Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: Action against hospital bed suppliers tossed due to conclusory allegations., (Sep 15, 2025)

By Sara Cracau, J.D.

Amended complaint failed to show that suppliers of hospital beds substantially foreclosed the relevant markets.

A federal district court in Pennsylvania granted the motion to dismiss of a hospital in an antitrust action against various hospital bed supply companies alleging anticompetitive practices because the allegations were conclusory. The court concluded that the first amended complaint failed to sufficiently allege that the suppliers have substantially foreclosed the relevant markets. In addition, the court found that the first amended complaint did not adequately allege an anticompetitive agreement. Granting the hospital leave to amend the complaint would be inequitable to the suppliers, and, therefore, leave to amend was denied (Reading Hospital v. Hill-Rom Holdings, Inc., No. 5:24-cv-02715-JMG (E.D. Pa. Sept. 12, 2025)).

Background. A hospital brought an antitrust claims action against various companies alleging that they violated antitrust laws and engaged in anticompetitive practices in the hospital bed industry. The complaint pertained to three distinct types of products and corresponding markets: (1) standard hospital beds; (2) intensive care unit (ICU); (3) birthing beds which the hospital purchased from the various companies which supplied these products. Each bed is “priced as a distinct product, with a separate price point from other types of hospital beds.” For each product, there were no reasonably interchangeable products and “no-cross-elasticity of demand” between them.

The complaint alleged anti-competitive, monopolistic practices by the hospital bed suppliers and alleged that the suppliers had “monopoly power” ion each of the bed’s markets. It further alleged that the suppliers’ monopoly power was protected by various barriers to entry, including: (1) the significant capital investment required to enter the market; (2) the suppliers’ history of allegedly monopolistic practices; (3) suppliers’ “longstanding relationships and exclusive dealing arrangements:” (5) suppliers’ aggressive pattern of patent enforcement; (5) the strict regulatory framework that governs medical equipment.

The complaint alleged that, because the hospital bed purchases were purchased through group purchasing organizations and pursuant to integrated delivery networks, that resulted in a “highly concentrated” distribution system and “centralized decision making” system. Furthermore, the suppliers’ monopoly power was protected by various barriers to entry into the market. This was bolstered even further by the use of a corporate enterprise agreement (CEA) to create exclusive arrangements with hospitals and block competition. The complaint alleged that these were made to look like multiple, independent, product-level agreements but, in reality, they were secret, long-term exclusive dealing arrangements that conditioned rebates on specific purchasing patterns. In short, the complaint alleged that these agreements contained exclusivity provisions that were virtually impossible to terminate and, as such, were anti-competitive.

Exclusive dealing arrangements. The legality of an exclusive dealing arrangement is determined by applying the “rule of reason,” depending on whether it will foreclose competition in such a substantial share of the relevant market that it will adversely affect competition. In applying the “rule of reason,” the fact finder weighs all of the circumstances of a case in determining whether a restrictive practice should be prohibited as imposing an unreasonable restraint on trade. The plaintiff must show “evidence of substantial foreclosure or anticompetitive effects.”

Substantial foreclosure. The court concluded that the first amended complaint failed to sufficiently allege that the suppliers substantially foreclosed the relevant markets. At most, the complaint pleaded foreclosure of no more than twenty percent of any market which is far less than the traditional threshold for liability in exclusive dealing cases. Substantial foreclosure can be shown when the alleged monopolist deprives customers of their ability to make a meaningful choice. That was not shown here, according to the court. To show substantial foreclosure, a plaintiff must define the relevant market and prove the extent of foreclosure. It is a legal conclusion to be reached rather than a factual allegation.

Anticompetitive agreement. The court found that the first amended complaint did not adequately allege an anticompetitive agreement. It failed to provide the factual basis from which the court could conclude that the required standards were met. The amended complaint did not explain how the exclusivity provisions operated, which products they covered, or how they secretly tie exclusivity rebates for the various products together.

Leave to amend. The court concluded that granting the hospital leave to amend the complaint would be inequitable to the suppliers. Because the suppliers would be prejudiced if the court granted the hospital leave to amend, and, because many of the allegations stemmed from the terms of the CEAs, that further supported the court’s conclusion that granting leave to amend would be inequitable.

The Case is No. 5:24-cv-02715-JMG.

Judge: Gallagher, J.

Attorneys: Farhad Mirzadeh (Hausfeld LLP) for Reading Hospital. Brandon C. Kressin (Kressin Powers LLC) for Hill-Rom Co., Inc.

Companies: Reading Hospital; Hill-Rom Co., Inc.

Cases: Antitrust PennsylvaniaNews