ProMedica Sued for Antitrust Violations by Ohio Hospital

On Tuesday, plaintiff St. Luke’s Hospital, doing business as McLaren St. Luke’s, filed a complaint seeking to enjoin rival ProMedica Health System, Inc. from cancelling commercial insurance and Medicare contracts. St. Luke’s accuses ProMedica of engaging in conduct designed to enhance its dominant market position while simultaneously suppressing St. Luke’s efforts to compete with it, allegedly harming the hospital, its physicians and patients. The Northern District of Ohio complaint contends that ProMedica has violated state and federal antitrust laws.

The plaintiffs include both St. Luke’s, a non-profit corporation organized under the laws of Ohio, and WellCare Physicians Group, LLC, of which the only member is St. Luke’s. Defendant ProMedica is also an Ohio non-profit corporation, the filing states.

According to the complaint, “ProMedica offers medical, surgical, psychiatric, rehabilitative, skilled nursing, home health, and hospice services across 28 states. The system includes at least 12 hospitals, 4 ambulatory surgery centers, and more than 400 post-acute facilities.” The filing also names five ProMedica-related healthcare businesses in the Midwest as defendants.

The filing explains that from 2007 and 2008, ProMedica “demanded that certain major health plans not include St. Luke’s in their networks,” and subsequently attempted to acquire St. Luke’s in a transaction challenged by the Federal Trade Commission (FTC). St. Luke’s claims that “it should have been apparent to ProMedica that such an acquisition clearly violated federal antitrust laws.” Yet, ProMedica proceeded and also “removed many of St. Luke’s functions and services while the FTC’s antitrust challenge was proceeding,” the plaintiffs argue.

Last year, the filing reports, Michigan’s McLaren Health Care Corporation, a multi-hospital system, agreed to acquire St. Luke’s, thereby enabling it to “recover from the serious financial  wounds” it sustained in the “unfair” divestiture agreement ProMedica imposed after the FTC reversed the acquisition. The filing claims that “ProMedica consistently took an unreasonable stand” in the divestiture negotiations. It cites statements allegedly made by ProMedica’s CEO, regarding St. Luke’s, claiming that it was “our hospital,” and that ProMedica “gets to decide what to do with it.”

McLaren’s deal, consummated on Oct. 1, reportedly provided critical assistance to St. Luke’s, including a $100 million investment, the assumption of substantial debt, and allowed the hospital to offer refreshed cancer care services. According to the complaint, “[t]hese efforts will make St. Luke’s a more significant competitor to ProMedica, the dominant health care system in Lucas County[,] [Ohio].”

In response, the filing claims, ProMedica made its insurance subsidiaries terminate commercial insurance and Medicare Advantage contracts with St. Luke’s and its physicians, effective Jan. 1, 2021. The termination will “seriously and irreparably injure St. Luke’s, would deprive large numbers of patients of their preferred health care providers, and would suppress additional competition from St. Luke’s which the McLaren relationship promises to create,” the complaint argues.

The plaintiffs claim that “the notices of termination were completely contrary to [ProMedica’s] interests, and quite unprofitable to it.” In addition, the plaintiffs charge ProMedica with doing so “in order to squelch competition from St. Luke’s after ProMedica faced the prospect that McLaren St. Luke’s would become a more significant competitor.”

The complaint also avers that ProMedica pressured physicians to stop practicing at St. Luke’s. Further, ProMedica took “extraordinary steps” to reduce competition from University of Toledo Medical Center (UTMC) by paying hundreds of millions to shift almost all of the UTMC faculty to ProMedica. This allegedly “depriv[ed] UTMC of its status as an academic medical center and confer[ed] that status on ProMedica Toledo Hospital.”

The plaintiffs argued that “[a]ll these actions have been taken for one reason and one reason only, and that is to harm competition and entrench ProMedica’s dominance.” The complaint seeks a preliminary and permanent injunction of the termination of the contracts, a declaration that ProMedica’s attempted termination is void, and an award of treble damages, as well as reasonable attorneys’ fees.

The plaintiffs are represented by Roetzel & Andress.