Illinois-based ASC takes next step in anti-competition, anti-trust case against hospital system: 6 things to know

Marion Healthcare, a large outpatient surgery center in Southern Illinois, filed a suit in 2012 against Southern Illinois Healthcare, alleging the hospital system is stifling competition by striking exclusionary agreements with commercial payers. On March 14, a judge issued an order on the ongoing proceedings.

Here are six things to know:

1. The initial complaint listed SIH and BlueCross and BlueShield of Illinois as defendants, but when some of the claims were dismissed a year later, Marion Healthcare filed a second and then third complaint, eventually only naming SIH as a defendant. SIH filed a motion for partial judgment on the pleadings, but the court denied it.

2. Court documents show that in 2003, Health Alliance entered into an exclusive agreement with SIH, the same year Marion first attempted to join BCBS' provider network; all requests between 2003 and 2011 were denied. SIH had a monopoly over the market, and found the exclusivity agreement which stated:

"Blue Cross agrees not to enter into a CPO [Community Participating Option] agreement…with another hospital in the southern Illinois counties of Jackson, Williamson, Franklin, Saline, Johnson, Union, Pulaski, Alexander, or Perry without the expressed written consent of [SIH]."

3. Marion alleged that because SIH had exclusionary contracts, patients were required to pay more for outpatient procedures than they would at a non-SIH outpatient facility. The ASC also alleges that because SIH prevented other providers from entering in network with BCBS, the health system "reduced quality competition between SIH and its competitors."

4. Furthermore, Marion alleged SIH violated the Sherman Antitrust Act and Illinois antitrust law. However, SIH denied the violations, indicating it didn't have contracts with exclusivity provisions during the timeframes alleged in the third complaint. Marion pointed to evidence that the exclusionary contracts were in effect on a de facto basis during the time periods in question, but the court didn't address all the issues.

"It makes no rational business sense not to contract with Marion HealthCare if Health Alliance was free to contract with any provider in the seven-county market. If a provider is willing to offer better rates than competitors, a rational insurer would include that provider in a competitive market. Yet the decision not to negotiate a contract with Marion HealthCare resulted in significantly higher costs for outpatient surgical services paid by Health Alliance," an expert report in the order advised.

5. While the third complaint focused on written agreements, the court found it also encompassed unwritten agreements. "Given that it has adequately pleaded non-written agreements and/or ongoing conduct, MHC has also demonstrated a factual dispute as to the issues raised in SIH's motion," the order states. "Simply put, while SIH contends that MHC cannot state a cause of action for the periods in which SIH did not have written exclusivity agreements with payors, MHC's expert opines that such agreements essentially continued on a constructive basis."

6. The court recognized an issue existed and denied SIH's motion for partial judgment on the pleadings. It did not make a ruling and didn't take a position on Marion's claims.

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