NC Treasurer files interest in HCA anti-trust suit; plaintiffs reiterate concerns
The latest filings in a class-action, anti-trust lawsuit against HCA Healthcare reiterate arguments of declining quality and rising costs and add a new interested party: North Carolina State Treasurer Dale Folwell.
In an amicus brief filed Dec. 13, Folwell states in his capacity as an individual, he has interest in the case based on allegations of HCA and Mission Health, stressing the importance of transparency in pricing as costs hinder the state’s administration of its health plan.
An amicus brief is filed by people or groups who are not parties to the case, but have a strong interest in the matter, and submit information to the court, with intent to influence is decision, according to Cornell Law.
“A significant part of the state’s budget goes to health care,” it reads. “The hospitals should be held accountable to comply with the Transparency Rule and with antitrust law. In the area of a person’s healthcare, transparency and honesty are imperative and any other corporate approach frankly amounts to nothing more than a pattern of deceit.”
Folwell, sworn in as treasurer in 2017, says in the brief that in that capacity, he administers the health plan of more than 750,000 current and retired public employees, making it the largest single purchaser of health care in the state.
In that role, the brief says Folwell has attempted to get pricing information on routine medical services from HCA/Mission, citing the recent federal pricing transparency rule requiring hospitals to disclose and make available online their prices.
He says his office has been unable to obtain a copy of agreements between HCA/Mission hospitals and its plan administrator showing prices, and notes research showing that consolidation increases prices.
“Patients and taxpayers deserve to know what they are paying for care,” the brief says. “It is impossible to give appropriate raises to valued employees or take on new employees when so much funding has been budgeted for healthcare. State government leadership on this issue is imperative. The ever-increasing costs being charged with these multi-state behemoths like HCA HealthCare are of high concern.”
The lawsuit, filed in August by six community members, including Will Overfelt, Jonathan Powell, Asheville chef Katie Button and Sylva psychologist Dr. Faith Cook, charges HCA with using a monopoly on the local health care industry to charge higher-than-average rates as quality deteriorates.
“Despite this rule having gone into effect in January, HCA has still not complied with its disclosure requirements,” they say in a brief filed Dec. 13 asking the court to deny HCA’s motion to dismiss.
The six plaintiffs are represented by Salisbury firm Wallace and Graham, as well as Washington, D.C.-based Fairmark Partners.
Brennan Bilberry, with Fairmark, declined to comment on the latest filing.
Mission did not ‘outcompete rivals in free market’
“For years, residents and businesses of Western North Carolina have endured some of the highest and fastest growing healthcare prices in the State, while the quality of care they receive has deteriorated,” the brief says. “That is because Mission Health … has a near-total monopoly over essential healthcare services in the region.”
It cites Mission as having a 90% share of the health care market for inpatient services in Buncombe County and that commercial health plans, employers and patients around Asheville have no choice but to obtain those necessary services from Mission.
“Mission did not build this monopoly by outcompeting rivals in the free market,” the brief says.
Citing costs for Caesarian section surgeries at more than twice the state average and monthly insurance premiums and more, the 87-page suit filed in August says “HCA has free rein to dictate the prices it charges insurers and consumers while at the same time undermining quality to cut costs.”
In a motion to dismiss and related brief filed Oct. 13, HCA called the lawsuit and “end-run” around the sale of nonprofit Mission to the for-profit HCA Healthcare, based out of Nashville.
HCA said then that residents are more concerned about the sale of Mission than an unfair monopoly on the market, saying the suit fails to show the company had “unlawfully acquired or maintained monopoly power.”
HCA says Mission Health operated for years under a Certificate of Public Advantage, immunizing it from antitrust liability. But regardless of COPA immunity, a 40-page memo in support of the motion to dismiss says “the Complaint fails to state a cognizable claim because it contains no factual allegations of conduct that is unlawful or otherwise actionable.”
