Physicians Score Antitrust Settlement With Health System

August 19, 2016

In a David-vs-Goliath court battle, a collection of independent physicians has scored a settlement with a Central Florida health system accused of anticompetitive actions that allegedly hurt physicians' ability to practice medicine.

The case highlights some of the challenges facing independent medical practices in the era of Big Box healthcare.

The health system in question is Rockledge-based Health First, which encompasses four hospitals, a multispecialty medical group, outpatient services, such as home and hospice care, and health insurance plans, including some for Medicare Advantage. In 2013, Health First and related defendants were sued in federal court for antitrust violations by a multispecialty medical group called Omni Healthcare, three other medical practices, seven individual physicians, a physician assistant (PA), and a PA services company.

These practitioners claimed that Health First, enjoying market power, pressured them to refer patients exclusively, or nearly so, to the system's hospitals, physician specialists, and ancillary services. Those who didn't "play ball" found themselves dropped from Health First's insurance provider panels and its hospital medical staffs as well as boycotted by compliant physicians, according to the lawsuit. Noncompliant practices lost patients and revenue as a result. Health First also allegedly lured their physicians to join the system empire.

To gain further control of referrals, the plaintiffs said, Health First 3 years ago acquired the largest independent physician group in the area, which was ordered to admit patients in house. This attempt to monopolize physician services restrained competition and drove up costs, the argument went.

Omni Healthcare and other plaintiffs also accused Health First of attempting to monopolize the local market for Medicare Advantage plans.

The plaintiffs asked the court to unwind its medical practice acquisition, divest its health plans, and pay close to $350 million in monetary damages.

"Disgrunted Cries" From Fee-for-Service Relics

Health First countered in court filings that the plaintiffs lacked sufficient evidence to support their claims. It described itself as a "pioneering" integrated delivery network that provided coordinated, wellness-oriented patient care at competitive costs, in contrast to the "archaic" fee-for-service model advanced by the plaintiffs. Their lawsuit, Health First said, represented "the empty cries of disgruntled doctors upset with the evolution of modern healthcare delivery networks." More to the point, the plaintiffs were disgruntled by the "downward pressure" that Health First put on reimbursement rates.

"[Health First's] refusal to accommodate plaintiffs' practice models is the result of competitive market forces, not antitrust violations," the system said.

The system also contested the claim that it was trying to take over the local Medicare Advantage market, arguing in part that there is no separate market for these plans because they compete with traditional Medicare. That's the same position taken by health insurer Aetna in its tussle with the Department of Justice (DOJ) over its proposed merger with Humana. The DOJ sued Aetna and Humana on July 21 to stop the merger on the grounds that, among other things, it would reduce Medicare Advantage competition in more than 350 counties in 21 states, home to more than 1.5 million Medicare Advantage customers.

The DOJ pronouncement that there are separate markets for traditional Medicare and Medicare Advantage — and to make a fight over it — did not appear to bode well for Health First as its antitrust case proceeded through federal court.

Settlement Ends Trial on Second Day

Health First failed in its attempts to keep the lawsuit from going to trial. US District Judge Roy Dalton Jr, in Orlando, ruled that there was enough evidence for the case to proceed.

However, on August 16, the second day of the trial, just after the opening arguments, the settlement was struck. It covered all the plaintiffs' claims against the defendants, according to a joint statement issued Wednesday by both sides. They said that they had agreed to give a former federal judge the authority to "mediate and to resolve any disputes that may arise in the preparation of final settlement documents." No other terms of the settlement were disclosed.

It is not known whether the settlement will reinstate physicians who were dropped from Health First insurance provider networks or from the medical staffs of system hospitals on account of allegedly anticompetitive actions by the system. Likewise, it's not clear whether Health First will divest itself of the medical practice it acquired or the health plans it formed, or pay any money to the plaintiffs.

Medscape Medical News did not receive answers to specific questions about the settlement from either Health First or an attorney for the plaintiffs.

Settlements of court cases often stipulate that none of the parties admit any wrongdoing or claim either legal victory or defeat.

Follow Robert Lowes on Twitter @LowesRobert


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