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Carolinas HealthCare loses round in lawsuit that says it illegally reduces competition

Carolinas Medical Center is the flagship hospital of Charlotte-based Carolinas HealthCare System.
Carolinas Medical Center is the flagship hospital of Charlotte-based Carolinas HealthCare System. mhames@charlotteobserver.com

In a setback for Carolinas HealthCare System, a federal judge has ruled that an antitrust lawsuit filed against the chain last year by the U.S. Justice Department and the N.C. Attorney General’s Office can move forward.

The decision last week by Judge Robert Conrad rejects an attempt by the state’s largest hospital system to dismiss the civil case, in which CHS is accused of illegally reducing competition in the Charlotte region’s health care market.

Specifically, the suit contends the system places illegal contract restrictions on insurers that forbid them from steering customers toward lower-cost, competing hospitals. The suit argues the restrictions cause patients in the Charlotte region to face higher health care costs and fewer choices.

In the March 30 ruling, Conrad wrote it is “plausible” that CHS violated federal antitrust law, as the Justice Department claims. The lawsuit is “full of reasons” to believe the system’s market power has the potential for “genuine adverse effects on competition,” he wrote.

But he also noted that the court has not yet been presented with enough facts enabling it to conclude whether CHS’ restrictions on insurers restrict competition in the market.

In a statement to the Observer, Carolinas HealthCare said that while the court did not dismiss the governments’ claims outright, “the court noted that Carolinas HealthCare System had outlined a strong challenge to the government’s claims.”

“Carolinas HealthCare System has not violated the antitrust laws and we look forward to further supporting our position in court,” the system said, adding that it “remains committed to providing quality care to our patients.”

“Our mission to deliver high quality services to anyone that comes through our doors will always be our main focus,” it said.

Carolinas HealthCare is one of the nation’s largest nonprofit health care systems, running about 40 hospitals. CHS is also the dominant hospital system in the Charlotte area, controlling about 50 percent of the market, where it operates Carolinas Medical Center and nine other hospitals in the region.

Its closest competitor is Winston-Salem-based Novant Health, which operates 14 hospitals in four states, including four in Mecklenburg County.

The outcome of the antitrust case could have sweeping implications nationwide, lowering hospital costs for patients in Charlotte and far beyond, experts have said.

Hospitals across the U.S. would likely feel compelled to remove contract provisions that tend to reduce competition and increase health care prices, according to some experts.

Staff writer Ames Alexander contributed.

Deon Roberts: 704-358-5248, @DeonERoberts

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