A group of managed-care organizations can sue NorthShore University HealthSystem over allegations that they were charged anticompetitive prices for healthcare after the 2000 merger that created the system.
An Illinois federal judge largely preserved a class-action lawsuit against NorthShore stemming from the 2000 merger of Evanston (Ill.) Northwestern Healthcare and Highland Park (Ill.) Hospital that created a three-hospital health system. Although the Chicago-area hospital group claimed the managed-care organizations' allegations were untimely, U.S. District Judge Edmond Chang said they were preserved thanks to a 2004 Federal Trade Commission antitrust challenge of the deal.
According to the managed-care organizations, NorthShore publicly maintained that its 2000 merger would benefit the communities served by the three hospitals, but they started renegotiating their managed-care organization agreements shortly after the deal closed.
Typically, companies or individuals can only file private lawsuits under federal antitrust law for four years after the allegedly anticompetitive event. But the clock stops ticking while the government has a pending suit.
“This means that whatever rights the class had as of February 10, 2000—four years before the FTC instituted its action against NorthShore—still existed when the class filed its complaint on August 7, 2007,” Chang wrote.
Although the managed-care organizations attempted to sue for damages from before this period, Chang said there was no evidence to support their claims that they were charged supracompetitive prices earlier, as there were no renegotiated managed-care organization contracts in effect at that time.
Ultimately, the FTC determined in 2007 that the three-hospital merger was anticompetitive, but it allowed the hospitals to stay together, even though an administrative law judge tried to unfurl the merger in 2005.
NorthShore mergers are no stranger to legal challenges. The health system is currently fighting an FTC lawsuit against its pending merger with Advocate Health Care in federal court. The FTC lost its battle to temporarily block the merger in lower court, but it has asked the 7th U.S. Circuit Court of Appeals to reverse that decision, despite lingering questions over its market definitions in the case.
The 7th Circuit held oral arguments for the Advocate-NorthShore case in August, but no decision has been released yet.
