This report originally appeared in the July 2010 issue of DOTmed Business News

The Eleventh Circuit Court of Appeals has allowed Georgia hospital Palmyra Park's antitrust lawsuit to be reinstated against a competitor facility-Phoebe Putney Memorial-which is accused of trying to coerce insurers to exclude Palmyra from in-network contracts. Both facilities operate in Albany, Ga.

Palmyra claims that sometime around 2000, Phoebe Putney threatened Blue Cross Blue Shield of Georgia with raising its reimbursement rates for contracted services, if Blue Cross included Palmyra in its provider network. After that time, Palmyra says that when it attempted to contract with Blue Cross, the facility was rejected due to Blue Cross's contract with Phoebe Putney. The lower district court had dismissed the claims against Phoebe Putney and its parent company, Phoebe Putney Health Systems, holding that Palmyra could not demonstrate that its injury from Phoebe is the type of injury that the antitrust laws were intended to prevent-anticompetitive effect.
Circuit Judge Gerald Tjoflat's opinion outlined how hospitals can exercise power over insurers through leveraging market power in certain medical monopolized services. A facility can then demand more favorable terms from insurers for other medical services. In addition, a hospital can force an insurance company to exclude another facility from its provider network, as Phoebe has been accused of doing. The Eleventh Circuit's opinion held that Phoebe's actions prevented Palmyra from competing in the market it shared with Palmyra. As a result, there is less competition for the services, leading to higher prices and fewer choices for consumers. Judge Tjoflat stated, "This is precisely the type of harm that we allow plaintiffs to vindicate through the antitrust laws....A competitor like Palmyra is perhaps best suited to efficiently enforce the antitrust laws."

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