Aurora Healthcare Sued for Anticompetitive Conduct in Class Action Complaint

Plaintiffs Uriel Pharmacy Health and Welfare Plan and Uriel Pharmacy, Inc. (collectively, Uriel) filed a class-action complaint against defendants Advocate Aurora Health, Inc. and Aurora Health Care, Inc. (collectively, AAH) on Tuesday in the Eastern District of Wisconsin for the defendants’ purported anticompetitive conduct.

The complaint alleges that over the past few years, AAH has “engaged in anticompetitive methods to restrain trade and abuse its market dominance for the purpose of foreclosing competition and extracting unreasonably high prices from the plaintiffs and other Wisconsin businesses, unions, and taxpayers.”

Uriel explains that healthcare costs have recently increased nationwide due to the prices charged by large hospital systems and consolidation among hospital providers. The plaintiffs note that there is a bipartisan consensus among healthcare policy experts that “consolidation of hospitals causes higher prices without resulting in corresponding increases in quality or patient satisfaction.”

The defendants’ high prices are most evident in routine procedures, according to the complaint. Uriel asserts that a simple joint replacement at an AAH facility is charged at a 50% higher price than a nearby competitor’s facility. By using its market power to suppress competition, AAH has allegedly directly contributed to the high healthcare prices in eastern Wisconsin. A recent study named Milwaukee as having the fourth highest healthcare prices in the United States. Further, AAH’s high profit figures are considered a “major outlier” from other hospitals in eastern Wisconsin.

The complaint emphasizes the defendants’ misconduct, which includes forcing employer health plans to include overpriced AAH facilities as in-network, driving innovative insurance products out of the market, suppressing competition on price and quality through secret and restrictive contract terms, and acquiring new facilities that will raise prices for the same services. Collectively, the anticompetitive conduct results in “higher prices paid by Wisconsin employers for healthcare.”

The defendants have recently announced a new strategy which, through mergers and acquisitions of healthcare systems, intends to double their annual revenue. Further, they have designated themselves as a non-profit, which the plaintiffs explain allows them to avoid “hundreds of millions in federal, state, and local taxes on profits by promising to pursue a primarily charitable purpose.”

The action concludes by noting that absent any regulation or intervention, the defendants will continue to “use anticompetitive contracting and negotiating tactics to raise prices on Wisconsin employers and use those funds for aggressive acquisitions and executive compensation.” They assert that this will reduce economic growth, harm patients and taxpayers, and drive employers out of Wisconsin.

The complaint cites restraint of trade, monopolization, and attempted monopolization in violation of the Sherman Act and Wisconsin Antitrust law. The plaintiffs are seeking injunctive, equitable and declaratory relief, a trial by jury, class certification, litigations fees, favorable judgement on each count, and any other relief deemed proper by the court.

The plaintiffs are represented by Bell Giftos St. John LLC and Fairmark Partners, LLP.