Four Michigan hospital systems accused of antitrust

Melissa Nann Burke
Detroit News Washington Bureau

Washington — The Justice Department and Michigan Attorney General’s Office on Thursday sued four hospital systems in south central Michigan, alleging they orchestrated agreements not to market or advertise themselves in one another’s territories in violation of antitrust laws.

The civil lawsuit filed in U.S. District Court for the Eastern District of Michigan says the agreements constitute “unreasonable restraints of trade that are per se illegal” under the Sherman Act and under the Michigan Antitrust Reform Act.

Government attorneys have settled with three of the defendants, Hillsdale Community Health Center in Jackson County, the Community Health Center of Branch County and the Toledo-based ProMedica Health System, whose facilities include Bixby and Herrick hospitals in Lenawee County.

The fourth and largest hospital system, Allegiance Health in Jackson County, plans to contest the charges in court.

The three that settled agreed not to enter future pacts that prohibit or limit marketing within the territories of other service providers or to communicate about one another’s marketing efforts or strategies.

They are also each required to appoint antitrust compliance officers and cooperate with any government investigation or trial regarding their “unlawful” marketing restriction agreements against other defendants. Each of the settling companies also must pay Michigan $5,000 to cover the attorney fees and costs of investigation.

The complaint alleges Allegiance and Hillsdale had a “hands off” agreement on marketing limits since at least 2009. In one instance described in court documents, Allegiance CEO Georgia Fojtasek told Hillsdale’s CEO that Allegiance would take a “Switzerland” approach toward Hillsdale, confirming this sentiment by mailing Hillsdale’s CEO a Swiss flag.

“We are disappointed that, despite our cooperation with the Justice Department and the Attorney General’s Office in their investigation, these regulators have misinterpreted Allegiance’s conduct,” Fojtasek said in a statement.

She noted the number of patients from Hillsdale County seen at Allegiance facilities has “significantly” increased over time, and, “ultimately, Allegiance’s marketing strategy has greatly benefited consumers.”

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