The Department of Justice (DOJ) and Ohio’s attorney general allege that 16-hospital nonprofit OhioHealth uses its market strength to force payers into noncompetitive contracts.
The officials outlined the claims in a lawsuit filed Friday alleging violations of federal and state competition laws. Specifically, they said the health system “forces” commercial plans to include or favor its facilities in their plan designs, precluding the insurers from “offering budget-conscious plan designs that promote competition,” such as a narrow or tiered network plan.
“This lawsuit challenges anticompetitive contract restrictions that prevent consumers from choosing lower-cost health plans and severely limit consumers’ access to price information,” Omeed A. Assefi, acting assistant attorney general, of the DOJ’s Antitrust Division, said in a release. “These restrictions cause many Columbus residents to pay more for lower-quality healthcare. American families and consumers deserve better.”
The lawsuit describes OhioHealth as the dominant hospital system of the Columbus area, with the Ohio State University Wexner Medical Center and Mount Carmel Health System (owned by Trinity Health) also serving the area as competitors. OhioHealth charges payers “significantly higher” reimbursement rates than other providers, according to the suit, and its services “are not generally higher quality than those of its local rivals.”
It does so, the suit continues, because of the competitive power it wields due to its high market share, which includes some rural hospitals that payers need to include in their plans to maintain network coverage. However, terms of the contracts the system signs “require[] “a payor that wants any of these providers in its network to include all of them in its network,” the government wrote.
The DOJ and Ohio argued that those terms are a violation of the Sherman Act and the state’s Valentine Act, and asked the court to enjoin the system from enforcing them or replacing them with substitute means.
“When competition is blocked, consumers end up being the biggest losers,” Ohio Attorney General Dave Yost said in a release. “My office stands with the Justice Department in our determination to eliminate these types of unfair practices and protect Ohioans' wallets.”
In a statement provided by a spokesperson, OhioHealth said it has been cooperative as the DOJ has reviewed its managed care agreements.
“We are confident in our position and remain committed to full compliance with all applicable laws and regulatory requirements,” the statement reads. “As this is active litigation, we will not comment on specifics beyond what has been publicly disclosed.”
Regulators and litigants have previously notched wins against major nonprofit systems alleged to employ restrictive, anticompetitive payer contracts. Key among these were a $575 million settlement between Sutter Health and California over alleged conduct that included “all-or-nothing” contract clauses, as well as a long-running class-action case against the organization that was settled last year for $228.5 million.