Federal judge denies HCA's motion to dismiss county and city antitrust lawsuit

ASHEVILLE – An antitrust lawsuit filed by a group of local counties and municipalities against HCA Healthcare and Mission Health will proceed after a federal judge denied defendants’ motion to dismiss.

HCA, a for-profit Nashville based company, bought the hospital system in 2019 for $1.5 billion.

U.S. Chief Judge Martin Reidinger denied HCA’s motion in a Feb. 21 ruling.

“It is unfortunate that the business practices utilized by HCA have resulted in this litigation, but the City of Asheville, along with our other local government co-plaintiffs, remain resolute in our intention to put an end to HCA's monopoly over our local healthcare system,” Mayor Esther Manheimer told the Citizen Times in a Feb. 22 statement. “This has resulted in higher costs and a compromised standard of care.”

Buncombe County Board of Commissioners Chair Brownie Newman told the Citizen Times in a Feb. 22 message that he is reviewing the decision.

The lawsuit began with a filing from the city of Brevard in June 2022. Buncombe County and the city of Asheville filed their own class action in July of that year. These government entities, along with Madison County, joined forces in an August 2022 consolidated complaint filed in the U.S. District Court for the Western District of North Carolina.

In the 58-page consolidated complaint, the class of local governments alleged anti-competitive conduct by HCA in acute care and inpatient services markets, both in the Asheville area and a series of outlying WNC counties.

The plaintiffs argued that HCA uses its market power to require private health insurance plans to include each of the company’s acute care and outpatient services for all facilities in the region, coining the term an ‘all or nothing’ provision. They also asserted that other provisions in the contract keep health plans from encouraging participants from choosing less expensive and higher quality health care providers outside the Mission Health system.

The plaintiffs asserted these claims under the Sherman Antitrust Act, a bill passed in 1890 to preserve competition, according to the Federal Trade Commission.

HCA filed a motion to dismiss in September 2022, arguing that the plaintiffs did not allege any malfeasance in the four-year statute of limitations for the antitrust complaint. Reidinger disagreed, noting that the local governments argued that Mission’s anticompetitive conduct began in 2017.

“At this early stage of litigation, the Plaintiffs are entitled to the reasonable inference that the last anticompetitive act of the Mission Defendants was committed within the limitations period,” the judge wrote.

HCA also argued that the group of governments did not allege any anticompetitive conduct.

Reidinger again disagreed, pointing to the alleged pressure HCA placed on insurance companies, as well as allegations that HCA raised prices and decreased quality of care.

“All of these allegations, taken together and separately, plausibly assert that Defendants’ conduct has harmed competition,” Reidinger wrote. He also dismissed an HCA argument about how the contract provisions promote competition, arguing that discussion would be best reserved for discovery.

ReidingerHCA by Mitchell Black on Scribd

Finally, Reidinger dispensed with an argument that HCA legally acquired its monopoly power under the Certificate of Public Advantage, an agreement that allows a hospital to operate with monopoly power in exchange for state oversight. Mission first operated under that agreement in 1995, Reidinger’s ruling said. The North Carolina General Assembly amended the COPA twice more, before repealing the agreement effective 2018.

Reidinger noted that the HCA’s argument did not address the plaintiffs’ complaints. The local governments did not argue that Mission illegally obtained its monopoly power, he said. Rather, they argued that HCA created an anticompetitive scheme to maintain its monopoly power and charge high prices after the COPA expired.

“We intend to vigorously defend the lawsuit, while continuing to provide excellent healthcare to the citizens of Western North Carolina,” Mission Health spokesperson Nancy Lindell said in a Feb. 22 statement to the Citizen Times.

State attorney general and gubernatorial candidate Josh Stein filed a brief in November 2022 requesting that the court deny HCA’s motion to dismiss the lawsuit. Stein filed a lawsuit against HCA in December 2023, arguing that the hospital and its parent owner failed to provide the emergency services and oncology care it agreed to when it purchased the Mission Health system.

“We’re pleased that the court has rejected Mission’s attempts to avoid responsibility for the ways it has increased health care costs and decreased health care quality in western North Carolina,” Attorney General’s Office spokesperson Nazneen Ahmed told the Citizen Times in a Feb. 22 statement. “We’ll continue to monitor this closely, as we pursue our own litigation in state court.”

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Mitchell Black covers Buncombe County and health care for the Citizen Times. Email him at mblack@citizentimes.com or follow him on Twitter @MitchABlack. Please help support local journalism with a subscription to the Citizen Times.

This article originally appeared on Asheville Citizen Times: Federal HCA class action lawsuit continues after judge denies motion