Marion Healthcare LLC v. S. Ill. Healthcare (Summary)

ANTITRUST

Marion Healthcare LLC v. S. Ill. Healthcare, No. 12-CV-00871-DRH-PMF (S.D. Ill. Aug. 26, 2013)

The United States District Court for the Southern District of Illinois dismissed an outpatient surgery center’s federal and state antitrust claims against a hospital and health insurer.  The surgery center asserted claims under the Clayton Act, Sherman Act, and Illinois Antitrust Act, alleging that the hospital, through its exclusive contracts with the insurer, prohibited the insurer from contracting with the surgery center and other providers of outpatient surgery services.

The hospital and insurer filed a motion to dismiss.  The court granted the motion with prejudice, for the Clayton Act claims, since the Clayton Act only applies to goods, as opposed to services.  According to the court, any goods provided by the defendants were “incidental” to the surgery center’s defined relevant markets of inpatient hospital services and outpatient surgical services.  With respect to the surgery center’s Sherman Act claims of exclusive dealing and illegal tying, the court, applying a rule of reason analysis, determined that the surgery center failed to define a plausible relevant market because it failed to include all potential buyers of inpatient and outpatient services, notably the federal government.

The court dismissed these Sherman Act claims against the hospital without prejudice, thus allowing the surgery center to amend its complaint.  The tying claim against the insurer was dismissed with prejudice because the surgery center was incapable of alleging that the insurer had market power in the tying and/or tied product (hospital services), considering the insurer was not a seller of these services.  The Sherman Act monopolization claim against the hospital was dismissed without prejudice because, once again, the surgery center failed to define a plausible relevant market.  The court’s ruling on the surgery center’s Illinois Antitrust Act claims mirrored those for the federal antitrust claims since federal courts use federal law to construe provisions of the Illinois Antitrust Law that are substantially similar to federal law.