A Utica, N.Y., federal judge is scheduled to hear oral arguments this week in an unusual civil antitrust lawsuit pitting 23 physicians and other investors in a shuttered ambulatory surgery center against the only acute-care hospital in the same town.
In January 2001, the 18-month-old Rome (N.Y.) Ambulatory Surgery Center filed a lawsuit in U.S. District Court in Syracuse, N.Y., against not-for-profit Rome Memorial Hospital, alleging it tried to freeze the surgery center out of exclusive contracts with the area's largest health plans.
The 195-bed acute-care hospital conspired with Blue Cross and Blue Shield of Utica-Watertown and the Schenectady-based Mohawk Valley Physicians Health Plan to drive the surgery center out of business, the 34-page lawsuit alleged. In its complaint, the surgery center also accused the hospital of intimidating physicians to discourage them from using or referring patients to the center. For example, the hospital passed a bylaw that allowed it to revoke the staff privileges of any physician who invested in competing facilities. The surgery center contends the hospital violated sections of the federal Sherman Antitrust Act that prohibit monopolies or contracts that unfairly restrain trade. The managed-care plans were not named as defendants.
"While there are plenty of disputes between doctors and hospitals, there have only been a handful filed on antitrust grounds," said William Kopit, the surgery center's lawyer, who is with the firm Epstein, Becker & Green. "The topic is contentious and it is a hot and growing issue."
Two weeks after filing the lawsuit the surgery center closed.
The center's closure was directly attributable to Rome Memorial's actions, Kopit said.
But Syracuse attorney Thomas Buckel of the firm Hancock & Estabrook, who represents Rome Memorial, said the surgery center didn't need the hospital's help to go out of business and denied any complicity in its demise.
"The investors grossly and irresponsibly exaggerated financial projections," Buckel said. "The surgery center was predicated on the assumption that its investor surgeons would use their own facility for most, if not all of their ambulatory surgery needs. But only one out of 20 of the physicians used the surgery center more than they used the hospital. The physician investors didn't support with testimony or money this surgery center and most aren't backing the lawsuit now."
Rome is a city of 34,000 in northeastern New York state, about 35 miles east of Syracuse. The two insurers named in the lawsuit cover nearly two-thirds of Oneida County's commercially insured patients. Both health plans supported the surgery center's certificate-of-need application and for a while the Blues plan even contracted with the surgery center.
The surgery center has filed a motion for summary judgment. If the judge grants the motion, Kopit said, a damages hearing would be scheduled, but the liability portion of the case would be resolved. If the judge grants Rome Memorial's motion for dismissal, the surgery center will likely appeal, Kopit said. If the judge denies both motions, the lawsuit will go to trial. If the surgery center wins, it will seek permission to reopen in its former location within the former Griffiss Air Force Base Hospital, Kopit said.