CHARLESTON – The Department of Justice sued Charleston Area Medical Center and St. Mary’s Medical Center for unlawfully agreeing to allocate territories for the marketing of healthcare services.
Allocating territories for the marketing of healthcare services is a practice that deprives consumers of the benefits of access to important information about competing healthcare providers, according to the DOJ press release.
The department filed the civil antitrust lawsuit in the U.S. District Court for the Southern District of West Virginia, while simultaneously filing a proposed settlement that, if approved by the court, would resolve the lawsuit. It was filed on April 14.
One way that hospitals compete to attract patients is by marketing their healthcare services, including through print advertisements, such as newspaper advertisements, and outdoor advertisements, such as billboards, according to the suit.
Advertising also spurs hospitals to compete for patients by investing in providing better care and a broader range of services.
The DOJ claims CAMC and St. Mary’s curtailed competition for years by agreeing to geographic limits on the marketing of competing healthcare services.
CAMC agreed not to place print or outdoor advertisements in Cabell County and St. Mary’s agreed not to place print or outdoor advertisements in Kanawha County.
The agreement disrupted competition, deprived patients of information needed to make informed healthcare decisions and denied physicians working for the defendants the opportunity to advertise their services to potential patients, according to the suit.
“These hospitals limited competition by agreeing on how and where each would advertise competing healthcare services,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Marketing is an important tool that hospitals use to compete for patients. Today’s action will end the hospitals’ anticompetitive agreement and promote competition.”
The proposed settlement prohibits CAMC and St. Mary’s from agreeing with other healthcare providers, including hospitals and physicians, to limit marketing or to divide any geographic market or territory.
The proposed settlement also prohibits communications between the defendants about their marketing activities, subject to limited exceptions. The hospitals will also implement compliance measures designed to prevent the recurrence of these types of anticompetitive practices.
The proposed settlement with CAMC and St. Mary’s, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act.
The DOJ is represented by Baer, David I. Gelfand, Patricia A. Brink, Peter J. Mucchetti, Ryan M. Kantor, Michelle R. Seltzer, Carol A. Casto, Matthew Lindsay, Kathleen Kiernan, Barry L. Creech, John Lohrer and Glenn Harrison.
The case is assigned to District Judge John Copenhaver.
U.S. District Court for the Southern District of West Virginia case number: 2:16-cv-03664