Antitrust Law Daily Wrap Up, ANTITRUST—D.N.J.: Physician Group fails to allege unlawful agreement against hospital system, (Sep 30, 2015)

By Greg Hammond, J.D.

A physician group was denied its motion seeking leave to file an amended complaint against a hospital system by adding factual allegations to support their Sherman Act conspiracy in restraint of trade claim. The federal district court in Trenton, New Jersey, determined that the new factual allegations would be futile because they fail to allege facts plausibly suggesting a unity of purpose or a common design and understanding, or a meeting of minds in an unlawful arrangement (Patel v. Meridian Health System, Inc., September 28, 2015, Bongiovanni, T.).

Mid-Atlantic Medical Associates, LLC and an individual doctor moved for leave to amend their complaint against Meridian Health System, Inc. and other doctors, seeking to remove their previously dismissed Racketeer Influenced and Corrupt Organizations Act (RICO) and Americans with Disabilities Act claims and to add factual allegations to support their Sherman Act claim. The court previously dismissed the Sherman Act conspiracy in restraint of trade claim, finding that the plaintiffs failed to sufficiently allege an agreement.

In their proposed amended complaint, the plaintiffs set forth new allegations concerning the relevant market, an exclusive contract Meridian entered with Hospital Medicine Associates of Monmouth County, L.L.C. (HMA), which is described as an independent hospitalist group, and statements made during a medical executive committee meeting and Ad Hoc committee meeting. Meridian opposed the motion, claiming that the proposed amended Sherman Act claim is futile.

The court agreed that the proposed amended conspiracy claim was futile, because the plaintiffs failed to sufficiently allege an agreement. Although the plaintiffs could demonstrate that an exclusive contract between Meridian and HMA existed, there was no evidence to plausibly unite HMA with Meridian’s purported actions to exclude plaintiffs from the relevant market. Rather, the allegations merely demonstrated that the defendants took actions against the plaintiffs without any reference to HMA, including claims that: (1) defendants acted unreasonably by summarily suspending the hospital privileges of plaintiff; (2) defendants arranged a joint boycott of plaintiff’s services; and (3) defendants’ agreement to take draconian punitive action against plaintiff. The court concluded that the mere fact Meridian entered into an exclusive contract with HMA does not plausibly suggest a unity of purpose or a common design and understanding, or a meeting of minds in an unlawful agreement. The motion to file an amended complaint was therefore denied with respect to the Sherman Act claim, but granted in all other respects.

The case number is 12-3102 (FLW).

Attorneys: Andrew Layton Schlafly (Law Office of Andrew L. Schlafly) for Robert B. Patel and Mid-Atlantic Medical Associates, LLC. Bruce A. Levy (Gibbons PC) for Meridian Health System, Inc.

Companies: Mid-Atlantic Medical Associates, LLC; Meridian Health System, Inc.

Cases: Antitrust RICO NewJerseyNews