The six physicians alleged that the hospital took part in illegal anticompetitive behavior by coercing insurers not to contract with Town & Country.
Memorial Hermann, the largest hospital system in Houston, threatened to change its agreed-upon payment rates with payors if they contracted with the competing physician-owned hospital. David Beck, an attorney with Beck, Redden & Secrest, representing the health system, previously acknowledged that Memorial Hermann did tell private payors it would change rates if they contracted with Town & County but said it was a legal, contractual right of the hospital. In its ruling, the jury determined that although threats by the health system to change rates might have occurred, there was no proven conspiracy among the health system and the payors.
Richard Zook, an attorney with Houston-based Thompson & Knight LLP, who represented the physicians, argued that the moves by the health system to block insurers out of contracts with its hospitals or increase rates if insurers contracted with Town & Country were indeed anticompetitive, according to the Houston Chronicle report. Town & Country closed in 2007 after being open for just over a year.
Jurors heard more than two months of testimony and deliberated for half a day before rendering their decision.
In January, Memorial Hermann settled a two-year investigation by Texas Attorney General Greg Abbott into the health system’s potentially anticompetitive behavior in regard to Town & Country. The hospital agreed to pay $700,000 but admitted no wrongdoing.
While the attorney general’s involvement in the case seemed to be a win for the physician-owned hospital community, the recent ruling in favor of Memorial Hermann shows the difficulty physician-owned facilities face when up against competitors with greater clout — both with payors and, often, the community.
Mr. Zook claimed that part of the reason Memorial Hermann fought this case, instead of settling, was to “send a message to other doctors who might want to open hospitals in this area,” according to the Houston Chronicle report.
