Premier Health Partners (Premier), a major hospital network in Dayton, Ohio, has won dismissal of an antitrust suit originally filed by a rival hospital. A physician-owned, for-profit hospital filed suit in 2012, alleging Premier and its member hospitals violated Section 1 of the Sherman Act by entering into a group boycott to force its rival from the market, implemented through a series of contracts with physicians and payors conditioned on the parties’ refusal to do business with the rival. These contracts included agreements with payors that had “panel limitations,” allowing Premier to renegotiate reimbursement rates if payors add new hospitals to their network, as well as non-compete agreements with physicians requiring patient referrals within the Premier hospital network.

Premier’s rival subsequently filed suit, claiming these agreements constituted per seviolations of the Section 1 of the Sherman Act, which prohibits “every contract, combination … or conspiracy in restraint of trade.” Courts have deemed per setreatment appropriate where an agreement is considered inherently anticompetitive, such that there can be no plausible procompetitive justification for its existence. Where courts apply per se treatment, the plaintiff is only required to prove the conduct at issue took place. In contrast, under a Rule of Reason analysis, the plaintiff must demonstrate the anticompetitive impact of an agreement outweighs any procompetitive benefits.

The district court dismissed the case in August 2017, finding that per se treatment of the contracts at issue would be inappropriate. Applying a Rule of Reason analysis, the district court determined that the pro-competitive justifications for the agreements outweighed the anticompetitive effects. On appeal, the Sixth Circuit affirmed, finding that the alleged anticompetitive activity did not qualify for per se treatment in light of Premier’s procompetitive justifications for its agreements.

The Sixth Circuit decision is available here.