Deborah Heart and Lung Ctr. v. Virtua Health Inc. – March 2015 (Summary)

ANTITRUST

Deborah Heart and Lung Ctr. v. Virtua Health Inc., Civil No. 11-1290 (RMB/KMW) (D. N.J. Mar. 24, 2015)

The United States District Court for the District of New Jersey granted two motions for summary judgment that were filed by a hospital and cardiology group (the “Defendants”). The competitor, a charity specialty hospital, alleged that the Defendants had conspired to exclude it from the market.

Much of the alleged conspiracy revolved around the actions of a key cardiologist who had been employed by the charity hospital. This cardiologist had resigned from the charity hospital in 2006 and joined a competing hospital that intended to build a cardiac institute at a new location. According to the record, patient referrals from the cardiology group to the charity hospital began to decline precipitously in the following years, from 627 patients in 2006 to 60 patients in 2010. The charity hospital introduced evidence of correspondence between the cardiologist and the administrators of the competing hospital, in which they discussed using a “white knight” strategy to obtain the charity hospital’s cardiac surgery services (presumably by forcing it into a merger).

Although the court acknowledged that the charity hospital had been adversely affected by the Defendants’ actions, it ruled that there was a fatal defect in the alleged antitrust claim. Specifically, the charity hospital failed to show that the conspiracy had caused an anticompetitive effect on the market as a whole. At best, the charity hospital only established harm to itself and a relatively small population of patients, which the court ruled was insufficient to prevail in federal court on a Sherman Antitrust Act claim. The court granted the Defendants’ motions for summary judgment, but did state that the charity hospital potentially had a legal remedy in the state court.