceptive acts and practices. Saint Francis brought a motion for judgment on the pleadings, arguing that Methodist failed to adequately plead plausible relevant product markets or substantial foreclosure in those markets.

The court found that Methodist’s claims were sufficient to survive the motion for judgment on the pleadings. The court found that Methodist properly defined the relative product markets, dismissing the argument that sales to commercial health insurers for inpatient and outpatient surgical services are not interchangeable with the sales of services to government payers. The court also disagreed with Saint Francis’ argument that Methodist had failed to show a substantive foreclosure of competition in the relevant market. The court determined that, with the benefit of discovery, Methodist will likely be able to establish that it was foreclosed from some portion of the health insurance market. The court did, however, grant Saint Francis’ motion to leave to file a reply, and also granted Methodist’s leave to file a surreply.