Honigman wins important health care and physician group antitrust decision for client in U.S. District Court, District of Idaho

Adopting arguments put forth by the Federal Trade Commission, the Idaho Attorney General, and by Honigman Miller Schwartz and Cohn LLP on behalf of its client, St. Alphonsus Medical Center, the United States District Court for the District of Idaho recently issued a landmark decision in the health care field. The Court ruled that state and federal antitrust laws were violated when Idaho’s largest health care system, St. Luke’s Health System, acquired the Saltzer Medical Group. This acquisition created an entity that included 80% of the primary care physicians in a local region, giving it significant bargaining leverage over health insurance plans.

David A. Ettinger, a Honigman partner and head of its Antitrust and Trade Regulation Practice Group, represented St. Alphonsus, which is located in Idaho and Oregon. In the Memorandum Decision and Order from Judge B. Lynn Winmill in St Alphonsus Medical Center v. St. Luke’s Health System Ltd. No. 1:12-CV-00560, the court ruled that the acquisition must be “unwound,” since it violates section 7 of the Clayton Act and the Idaho Competition Act. In the decision, Judge Winmill noted that the antitrust laws required the court to predict whether the deal would have anticompetitive effects, and he determined that it would.

According to an article in Modern Healthcare, “Healthcare providers and antitrust experts have watched the case closely because it’s the first time that the federal courts have decided a Federal Trade Commission case against a physician practice deal. The decision comes as healthcare systems across the U.S. have been rapidly scooping up medical groups to create integrated delivery networks to prepare for population health management.” (January 24, 2014, “Judge rules St. Luke’s must give up Saltzer Medical Group”).

Ettinger stated, “This decision should have significant implication for hospitals and physician groups throughout the United States. In the future, organizations contemplating physician practice mergers and acquisitions will need to carefully consider the antitrust implications of the transaction. This is particularly true when a merger involving a large physician group in a localized area creates an entity with significant market share.”

Ettinger is nationally recognized as a leading healthcare antitrust attorney. Honigman’s Antitrust and Trade Regulation Practice Group has litigated antitrust cases and represented clients in antitrust matters in more than 30 states. The firm’s efforts have included one of the leading hospital merger cases and one of the leading cases on HMO liability.