Health First again accused of monopoly, trade restriction in new class action lawsuit

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Plaintiffs are seeking damages for alleged above-competitive acute care fees and court intervention in Health First's business practices. It's the second time the integrated health system has fielded a monopoly lawsuit in five years. (Getty Images/martince2)

Central Florida-based Health First has been hit with a class-action lawsuit alleging that the integrated health system built and maintained a monopoly over the local acute care market, leading to higher fees for patients and health plans.

The complaint, filed Monday in the Middle District of Florida Court, comes nearly five years after Health First settled a suit with independent physician group Omni Healthcare regarding similar anticompetitive behavior.

In it, three Florida residents who each had used Health First’s acute care services and made “substantial” co-insurance payments to the group said that it was undeterred by the settlement and over the years has continued working to strengthen its monopoly in two Florida markets.

“Defendant has caused its competitors harm in the form of lost profits; at the same time, it has caused the health plans who pay its bills harm in the form of overcharges for services, well above the fees that the health plans would pay in a competitive market. And it has delivered sub-par care to its patients, threatening their health and longevity,” the plaintiffs wrote in the complaint.

Health First is a not-for-profit group founded in 1995. It’s comprised of four affiliated hospitals and holds subsidiaries that manage physician groups and administer health plans. According to its website, Health First employs more than 9,000 associates.

The plaintiffs said Health First controlled 86.8% of the acute care market (as measured by patient admissions) in the Southern Brevard County market during 2014 and estimate that it has increased that position in subsequent years. They estimate its market share in the separate Brevard County market exceeds 90%.

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The plaintiffs allege that Health First has leaned on its dominant position in the two markets to increase care prices and restrain trade in violation of the Sherman Act and the Florida Antitrust Act.

Among other claims, they highlighted alleged exclusive-dealing arrangements with independent physicians in which Health First would threaten to revoke referrals and hospital privileges.

They also wrote that the acquisition of competing physician group Melbourne Internal Medical Associates in 2012-13 “has helped Health First to perfect its control over the majority of admissions and specialty referrals” in the markets through exclusive or near-exclusive admissions to Health First facilities.

Health First denied the behaviors outlined in the complaint, and told Fierce Healthcare in an email statement that it "will vigorously defend against these unfounded allegations."

"What is especially disappointing about this latest lawsuit is the decision to initiate baseless litigation while Health First is continuing the fight to protect Brevard during the COVID-19 pandemic," the organization said in the statement. "Furthermore, the claims in this lawsuit were previously litigated years ago by an individual who is obsessed with suing Health First. At a time when our resources should be focused on saving lives, we find ourselves having to organize a multi-million-dollar defense. This lawsuit will divert resources from saving lives, but it will not distract from our mission to improve the wellness and health of Brevard families.”

The plaintiffs are seeking damages be awarded for the alleged above-competitive fees for acute care services and that Health First be permanently enjoined from continuing its “exclusionary conduct.”

In contrast to the Health First lawsuit, recent industry discussion regarding provider monopolies has generally circled around mergers and acquisitions and antitrust law.

These concerns have led to a handful of nixed deals and settlements over the past several months, including those between Atrium Health and Houston Healthcare, Geisinger Health and Evangelical Community Hospital, and Prisma Health and LifePoint Health. The Federal Trade Commission also said it had launched a probe earlier this year to investigate the impact such mergers have had on surrounding competition.