Methodist Health Servs. Corp. v. OSF Healthcare Sys. — Sept. 2016 (Summary)

ANTITRUST

Methodist Health Servs. Corp. v. OSF Healthcare Sys.
No. 1:13-cv-01054-SLD-JEH (C.D. Ill. Sept. 30, 2016)

The United States District Court for the Central District of Illinois granted a hospital’s motion for summary judgment against federal and state law claims, brought by another, smaller hospital, relating to alleged illicit monopolization and antitrust violations.

Methodist Health Services Corporation (“Methodist”) sued St. Francis Medical Center (“St. Francis”) after St. Francis entered into exclusive contracts with the largest commercial insurers in the area.  Methodist argued that these exclusive arrangements unreasonably restrained trade and created an unlawful monopoly by diverting higher-reimbursing, commercially-insured patients to St. Francis facilities instead of Methodist facilities.  Methodist argued that St. Francis’ provision of certain specialized and essential services enabled it to use its market influence to “coerce commercial payers into excluding Methodist from their provider networks,” which inevitably created a “substantial foreclosure of competition.”  However, the district court held that a market foreclosure of slightly more than 50 percent constituted insufficient evidence upon which to predicate a claim of substantial foreclosure.

In its analysis, the court emphasized that although Methodist could not compete for some individuals insured by the largest insurer in the market, it was theoretically able to compete at other levels within the market, including employee benefit plans established by area employers.  Additional factors, such as the short duration of the exclusive contracts (one to two years) and Methodist’s alternative means by which it could reach the market of commercial patients, indicated that there was not foreclosure from the market of inpatient services rising to the level of a Sherman Act antitrust violation.  Accordingly, the court held that the exclusive contracts that St. Francis maintained did not “substantially lessen competition in the…market” in the coverage for either inpatient or outpatient services.