Earlier this week, my colleagues Bruce Sokler, Robert Kidwell, Dionne Lomax, and Farrah Short published an alert about the federal district court for the Eastern District of Michigan’s recent decision to deny both the government’s and defendant hospital’s respective motions for summary judgment in a suit filed by the Department of Justice and the Michigan Attorney General in 2015 against W.A. Foote Memorial Hospital, d/b/a Allegiance Health (“Allegiance”), Hillsdale Community Health Center (“HCHC”), Community Health Center of Branch County (“Branch”), and ProMedica Health System, Inc. (“ProMedica”). In this case, the government alleged that HCHC orchestrated agreements among the hospitals not to advertise or otherwise market in each other’s territories for competing health care services in violation of the Sherman Act. (You can read Dionne’s previous alert on the Allegiance complaint here.) HCHC, Branch and ProMedica have each settled, leaving Allegiance as the sole defendant. Continue Reading Antitrust Suit Against Michigan Hospital Moves Forward After Federal District Court Denies Both Sides’ Motions for Summary Judgment
Last week, in Deborah Heart & Lung Center v. Virtua Health, Inc., the Third Circuit affirmed a lower court’s dismissal of a suit filed by a hospital alleging an illegal exclusive dealing arrangement by a competing hospital and physician group for referrals made by the defendants to a third hospital rather than to the plaintiff hospital. In its decision, the court emphasized the importance of market definitions in antitrust cases, and clarified an antitrust plaintiff’s burden when alleging a Sherman Act Section 1 claim with no allegation of market power. The court held that anticompetitive effects in those cases must then be shown on the relevant market as a whole, not only on a small subset of the market. In a Health Care Antitrust Alert, our antitrust colleagues Bruce Sokler and Farrah Short analyze the Third Circuit’s decision.
In this case, the Second Circuit upheld a preliminary injunction against Actavis PLC and its wholly owned subsidiary Forest Laboratories, LLC and found that Actavis’s “hard switch” strategy to launch an extended-release version of an Alzheimer’s therapy and delist the immediate-release version would likely violate Section 2 of the Sherman Act. The court reasoned that because generic competition depends so much on state drug substitution laws that allow pharmacists to substitute generics for brand-name products, the combination of launch and product removal was an anticompetitive “product hop” that would likely impede generic competition of the original immediate-release version of the drug.
You can read the full advisory here.
On October 21, 2014, the U.S. District Court for the Southern District of Ohio granted Defendants’ motion for summary judgment, holding that Premier Health Partners and its affiliate hospitals, Atrium Health Systems, Catholic Health Initiatives, MedAmerica Health Systems, Samaritan Health Partners, and Upper Valley Medical Center, operating under a joint operating agreement, constituted a single entity incapable of conspiring in violation of Section 1 of the Sherman Act. The Medical Center at Elizabeth Place v. Premier Health Partners, et al., Case No. 3:12-cv-26 (S.D. Ohio, Oct. 21, 2014).
As health care providers and health industry participants seek to find innovative ways to collaborate, this case is an important reminder that courts place significant emphasis on how joint venture participants function and operate rather than the corporate form of the organization. The case also highlights that the examination of conspiratorial capacity involves a highly factual inquiry where principal considerations include a parent’s or general partner’s ability to control the actions of the affiliates or members and the resultant unity of interest between the joint venture participants.
Read more about the underlying rationale of the court’s decision in the following Antitrust Alert Ohio District Court Deems Hospital Alliance a Single Entity Incapable of Conspiring Under the Antitrust Laws.