Antitrust – Monopoly Maintenance & Leveraging – Hospital System – Inpatient & Outpatient Care – Surrounding Area

Plaintiffs allege that, even if hospital-system defendants obtained their Asheville-area inpatient-care monopoly legally (largely via the now-repealed Certificate of Public Advantage law), defendants illegally coerced health insurers into including anti-steering provisions in their policies in order to maintain defendants’ monopoly in the “Asheville Region Inpatient Services Market.” Plaintiffs allege that, absent these anti-steering provisions, the insurers would be able to steer patients within the service area of defendants’ Mission Hospital-Asheville to nearby competitor hospitals such as AdventHealth Hendersonville and Pardee UNC Healthcare, who could offer higher quality care at a lower cost. Given that the court has previously held such contractual restraints to be potentially anticompetitive, the court finds that plaintiffs have adequately pleaded a monopoly maintenance claim.

Defendants’ motion to dismiss is granted as to plaintiffs’ monopoly acquisition claim (as conceded by plaintiffs) and as to plaintiffs’ claims regarding outpatient services. The motion is denied as to plaintiffs’ claims of monopoly maintenance and as to monopoly leveraging of inpatient services.

In plaintiffs’ original complaint, their allegations of monopoly leveraging as to inpatient services in outlying regions were impermissibly based on Medicare data. In their amended complaint, plaintiffs’ allegations are based on four different sources of data. For each of the counties that make up the outlying regions, plaintiffs allege that defendants possess a market share well in excess of 70 percent.

Moreover, plaintiffs have alleged that defendants were able to obtain monopolies in these counties by “requir[ing commercial health] insurers to include all of their hospitals in-network through their all-or-nothing contracting” and that defendants “prevented insurers from steering patients to competitors in the Outlying Regions through the use of anti-steering provisions.” The amended complaint further asserts that “[a]bsent these restraints, Defendants would not have monopolized these markets.”

Plaintiffs have alleged a sufficient causal nexus between defendants’ anticompetitive acts and their ability to leverage their existing Asheville-based monopoly for inpatient services into a new monopoly for inpatient services in the outlying regions. Plaintiffs have accordingly alleged a monopoly leveraging claim as to the outlying regions inpatient services market.

Where the amended complaint lacks any allegations regarding defendants’ market share in the outlying regions’ outpatient services market, and where plaintiffs make only conclusory allegations that defendants control prices in either the Asheville or outlying regions’ outpatient services market, plaintiffs have not stated monopoly leveraging claims as to the outpatient services markets.

Motion granted in part, denied in part.

Davis v. HCS Healthcare, Inc. (Lawyers Weekly No. 020-032-23, 24 pp.) (Mark Davis, J.) Mona Lisa Wallace, John Hughes, Olivia Smith, Jamie Crooks and Rucha Desai for plaintiffs; Phillip Jackson, John Noor, David Hawisher, Sara Razi, Abram Ellis, Laurel Fresquez, John Robinson, Dana Lumsden, Anna-Bryce Hobson, Hanna Eickmeier, Kenneth Vorrasi, Jonathan Todt, Alison Agnew and Paul Saint-Antoine for defendants. 2023 NCBC 32; North Carolina Business Court