An Indianapolis specialty-care provider network has filed an antitrust lawsuit against central Indiana's largest PPO, alleging exclusionary practices and anticompetitive behavior.
Gateway Contracting Services, which does business as Gateway Medical Resource Alliance, filed the antitrust suit in U.S. District Court in Indianapolis last month against 700,000-member Sagamore Health Network, a PPO owned by several Roman Catholic hospitals in Indiana and headquartered in the Indianapolis suburb of Carmel. Gateway also named as a defendant one of Sagamore's owners, 402-bed St. Francis Hospital and Health Centers in Beech Grove, just outside Indianapolis. St. Francis is owned by the Mishawaka, Ind.-based Sisters of St. Francis Health Services.
Gateway alleged in its 14-page complaint that Sagamore, which offers a comprehensive array of healthcare services through its PPO plans, illegally conspired with third-party administrators to require large employers and insurance brokers to exclude Gateway if they wanted to contract with Sagamore's PPO. Gateway is what is known as a carve-out company, offering a range of specialty cardiac, orthopedic and oncology services through physician and hospital networks to subscribers of Sagamore Health Network and other health plans.
The lawsuit is part of a growing national trend by aggrieved healthcare providers and insurers to file private antitrust suits against competitors or groups that they believe demonstrate anticompetitive behavior (Dec. 3, p. 26). Last year, the U.S. Justice Department investigated allegations that Indianapolis' dominant HMO, Clarion Healthcare's The M Plan, and its hospital owners used their market clout to shut out HMO competition. That case remains under investigation (April 10, 2000, p. 5).
In this case, lawyers for Gateway cited two instances when Sagamore allegedly demanded that companies exclude Gateway or risk losing Sagamore coverage or favorable discounts. The suit accuses Sagamore of violating two sections of the Sherman Antitrust Act and a state antitrust statute, and of distorting the competitive process.
Gateway is seeking a permanent and a preliminary injunction against the allegedly anticompetitive acts, as well as unspecified damages.
"We are aware of more than the two instances reflected in the complaint," said Steven Crell, Gateway's lawyer from the firm Cohen, Garelick & Glazier in Indianapolis. "And because the damages we're sustaining are so severe, there's been no time for government involvement."
Gateway's Chief Executive Officer Terry Kopp said the 5-year-old company markets its services to 1,700 employers and 85,000 enrollee employees in Indiana, Illinois, Kentucky and Ohio.
Sagamore denied the charges through its Washington antitrust attorney, Arthur Lerner of the firm Crowell & Moring.
"We don't think the case has merit," said Lerner, a former Federal Trade Commission official.
St. Francis general counsel Pamela Jones denied the allegations.
A hearing on whether to grant an injunction has been scheduled for Feb. 7.