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Feb 28

Court Dismisses Antitrust Claims Brought by Radiologists against Hospital

On January 15, the U.S. District Court for the Western District of Tennessee dismissed claims brought by four interventional radiologists that they were illegally excluded from providing services to a Memphis hospital. The court concluded that such claims failed to demonstrate an injury to competition as required by federal antitrust laws. (Gold v. Methodist Healthcare Memphis Hospitals, No. 06-2329 (W.D. Tenn. 1/15/08)).

In their complaint, the radiologists alleged lost profits caused by an exclusive contract for radiology services between Methodist Healthcare Memphis Hospitals and Memphis Radiological PC. Methodist Hospital controls approximately 40% of the market for radiological services in the Memphis area.

The court found that the plaintiffs lacked standing to pursue their claims, noting that federal antitrust laws are designed to protect consumers, not competitors, and that the plaintiffs had not shown that the exclusive contract at question had any adverse effect on consumers or competition generally. The court also concluded that the plaintiffs failed to demonstrate an antitrust injury, since exclusive contracts are not presumptively anticompetitive. Additionally, there was no showing that defendants’ actions decreased competition, since the contract does not bar the plaintiffs from practicing at hospitals which serve the remaining 60% of the Memphis market for radiological services. According to the court, the underlying injury alleged by the plaintiffs was merely lost profits, and such an injury is not of the type the antitrust laws are designed to prevent.

Finally, the court found that—even if antitrust injury could be found—the plaintiffs were not the proper parties to pursue these injuries. Rather, the court noted that “the most direct victims of anticompetitive behavior are patients and the third-party insurance plans that must pay their bills.”

This is another case in a long line of private antitrust cases challenging exclusive contracts between hospitals and hospital-based physicians. Excluded physicians rarely prevail in such cases, but many are apparently undeterred from bringing them.

A copy of the court’s decision is attached.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →