Complaint against healthcare company sufficiently establishes lack of interchangeability between emergency and urgent care services

On September 5, 2024, the United States District Court for the Middle District of Florida denied Health First, Inc.’s motion to dismiss the amended complaint of plaintiffs in the Brevard County, Florida health care monopoly and anticompetitive practices class action lawsuit. Powers et al. v. Health First, Inc.No. 6:23-cv-375-JSS-RMN (M.D. Fla. Sept. 5, 2024). The court found that plaintiffs’ amended complaint contained a sufficiently detailed explanation of why urgent care and similar facilities are not interchangeable with emergency rooms, correcting deficiencies in the prior complaint regarding the definition of the relevant product market. Brevard County plaintiffs may now proceed to an evidentiary hearing on all four counts of their alleged violations of Sections 1 and 2 of the Sherman Act and the Florida Antitrust Law.

Plaintiffs, residents of Brevard County, Florida, filed their first class action lawsuit on March 1, 2023, alleging four causes of action: (1) monopolization of the inpatient, emergency, and outpatient care market in southern Brevard County in violation of Section 2 of the Sherman Act; (2) horizontal market divisions in restraint of trade in violation of Section 1 of the Sherman Act; (3) exclusive dealing in violation of Section 1 of the Sherman Act; and (4) violations of the Florida Antitrust Law. Specifically, Plaintiffs alleged that Defendants monopolized the health care market in southern Brevard County by using its large market share and vertically integrated business model to illegally control physician referrals in order to limit referrals to other competing hospitals and acute care physicians; inducing and obtaining preferential vertical contracts with competing health plans, physicians, and other providers; threatening and deterring competitors from entering the market; and entering into a horizontal market-sharing agreement with an acute care competitor. Defendants’ conduct allegedly resulted in uncompetitively high prices and reduced quality of care for defendants’ policyholders. Importantly, in their original complaint, plaintiffs defined the relevant geographic market as Brevard County or southern Brevard County and the relevant product market as “the sale of inpatient, emergency, and outpatient acute care hospital care by (defendant) and competing hospitals.”

Defendant filed a motion to dismiss all counts, arguing that plaintiffs’ definition of the relevant product market was flawed because it did not adequately define “acute care.” The Court agreed and, on September 7, 2023, granted defendants’ motion as to counts one, three, and four, but permitted plaintiffs to amend their complaint. Plaintiffs filed their first amended class action on September 21, 2023.

Plaintiff’s amended complaint clarified the product market definition by removing outpatient care and adding references to hospital point-of-service (“POS”) billing codes to more precisely define what services were covered by the definition. Defendant responded by arguing that plaintiff’s amended product market definition continued to be inadequate because it did not include non-hospital providers as reasonably interchangeable substitutes for emergency department care. Plaintiffs sought to distinguish emergency department settings from acute care and other non-hospital settings, pointing in part to defendant’s data showing that a significant portion (74%) of acute care patients were admitted from an emergency department, which can provide integrated and comprehensive acute care not available in other settings.

The court denied defendants’ motion to dismiss the amended complaint, finding that plaintiffs had sufficiently argued their claims. The court noted that plaintiffs had provided a detailed explanation to support their position that urgent care and similar facilities were not interchangeable substitutes for emergency rooms. In denying the motion to dismiss, the judge emphasized that because the scope of the relevant product market includes an examination not only of the product at issue in the case but also of other products to which consumers would reasonably turn as substitutes, the parameters of the relevant market are questions of fact that should not be decided at the motion to dismiss stage.

The court found that plaintiffs had credibly alleged a relevant product market and that an investigation would be necessary to determine whether a substitute actually existed. This case is a useful reminder that plaintiffs in antitrust cases may sufficiently allege a relevant product market that will survive a motion to dismiss by providing enough information to credibly suggest the contours of the alleged relevant markets.

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