Largest health system in N.C. hit with antitrust lawsuit

Carolinas HealthCare System (CHS) is being accused of illegally keeping patients from lower-priced competitors by including steering restrictions in its contracts with insurers.

The lawsuit filed June 9 by the U.S. Justice Department (DOJ) and the North Carolina Attorney General’s office claimed CHS used its power in the Charlotte market, where it runs 10 hospitals, to include provisions in contracts with insurers allowing CHS to terminate the deal if the insurer encourages patients to use other hospital. The suit alleged one insurer contract specifically stipulated the insurer “shall not directly or indirectly steer business away from” CHS.

““Americans should be able to choose a healthcare provider that gives them and their families the most cost-effective and appropriate treatment,” Principal Deputy Assistant Attorney General Renata B. Hesse, head of the Justice Department’s Antitrust Division, said in a statement.  “This lawsuit will stop a dominant hospital from using its market power to undermine its smaller competitors’ efforts to attract patients by competing on the price and quality of their services.”

CHS is accused of including the steering provisions in contracts with insurers Blue Cross Blue Shield of North Carolina, Aetna Health of the Carolinas, Cigna Healthcare of North Carolina and United Healthcare of North Carolina, which together cover 85 percent of the commercial health insurance market in Charlotte.

The N.C. Attorney General’s office said CHS used these practices in response to its reputation as being an expensive provider.

“To protect its revenues, the plaintiffs contend that CHS aggressively uses its market power to keep consumers from taking advantage of better prices at other hospitals and from getting access to less expensive insurance policies,” the office said in a statement. “The lawsuit also alleges that CHS blocks consumers from receiving information about the cost and quality of CHS services, critical data that could potentially help consumers find quality care at better prices.”

Similar allegations have been levied against large nonprofit hospitals in the state. A 2012 investigation by the Charlotte Observer found CHS and other large health systems had “pushed up healthcare costs, paid executives millions and left thousands with bills they struggle to pay.”

In a statement to the Observer, CHS promised to fight the lawsuit.

“Carolinas HealthCare System is committed to fair competition and looks forward to presenting our position in court," read the statement. "Our arrangements with insurers are similar to those in place between insurers and healthcare systems across the country. We have neither violated any law nor deviated from accepted healthcare industry practices for contracting and negotiation.”