Physician-Owned Hospital Settles Landmark Antitrust Suit Against Regional Insurers and Hospitals

Heartland Spine & Specialty Hospital has reached a settlement with a group of insurers that were the defendant's in the Overland Park, Kan., physician-owned hospital's landmark antitrust suit (Heartland Surgical Specialty Hosp. LLC v. Midwest Division Inc., No. 05-2164). No terms of the settlement were disclosed; the case had been scheduled for trial in April

The settlement is the second in the case. Carondelet Health System, North Kansas City Hospital, Blue Cross and Blue Shield of Kansas, Humana and UnitedHealthcare settled early last year. In Octobter, a U.S. district court judge in Kansas found that "sufficient evidence exists for 19-bed Heartland Spine & Specialty Hospital in Overland Park, Kansas, to proceed with its antitrust lawsuit against some of the state's major healthcare providers," according to Stueve Siegel Hanson, the law firm representing the plaintiff. Aetna, Coventry Health Care, HCA Midwest, St. Luke?s and Shawnee Mission settled with Heartland March 20.

According to the complaint filed in 2005, Heartland alleged that five area hospitals and six managed care organizations conspired to shut the physician-owned hospital out of managed care contracts, and thereby drive it out of business, because of the "competitive threat" posed by specialty hospitals. Evidence against the insurers presented by Heartland included the testimony of one defendant acknowledging an unwritten "gentlemen's agreement" among the managed care organizations that they would not extend contracts to specialty hospitals, according to Stueve Siegel Hanson. Further, says the firm, Heartland presented evidence that the defendant hospitals "met and discussed [with each other] the competitive threat caused by specialty hospitals" and openly expressed these concerns at public gatherings in which the managed care organization defendants were present.

"It is fairly common for specialty hospitals to claim that they are being excluded from managed care networks, but cases such as Heartland ? in which a specialty hospital alleges a horizontal conspiracy among multiple hospitals aimed at excluding the plaintiff hospital and a companion horizontal conspiracy among health plans ? are quite rare," says Stueve Siegel Hanson. "By comparison, the Ninth Circuit's recent PeaceHealth decision involved conduct by only one hospital allegedly coercing managed care organizations to exclude the hospital's competitor."

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