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District Court Finds Hospital's Joint Venture Not "Per Se" Unlawful

On the eve of trial, and after years of litigation (including an appeal to the Sixth Circuit), all claims by Dayton, Ohio hospital The Medical Center at Elizabeth Place ("MCEP") against Premier Health Partners ("Premier") have been dismissed with prejudice. This case represents an important development in the body of case law addressing the antitrust risk introduced by joint ventures. 

In 2012, plaintiff MCEP filed a complaint against Premier and its hospital affiliates alleging that they had conspired to orchestrate a per se illegal group boycott against MCEP. MCEP is a 26-bed physician-owned hospital. Premier operates four hospitals through a joint operating agreement in the Dayton area. Premier does not provide health care services, but it handles some of the financial business of the defendant hospitals, including negotiating their managed-care contracts. MCEP claimed that the defendant coerced payors into denying MCEP full access to insurance networks, and that the defendants threatened financial consequences for physicians affiliated with MCEP.

After the case was reassigned to a new judge, the court reconsidered an earlier order on defendants’ “untimely” but “very substantial” question about whether the plaintiff’s group boycott allegations should be analyzed under the per se rule or the rule of reason. Finding that “the challenged restraints at issue in this case do not have such a clear lack of any redeeming virtue that they should be conclusively presumed to be unreasonable,” the court held that the per se standard was inapplicable and dismissed the case—with prejudice—because the plaintiff had disavowed any reliance on a rule of reason analysis. The Medical Ctr. At Elizabeth Place, LLC v. Premier Health Partners, et al., No. 3:12-cv-26 (S.D. Ohio Aug. 9, 2017).

For those looking for more insight on why the joint venture survived the court’s scrutiny, we have drafted this alert that summarizes the history of the case and why the district court ruled that the proposed per se standard was inapplicable.

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Dionne Lomax