The U.S. Supreme Court's refusal to review the Marshfield (Wis.) Clinic antitrust case last week brings the 2-year-old case almost to an end.
The decision was good news for the 400-physician clinic, which serves central and northern Wisconsin. It leaves intact a decision by the 7th U.S. Circuit Court of Appeals in Chicago that overturned most of a multimillion-dollar jury verdict against the clinic.
Clinic President Richard A. Leer, M.D., called the Supreme Court's refusal to consider the case "an important decision for the future of healthcare. Healthcare providers can continue to develop integrated health delivery systems in rural areas."
But others cautioned that the case does not give a green light for physician networks to behave as they please.
"It envisions a case-by-case approach" to reviewing these networks, said clinic attorney Greg Katsas with Jones, Day, Reavis & Pogue in Washington.
Few if any other cases of an alleged physician monopoly have been litigated rather than settled privately or with a business review letter from the Federal Trade Commission or Justice Department, said Mark Horoschak, former head of the FTC's healthcare division.
He said the case offers a good analysis of market definition for large medical groups but doesn't identify specific activities that might pose legal problems for groups with monopoly power.
Horoschak, now with the Charlotte, N.C., law firm Womble, Carlyle, Sandridge & Rice, wouldn't advise medical groups to deny cross-coverage to smaller competitors or bar competitors from hospital staff privileges-even though the 7th Circuit expressed doubt that those activities would be illegal.
The Marshfield case breaks new ground by addressing the question of a distinct market for HMOs, apart from other types of health plans. The jury in the case found there was a distinct HMO market, but the appeals court disagreed.
Horoschak said the issue of a separate market for HMOs is "likely to become a market-by-market issue" with price differences among plans being a determining factor.
Attorneys general of 26 states, who requested a Supreme Court review, are troubled that the appeals court did not let the jury's finding stand.
The appeals court opinion, written by Chief Judge Richard Posner, a well-known writer on antitrust issues, could make it more difficult to challenge the consolidation of HMOs and vertically integrated provider networks, said Kevin J. O'Connor, assistant attorney general in charge of antitrust enforcement in Wisconsin.
"In more thinly populated areas there does appear to be a trend toward this kind of networking, and that is kind of disturbing because it is leaving no alternative to the dominant provider," O'Connor said.
Plaintiff Blue Cross and Blue Shield United of Wisconsin said it was disappointed but remained "gratified that the majority of the country's state attorneys generals saw the merit in our case and joined in our appeal." Further, the Blues said, "it is important to note the Marshfield Clinic's conviction for violating federal antitrust laws for market division stands."
The case returns to the U.S. District Court in Madison, Wis., for retrial on damages for one charge that was upheld-that the clinic and its HMO illegally divided markets with competitors.
Reed Hall, the clinic's general counsel, said the Blues plan is likely to come out with only a modest award-perhaps $600,000. Jon Furlow, an attorney for the Blues, said it was premature to say how much the Blues would seek in damages.
Feb. 16, 1994: Blue Cross and Blue Shield United sues Marshfield Clinic and its Security Health Plan HMO, alleging an illegal monopoly.
December 1994-January 1995: Federal jury in Madison, Wis., finds the clinic and Security HMO guilty and awards the Blues $16.2 million plus attorney fees. Under federal law, the damage award is trebled to $48.6 million.
March 22, 1995: U.S. District Court Judge John Shabaz reduces the award to $5.6 million, which is trebled to $16.8 million.
Sept. 19, 1995: 7th U.S. Circuit Court of Appeals in Chicago substantially reverses the verdict, but upholds the jury's finding that the clinic and its HMO divided markets with competing physicians and an HMO.
February 1996: Attorneys general in 26 states join the Blues' petition for a Supreme Court review.
March 18, 1996: Supreme Court refuses to hear the case.
Source: MODERN HEALTHCARE research