Antitrust Law Daily Wrap Up, ANTITRUST—S.D. Ind.: Surgeon’s case against Indiana University Health flatlines, (Aug 1, 2024)

By George Basharis, J.D.

Vascular surgeon’s claims of anticompetitive behavior rejected.

The federal district court in Indianapolis, Indiana dismissed an antitrust lawsuit brought by a Bloomington vascular surgeon against Indiana University Health, ruling that the hospital system’s actions in revoking the doctor’s privileges and hiring its own surgeons did not violate antitrust laws. After the surgeon’s privileges at IU Bloomington Hospital were revoked, he filed suit alleging that Indiana University Health pushed him out as a plan to monopolize vascular surgery services in the area. The court held that the surgeon did not have standing to bring antitrust claims related to IU Health’s alleged monopolization of primary care services. Also, the court found that the hospital’s actions were not anticompetitive or the actions covered by antitrust law (Vasquez v. Indiana University Health, Inc., No. 1:21-cv-01693-JRS-MG (S.D. Ind. July 22, 2024)).

Dr. Vasquez had admitting privileges at IU Bloomington Hospital, allowing him to treat patients there. In 2010, IU Health acquired the hospital. In 2017, IU Health purchased a large independent physician group in Bloomington, bringing many local primary care doctors under its employ. Soon after, IU Health began disciplinary proceedings against Dr. Vasquez, alleging issues with his behavior toward nurses and patients. In 2019, IU Health suspended and then revoked Dr. Vasquez’s hospital privileges.

Dr. Vasquez claimed these actions were part of an anticompetitive scheme to push him out of the market. He alleged IU Health was trying to monopolize vascular surgery services in Bloomington by revoking his privileges, cutting off patient referrals, and removing him from the hospital’s vascular lab rotation.

After losing his hospital privileges, Dr. Vasquez opened his own office-based lab to treat patients independently. He also increased his work at other area hospitals, and his revenues and profits actually increased substantially after leaving IU Health Bloomington.

Initially, IU Health sought to have the lawsuit dismissed, arguing that Dr. Vasquez had not properly defined the geographic market for antitrust purposes. The district court agreed and dismissed the case. However, the Seventh Circuit reversed that decision and sent the case back for further proceedings. Since then, both parties have moved past the geographic market definition issue. For the purposes of this summary judgment ruling, the court assumed that Bloomington was an appropriate geographic market for analyzing the antitrust claims, as both parties seemed to accept this definition. The court noted that the geographic market question did not affect the outcome of its decision on the antitrust claims.

Antitrust claims. In dismissing the antitrust claims, the court ruled that IU Health’s actions did not constitute anticompetitive behavior under antitrust law. The court emphasized that antitrust laws are meant to protect competition, not individual competitors. “That means the intuitive answers to the basic questions here are correct: must a hospital allow a doctor, not in its employ, to use its facilities? No. Must a hospital allow its staff to refer patients to competitors? No. Must a hospital buy lab reading services from any particular provider? Also no,” the court reasoned.

The court further explained that compelling a business to deal with competitors could actually harm competition by facilitating collusion. It cited Supreme Court precedent recognizing the right of private businesses to choose their business partners freely and establishing that there is generally no antitrust duty for companies to deal with competitors. The court found that forcing IU Health to maintain its previous arrangements with Dr. Vasquez would impair competition rather than protect it, which goes against the fundamental purpose of antitrust laws.

The court elaborated on the narrow exception to this principle, which applies only when a monopolist discontinues a profitable cooperative arrangement with no business justification and refuses even to sell an ordinary retail product at retail price. The court found that none of IU Health’s actions met these stringent criteria.

The court also ruled that as a competing surgeon, Dr. Vasquez did not have standing to bring antitrust claims related to IU Health’s alleged monopolization of primary care services. The court noted that Dr. Vasquez actually stood to benefit if IU Health raised prices or lowered quality in vascular surgery, as he could then compete for that business. The court dismissed Dr. Vasquez’s attempt to vindicate consumer harm, stating that as a competitor, he was not in a position to do so.

Addressing Dr. Vasquez’s allegations about IU Health's upstream monopolization of primary care, the court cited the Supreme Court’s decision in Pac. Bell Tel. Co. v. linkLine Commc’ns, Inc., 555 U.S. 438 (2009), which held that claims of upstream monopoly power being used to prevent downstream competition are not cognizable under antitrust law without a duty to deal.

The court also noted that even if IU Health’s actions harmed Dr. Vasquez as an individual competitor, this alone does not constitute an antitrust violation without evidence of harm to overall market competition. In fact, the court pointed out that the market now has more vascular surgeons and expanded services at multiple hospitals, suggesting increased rather than decreased competition. This observation underscored the court’s view that protecting individual competitors is not the aim of antitrust law, but rather fostering a competitive marketplace overall.

Defamation. Dr. Vasquez had alleged that IU Health’s Chief Medical Officer defamed him in 2018 by stating he was the subject of more malpractice complaints than other area vascular surgeons. However, the court found this claim was barred by Indiana’s two-year statute of limitations for defamation. The lawsuit was not filed until 2021, well after the statute of limitations had expired.

Contract claim. The court also dismissed Dr. Vasquez’s claim that IU Health breached its medical staff bylaws in revoking his privileges. The court found that the bylaws allowed for suspension of privileges during the review process, which is what occurred in this case. The final revocation did not happen until after Dr. Vasquez had received the hearings and appeals provided for in the bylaws.

Motion to amend complaint denied. Dr. Vasquez sought to file an amended complaint adding new antitrust allegations related to non-compete agreements in IU Health’s physician contracts. However, the court denied this request, ruling it came far too late in the proceedings. The court noted the deadline to amend pleadings had passed over a year earlier, and Dr. Vasquez had already been allowed one belated amendment previously.

The Case is No. 1:21-cv-01693-JRS-MG.

Judge: Sweeney II, J.

Attorneys: Elizabeth Lynne Merritt (MacGill P.C.) for Ricardo Vasquez. Ryan Doringo (Jones Day) for Indiana University Health Inc. and Indiana University Health Bloomington Inc. d/b/a IU Health Bloomington Hospital.

Companies: Indiana University Health Inc.; Indiana University Health Bloomington Inc. d/b/a IU Health Bloomington Hospital

Cases: Antitrust IndianaNews