Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Physicians allege hospital and health insurance provider conspired to limit competition for outpatient surgery services, (Jun 9, 2014)

By Linda O’Brien, J.D., LL.M.

A physician-hospital organization, a major hospital system, and a health insurance provider engaged in restraint of trade and deceptive business practices by engaging in a conspiracy to boycott an outpatient surgery services provider and limit competition to the hospital system, according to a complaint filed in the federal district court of Jonesboro, Arkansas (Tri State Advanced Surgery Center, LLC v. Health Choice, LLC, June 5, 2014).

Tri State Advanced Surgery Center is an ambulatory surgery center that offers outpatient surgery services to patients and provides increased patient choice in surgery options. Glenn Crosby and Michael Hood are physicians who utilize Tri State to perform outpatient procedures on their patients. Health Choice is a physician-hospital organization between MetroCare Physicians, an independent physician association, and Methodist LeBonheur Healthcare, the dominant hospital system in the Memphis metropolitan area. Methodist operates hospitals and outpatient surgical centers.

The complaint alleges that Health Choice engaged in a conspiracy with Cigna Healthcare, a major provider of commercial health insurance products, to boycott the plaintiffs and prevent them from contracting with insurers and referring patients to Tri State. As part of the conspiracy, Cigna agreed to terminate physicians Crosby and Hood from its provider network and threatened to terminate other physicians unless they ceased referring patients to Tri State. Health Choice allegedly made the illegal agreement on behalf of Methodist to attempt to eliminate competition for Methodist, and Cigna made the agreement to keep Methodist in its provider network.

Health Choice has exclusive contracts with health insurers, including Cigna, under which physicians who want to join Cigna’s provider network to serve Cigna patients must do so through Health Choice. Under the agreement, Health Choice and Cigna mutually decide which Health Choice providers should be included in Cigna’s provider network.

Tri State does not have a participating provider agreement with Cigna and is considered an out-of-network provider (OON) to Cigna members. Many Cigna members pay higher insurance premiums so they may receive services at OON providers such as Tri State.

Prior to the commencement of the illegal conspiracy, physicians Crosby and Hood participated in Cigna’s network through Health Choice, according to the complaint. In June 2013, Cigna notified Crosby, Hood, and other physicians who treated patients at Tri Star, that they were required to refer Cigna patients to in-network facilities pursuant to the participating provider agreement and not to Tri Star, which was an OON facility. When Crosby and Hood refused to confirm that they would refer Cigna patients to in-network facilities, Cigna terminated them from its network of providers.

Tri State provides an important alternative to physicians and their patients, which increases consumer welfare, the complaint claimed. Many patients prefer treatment at Tri State to treatment at a hospital. Tri State has certain equipment that is not readily available at other facilities. Treatment performed at Tri State is almost always less expensive that similar procedures performed at hospitals. Also, patients can schedule procedures at Tri State with more flexibility and can schedule them sooner than when scheduling similar procedures at hospitals.

The plaintiffs assert claims for tortious interference with contract, tortious interference with business expectancy, deceptive trade practices, and violations of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, treble and punitive damages, interest, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 3:14-cv-00143-JM.

Attorneys: Scott E. Poynter and John Emerson (Emerson Poynter LLP) and Edith M. Kallas, Deborah J. Winegard, and Joe R. Whatley, Jr. (Whatley Kallas, LLP) for Tri State Advanced Surgery Center, LLC; Glenn A. Crosby II, and Michael Hood.

Companies: Tri State Advanced Surgery Center, LLC; Health Choice, LLC; Cigna Healthcare of Tennessee, Inc.

News: Antitrust ArkansasNews