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Complaint Against Health Company Sufficiently Pleads Non-Interchangeability Of Emergency Room And Urgent Care Service
09/18/2024On September 5, 2024, the United States District Court for the Middle District of Florida denied Health First, Inc.’s motion to dismiss plaintiffs’ amended complaint in a class action lawsuit alleging monopolization and anticompetitive practices in the healthcare market in Brevard County, Florida. Powers, et al. v. Health First, Inc., No. 6:23-cv-375-JSS-RMN (M. D. Fla. Sept. 5, 2024). The Court held that plaintiffs’ amended complaint provided a detailed enough explanation as to why urgent care and similar-type facilities are not interchangeable with emergency rooms, correcting the deficiencies in the prior complaint relating to the definition of the relevant product market. The Brevard County plaintiffs may now proceed to discovery on all four counts of their alleged violations of Sherman Act Sections 1 and 2, and the Florida Antitrust Act.
Plaintiffs, residents of Brevard County, Florida, filed their initial Class Action Complaint on March 1, 2023, asserting four causes of action: (1) monopolization of the inpatient, emergency, and outpatient acute care market in Southern Brevard County in violation of Section 2 of the Sherman Act; (2) horizontal market divisions in restraint of trade in violation of Section 1 of the Sherman Act; (3) exclusive dealing in violation of Section One of the Sherman Act; and (4) violation of the Florida Antitrust Act. Specifically, plaintiffs alleged that defendant monopolized the healthcare market in Southern Brevard County by leveraging its large market share and vertically integrated business model to illegally control physician referrals to limit referrals to other competing acute care hospitals and physicians; induce and obtain preferential vertical agreements with competing health plans, physicians, and other providers; threaten and deter competitors from entering the market; and enter a horizontal market division agreement with an acute care competitor. Defendant’s conduct allegedly resulted in uncompetitive high prices and reduced quality of care for defendant’s health plan policyholders. Importantly, in their initial complaint, plaintiffs defined the relevant geographic market as Brevard County or Southern Brevard County and the relevant product market as “the sale of inpatient, emergency, and outpatient acute care at an acute care hospital by [defendant] and competing hospitals.”
Defendant moved to dismiss all counts, arguing that plaintiffs’ definition of the relevant product market was deficient because it did not adequately define “acute care.” The Court agreed and on September 7, 2023, granted defendant’s motion as to Counts One, Three, and Four, but allowed plaintiffs to amend their complaint. Plaintiffs filed their First Amended Class Action Complaint on September 21, 2023.
Plaintiffs’ amended complaint refined the product market definition by removing outpatient care and adding references to place of service (“POS”) hospital billing codes to further define what services were encompassed within the definition. Defendant responded by arguing that Plaintiffs’ revised product market definition was still deficient because it failed to include non-hospital providers as reasonably interchangeable substitutes for emergency room care. Plaintiffs sought to distinguish emergency room facilities from urgent care and other non-hospital facilities in part by pointing to defendant’s data which demonstrated that a significant portion (74%) of its acute care inpatients were admitted from the emergency room department, which can provide integrated and comprehensive emergency care not available at other facilities.
The Court denied defendant’s motion to dismiss the amended complaint, finding that plaintiffs had sufficiently pleaded their claims. The Court noted that plaintiffs had provided a detailed explanation to support their position that urgent care and similar facilities are not interchangeable substitutes with emergency rooms. In denying the motion to dismiss, the judge emphasized that, because scope of a relevant product market involves an examination of not only the product at issue, but also which other products consumers would reasonably turn to as substitutes, the parameters of a given market are questions of fact that should not be decided at the motion to dismiss stage.
The Court found that plaintiffs had plausibly alleged a relevant product market and that discovery would be necessary to determine whether an interchangeable substitute in fact exists. This case is a useful reminder that antitrust plaintiffs can sufficiently plead a relevant product market that survives a motion to dismiss by providing enough information to plausibly suggest the contours of the relevant markets alleged.
