Marshfield (Wis.) Clinic agreed to pay $4 million to settle a class-action lawsuit accusing it of conspiring to eliminate competition among physicians in rural north-central Wisconsin.
In addition, the 550-physician clinic will remove its medical director as a trustee of an affiliated hospital system. It agreed to refrain from certain anti-competitive practices and to limit price increases and maintain charity care for two years.
The clinic hopes the settlement will bring an end to antitrust litigation that started with a lawsuit brought by Blue Cross and Blue Shield United of Wisconsin. The insurer won a jury verdict in 1994 but has been unable to collect damages or maintain an injunction barring the clinic from anti-competitive practices.
"After being involved in litigation of this nature for over four years, we felt the settlement was reasonable to avoid the uncertainties of a trial," said clinic attorney Reed Hall.
The clinic estimated such litigation has cost its insurer more than $5 million. Its revenues for fiscal 1997 were $280 million.
The clinic admitted no wrongdoing in the settlement, but Blues attorney Jim Troupis called it "a very strong statement that Blue Cross was correct from the beginning in its allegations."
The settlement was tentatively approved by U.S. District Judge Barbara Crabb late last month. An estimated 200,000 people who are covered by the lawsuit have until Nov. 28 to object.
About half the settlement amount, $2 million to $2.5 million, will be used to pay the plaintiffs' attorneys. The balance will finance healthcare for low-income residents. The amount will be pooled with $750,000 from a settlement reached with two other defendants, North Central Health Protection Plan HMO and Rhinelander (Wis.) Medical Center.
The clinic and its Security Health Plan agreed not to divvy markets with competitors, deny cross-coverage or hospital privileges to competing physicians, or bar nonclinic physicians from contracting with Security Health Plan.
It also agreed not to hold a seat on the board of Ministry Health Care, owner of St. Joseph Hospital in Marshfield and other clinic-affiliated hospitals, for four years.
For two years, the clinic won't increase its aggregated fees annually by more than 5.01%, which is the average medical consumer price index as calculated by the U.S. Labor Department. It agreed to maintain its expenses devoted to charity care at its 1996 level of $4.8 million for two years.
The settlement applies to three class-action suits that were consolidated. All three were filed after a federal jury found the clinic guilty of violating certain antitrust laws in the Blues case. Although the 7th U.S. Circuit Court of Appeals in Chicago overturned part of that verdict, it upheld the jury's finding that the clinic and its HMO illegally divided markets with competing physicians and an HMO.
Earlier this year, Crabb threw out the Blues' claim for $6 million in damages and ended an injunction that barred the clinic from anti-competitive practices. The insurer has appealed those decisions.