Promedica is appealing a court ruling declaring it wrongfully terminated insurance contracts with rival McLaren Health Care.
A federal judge had issued a preliminary injunction barring Promedica from terminating its insurance contracts with St. Luke's Hospital in the Toledo, Ohio, area in late December. Judge Jack Zouhary of the Northern District of Ohio concluded the contracts were wrongfully terminated and barred Promedica's insurance arm, Paramount, from canceling them.
Zouhary noted that the Supreme Court has previously found that if a company is "'attempting to exclude the rivals on some basis other than efficiency,' it is fair to characterize its behavior as predatory. So too here."
"For the rest of the public in Lucas County, a dominant player in the healthcare market unlawfully consolidating power and market share would likely result in lower-quality care, higher prices, or both," Zouhary added.
Promedica was also required to notify plan members of the ruling and that they still have access to St. Luke's for care, per the judge's order.
Promedica is now appealing Zouhary's decision to the Sixth Circuit, according to a filing issued Monday.
McLaren Health Care said in a statement: "We are confident today's ruling will be upheld and McLaren St. Luke's will once again be able to care for the thousands of individuals and families who rely on our hospital and its dedicated physicians and caregivers."
Michigan-based McLaren brought the suit alleging that Promedica insurance arm Paramount terminated its contracts with St. Luke's in retaliation because McLaren had just finalized its purchased of St. Luke's. In addition to its health plan, Promedica also operates hospitals in Michigan and terminated its agreements with McLaren's insurance arm there.
"The harm posed by the abrupt cancellation of the agreements between Paramount and St. Luke's risks further diminishing Promedica's primary rival in southwest Lucas County, [Ohio] and one of their only three rivals in Lucas County overall," Zouhary wrote in his opinion in December.
Promedica has a long history with St. Luke's. It originally bought the rival hospital in 2010 but had to unwind the deal after a drawn out legal tussle with the Federal Trade Commission and attorney general of Ohio. It was a legal battle closely watched by the industry.
The fallout from the acquisition and the divestiture terms left St. Luke's hospital in a "precarious financial situation," the judge concluded.