The Local Doctor is Not Immune From Antitrust Law

Antitrust law may seem, to some physicians, like an issue reserved for corporate giants such as Standard Oil, AT&T, Microsoft, or Apple. However, as the push to ensure affordable access to healthcare intensifies, healthcare systems are facing increased antitrust scrutiny. While large systems have been the primary focus of recent enforcement actions, many local physicians – whether in primary care or specialty practices – may be surprised to learn that antitrust laws also apply to more localized business practices that may drive up prices. 

Landmark cases such as Sidibe et al. v. Sutter Health, and recent lawsuits from the U.S. Department of Justice against OhioHealth and NewYork-Presbyterian signal a growing wave of antitrust scrutiny across healthcare systems. Confronting anticompetitive behavior has become a critical component of efforts to address the healthcare affordability crisis, and physicians must remain informed and vigilant in evaluating whether any of their practices could raise antitrust concerns.

Some physicians may believe that business practices that result in rising costs are justified, particularly if they view these rising costs as necessary to fight against mammoth insurance companies that constantly push their rates down. However, any practice that adopts this mindset exposes itself to significant risk, particularly as enforcers, both governmental and private parties, will scrutinize their actions and seek to hold them liable if they violate these laws. Trends show an increase of antitrust enforcement in the healthcare sector for not only larger hospital systems, but for physician practices as well, particularly when higher prices result from either (1) agreements that appoint a common agent to negotiate fee-for-service prices collectively or (2) practices that prevent health plans from steering or redirecting their members to lower-prices, but still high quality, competitors.

Over the last several years, governmental and private class plaintiffs have brought cases against various systems and have charged that their affiliates, even if independent practices, are violating antitrust law. As noted earlier, the recently settled Sidibe et al. v. Sutter Health remains an important reference point for any healthcare system looking to manage potential legal risk. In various cases against the Sutter Health system primarily located in Northern California, the California Attorney General along with two classes of plaintiffs – one a class of self-insured employers and entities and the other a class of millions of employees and entities that paid premiums for health insurance – sued Sutter for violating antitrust law.  The suits concerned actions by Sutter, which required health insurers to contract systemwide for all Sutter providers and prevented providers from offering lower-priced insurance products.  

The Plaintiffs charged that Sutter hospitals were a “must have” for insurance company networks. Because Sutter would only allow insurers to contract for all Sutter facilities – including hospitals, outpatient facilities, and physician practices – Sutter was able to bully insurance behemoths, such as UnitedHealthcare and Anthem Blue Cross (now Elevance), and prevent these providers from offering lower-priced insurance products.  The result of the nearly thirteen years of litigation: Sutter had to pay over $800 million in damages.    

More recently, the U.S. Department of Justice sued the OhioHealth and NewYork-Presbyterian system for engaging in conduct similar to Sutter’s. These suits also concern the physician practices affiliated with these systems.

In still other cases, the acts of independent practices that have banded together are being challenged. For example, one current suit alleges that a so-called clinically-integrated network in Connecticut has engaged in per se illegal price-fixing on behalf of its members, leading to prices that the CIN’s members could not achieve absent the price-fixing. 

Why is all this healthcare-related antitrust litigation occurring now? Governmental plaintiffs have noted the need to ensure affordable healthcare for their constituents has grown, as the rate of healthcare inflation continues to far exceed the general rate of inflation (which is higher than it has been previously). Private plaintiffs have become more emboldened because they have proven in the Sutter Health litigation that they can recover, on a class-wide basis, higher rates demanded as a result of anticompetitive conduct.

And what does all this mean? It means that physician practices should ensure that they are assessing whether any of their actions could be deemed violative of antitrust law, especially since plaintiffs can recover triple damages when they prove that they have paid higher prices due to antitrust violations.