A federal judge in Wichita, Kan., said he found no evidence that a local hospital used the clout of its acute-care business or predatory pricing to steer patients to its managed-care business, as alleged in an antitrust lawsuit filed by a regional subsidiary of national HMO Coventry Health Care.
After four days of testimony, U.S. District Judge J. Thomas Marten ruled against a preliminary injunction request by Coventry Health Care of Kansas. The regional health plan is owned by Bethesda, Md.-based Coventry Health Care, which insures 1.8 million people in 13 U.S. markets. In August, Coventry of Kansas filed an antitrust lawsuit in Wichita federal court against Preferred Plus of Kansas and its PPO, Preferred Health Systems, both owned by five-hospital Via Christi Health System, headquartered in Wichita (Sept. 3, p. 6). Specifically, Coventry alleged that Via Christi and Preferred used predatory pricing to undercut a longtime Conventry contract with Raytheon Aircraft, its largest customer with 25,000 enrollees. Coventry will be left with less than 10,000 members in the Wichita market.
The judge's denial could force dramatic cutbacks at Coventry in Kansas or even its closure.
Marten found no evidence that Via Christi practiced predatory pricing or that Coventry would suffer irreparable harm by losing the Raytheon contract. He said Coventry was unlikely to prevail in a trial. The judge wasn't convinced that Via Christi abused its market power, finding that its rival, HCA-owned 534-bed Wesley Medical Center, keeps prices at 942-bed flagship Via Christi Regional Medical Center in check. Alan Rupe, a Coventry lawyer with the Wichita firm Husch & Eppenberger, said the insurer was "disappointed" by the decision and has not yet decided whether to go to trial.
The Raytheon contract is slated to transfer to Preferred on Jan. 1.