- Carolinas HealthCare System, which bills itself as the second largest not-for-profit health care system in the U.S., has hit back against a lawsuit from the U.S. Department of Justice that argued the system required insurers to accept anti-competitive contract arrangements.
- The health system requested that a North Carolina federal judge throw the lawsuit out because the basis for the DOJ's case has recently been rejected by the U.S. Court of Appeals in a similar contract case around American Express, Modern Healthcare reported.
- While the federal judge in North Carolina could decide differently from the appeals court, Carolinas argued the American Express decision to be a major blow to the DOJ's case.
The argument hinges on whether the DOJ prevails in suggesting the health system's insurer contracts could hurt competition, or the system prevails in arguing it would actually improve it.
Carolinas has narrow network contracts that include steering provisions with Aetna Health of the Carolinas, Blue Cross and Blue Shield of North Carolina, Cigna Healthcare of North Carolina, and United Healthcare of North Carolina.
It previously sought a dismissal of the suit in August, when it argued that it does not use its market power to impose its terms, in which insurers are barred from steering enrollees toward competing hospitals for reasons such as lower prices or better services. The lack of imposition remains a key component of the system's argument.
“The government does not contend that the hospital authority has secured steering restrictions through coercion,” Carolinas wrote in its latest brief. Carolinas argued the it does indeed earn consumer loyalty and discount prices, as the DOJ noted. "These activities are the hallmark of competition – the polar opposite of an exercise of market power,” the brief said,
The American Express case had been based on a similar principle in which the company was accused of being anti-competitive in writing contracts that restricted merchants from steering consumers to use cash or other credit cards, and the DOJ had been relying on that case to bolster its position against Carolinas, Modern Healthcare reported.
The outcome of the Carolinas case is expected to set a precedent for health systems and insurers nationwide given that such contracts exist across the country, the health system previously said.