Carolinas HealthCare System is fighting back against a lawsuit by the U.S. Justice Department that alleges the system imposed anti-competitive contract requirements on insurers, saying a federal appeals court has rejected the government's arguments.
Carolinas urged a North Carolina federal judge to toss out the Justice Department's suit after the 2nd U.S. Circuit Court of Appeals rejected the government's arguments against similar contract arrangements in a case involving American Express.
Although the North Carolina judge is not bound to follow the 2nd Circuit's judgment, Carolinas maintains the appellate ruling undercuts the feds' arguments that it would harm competition.
The 10-hospital system has steering provisions in contracts with Aetna Health of the Carolinas, Blue Cross and Blue Shield of North Carolina, Cigna Healthcare of North Carolina and UnitedHealthcare of North Carolina. Those insurers make up 85% of the commercial market in the Charlotte area, the Justice Department said. Under the contracts, Carolinas gave the insurers discounted rates for its facilities and services. Without the arrangements, the health system claims the insurers would take advantage of its inclusion in their networks.
The Justice Department hasn't previously targeted steering provisions in hospital contracts. In the past, the agency has attacked the issue by challenging contracts with most-favored-nation clauses.
