Antitrust Law Daily Wrap Up, TOP STORY—D. Colo.: Surgery centers’ conspiracy claims against health care network can proceed to trial, (Aug 31, 2015)

By Jeffrey May, J.D.

Health care network Centura Health Corporation could have conspired with insurers and others to drive complaining ambulatory surgery centers out of the Denver and Colorado Springs markets, the federal district court in Denver has decided. Questions of fact precluded summary judgment in favor of Centura in the nearly three-year-old antitrust action (Kissing Camels Surgery Center, LLC v. Centura Health Corp., August 28, 2015, Martinez, W.).

Kissing Camels Surgery Center, LLC and three other non-hospital ambulatory surgery centers (ASC) presented sufficient evidence of a conspiracy involving Centura—an operator of hospitals and ambulatory surgery centers (ASCs) through joint ventures with private physicians—to reduce competition for ambulatory surgery services by pressuring physicians and insurers not to do business with the plaintiffs. In addition to Centura, other alleged conspirators included hospital operator HCA, Inc. (which is no longer a defendant), Colorado Ambulatory Surgery Center Association, Inc. (CASCA)—a trade association that purported to represent the interests of ASCs but was financially supported by the hospital operators—and health insurers.

The court rejected Centura’s argument that there was no evidence that it entered into a conspiracy with either HCA or the insurers. A meeting between the CEOs of Centura and HCA regarding concerns about new ASCs in Colorado alone was insufficient to directly establish a conspiracy. There was no evidence of an agreement between them to take action against the plaintiffs. However, there was evidence of an agreement, formulated or furthered at a CASCA trade association meeting with insurers. Even though Centura had no representative at the meeting, Centura could have acted through one of its joint venture ASCs—Audubon Ambulatory Surgery Center, LLC—whose administrator was in attendance. A series of e-mails involving personnel of a Centura-owned hospital suggested that the Centura used Audubon to take action against their mutual competitor, Kissing Camels. Thus, conspiracy to restrain trade and conspiracy to monopolize claims could proceed.

Attempted monopolization. An attempted monopolization claim could proceed as well, despite Centura’s low market share, the court ruled. Centura argued that there was no dangerous probability of it achieving monopoly power. According to Centura's expert, the company's market share for ambulatory surgery patient visits in Colorado Springs was only 4.3 percent, and it had only a 16.4 percent share of the operating rooms used for such surgeries. However, a reasonable jury could find that the market share of Centura and Audubon could be combined, in the court’s view. They were not operating as competitors whose market shares had to be considered separately. Thus, there was a disputed question of material fact as to the relevant market share at issue.

Moreover, Kissing Camels presented sufficient evidence of exclusionary conduct for summary judgment purposes. The plaintiffs argued that Centura worked to drive them out of business by penalizing physicians who referred patients to them. The court rejected Centura’s contention that neither its decision to cancel a patient transfer agreement that Kissing Camels needed to operate, nor its efforts to require physician-investors in Kissing Camels to refer certain patients to Audubon for treatment, constituted exclusionary conduct under Sec. 2 of the Sherman Act. The evidence “can reasonably be interpreted to support a finding that Centura took actions intended to result in the exclusion of Plaintiffs from the market altogether,” according to the court.

Antitrust injury. A jury could find that competition as a whole was harmed in the Colorado Springs market for ambulatory surgery services, the court ruled. Centura unsuccessfully argued that summary judgment should be granted for lack of antitrust injury because the plaintiffs presented evidence only of injury to themselves as competitors, not injury to competition itself.

A “plaintiff’s injury alone can constitute antitrust injury under certain circumstances,” the court explained. Because the market was highly concentrated, elimination of any of the plaintiffs as competitors would have a substantial negative impact on competition, the court concluded.

The case is Civil Action No. 12-cv-3012-WJM-NYW.

Attorneys: Joe Ramon Whatley, Jr. (Whatley Kallas, LLP) for Kissing Camels Surgery Center LLC. Melvin B. Sabey (Hall Render Killian Heath & Lyman, PC) for Centura Health Corp.

Companies: Kissing Camels Surgery Center LLC; Centura Health Corp.; HCA, Inc.; Audubon Ambulatory Surgery Center, LLC; Colorado Ambulatory Surgery Center Assn., Inc.

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