“Plaintiffs are attempting to use North Carolina’s antitrust laws to attack that acquisition and (perhaps) even unwind it, even though the acquisition was vetted thoroughly and approved by both the US Federal Trade Commission and the State of North Carolina,” HCA’s memo says.
N. C. Attorney General Josh Stein, whose office approved the $1.5 billion sale of Mission Health to HCA Healthcare in 2019, said in August that the office “will not hesitate to act” if allegations, which he called “very concerning,” are true.
Stein told the Citizen Times his office’s authority to prevent or restrict private mergers can be narrow, saying he approved the sale because the $1.5 billion was a fair price.
He reported nearly 300 complaints filed with his office through September, about quality of care, neglected health issues and closures of regional clinics, including from current and former employees.
“The fact that the Attorney General approved the merger does not immunize HCA from scrutiny,” the plaintiffs argue. “The Attorney General did not evaluate quality of care or pricing. … And a regulator’s approval of a merger does not immunize a monopolist from a later suit.”
‘Unchecked monopoly power’
In the response filing Dec. 13, the plaintiffs say that after the COPA was repealed, and “once it wielded unchecked monopoly power, Mission extended into new service lines and geographies through anticompetitive contractual restraints.”
Mission knew that insurers had to include the Asheville hospital in their networks, it says, and “Mission forced commercial health plans to submit to contractual terms to which they would never otherwise agree.”
Through those “all-or-nothing” contracts, the filing says Mission required insurers to put all the system’s facilities in-network at rates higher than what a competitive market would have otherwise sustained.
“Through these restraints, Mission freed itself from the price and quality competition that is the basis of our free enterprise system,” it says, adding that when HCA took over in 2019, the for-profit hospital company expanded those practices, leading to even higher prices and lead to the decline in quality of care.
The filing says case law contradicts HCA’s claims that higher prices don’t indicate an anti-competitive market, and that HCA made no attempt to rebut the claims of decreased quality, also an indication of antitrust harm.
HCA, in its brief supporting its motion to dismiss, instead says its contracting practices increase competition by acting as volume discounts for insurers, which receive better prices in exchange for sending higher volumes to hospitals.
Those “assertions come nowhere close to rebutting what the claims data and objective quality metrics show,” the Dec. 13 filing says.
While possessing monopoly power isn’t itself unlawful, it says, “abusing or seeking to maintain that monopoly power through anticompetitive conduct (is).”
HCA/Mission is using its monopoly over inpatient care in the Asheville region to force commercial health plans to pay inflated rates for other services in Asheville and surrounding areas, it says.
The brief points to differences in insurance premiums in the region as proof of a substantial effect those practices have had on commerce, alleging that they’ve caused “exorbitant increases in the prices of hospital services and by extension, insurance premiums.”
Folwell, in his brief, says improper contract terms by a monopoly hospital “could be costing the (State Health) Plan millions of dollars, and the Plan and its participants may be entitled to damages if these allegations are substantiated in discovery.”
While HCA has called the lawsuit an effort to undo the sale of Mission to HCA, the Dec. 13 brief says that purchase was made with the “specific intent to monopolize.”
“Defendants correctly note that antitrust law does not prohibit the possession of monopoly power that is the result of ‘growth or development as a consequence of a superior product, business acumen, or historic accident.'”
That’s not how HCA acquired this monopoly, the brief alleges, saying it was instead an identified acquisition opportunity that would give HCA the ability to dictate prices and cut quality without regulatory or competitive checks.
“It was a deliberate business plan, and part of HCA’s national playbook,” it says. “In communicating with Wall Street investors, HCA called Mission a ‘market maker’ that ‘need[ed] to be a part of something bigger.'”
According to an Aug. 30 order from Special Superior Court Judge Adam M. Conrad, HCA has until 11:59 p.m. Jan. 13 to file the next reply brief.
Derek Lacey covers health care, growth and development for the Asheville Citizen Times. Reach him at DLacey@gannett.com or 828-417-4842 and find him on Twitter @DerekAVL.