Davis et al. v. HCA Healthcare and Mission Health System

Date Filed: August 10, 2021
Status: Pending
District Court: North Carolina Superior Court (Buncombe County) – Case No. 21 CV 03276
Nature of Suit: Antitrust
Defendant Type: Provider
Plaintiff Type: Private

The class action lawsuit filed in North Carolina state court against HCA Healthcare and Mission Health alleges anticompetitive practices in violation of the North Carolina Constitution and antitrust and consumer protection laws. The lawsuit follows HCA’s 2019 acquisition of Mission Health in North Carolina, which was approved with conditions by the North Carolina AG, although none of which were competitive impact conditions.

Plaintiffs, who are North Carolina patients, claim that Tennessee-based HCA used market power garnered from the cross-market merger to demand anticompetitive terms in contracts with insurers, including tying, all-or-nothing, anti-steering, and gag clauses, driving up prices and insurance premiums. Plaintiffs point out in the complaint that even prior to the merger, Mission Health was shielded by a state-administered certificate of public advantage (COPA) and used similar anticompetitive tactics. The COPA ended in 2016 and the further consolidation with HCA has culminated in making Mission Health the most expensive hospital system in North Carolina for many procedures.

Plaintiffs seek damages and an injunction to prevent future anticompetitive activity.

On September 19, 2022, the court granted in part and denied in part HCA’s motion to dismiss holding that members of commercial health insurance plans have standing as indirect purchasers and that they stated a proper claim regarding the tying allegation. However, the court granted the dismissal of the monopolization claim because the hospitals are not state actors. Likewise, the claims of monopoly acquisition, monopoly maintenance, monopoly leveraging, and attempted monopolization failed due to the claim not alleging unlawful behavior or a sufficient market share.

Subsequently, the plaintiffs’ filed an amended complaint that was subject to a new motion to dismiss by HCA and Mission. The court held that the amended complaint stated a valid claim for monopolization resting on a theory of monopoly maintenance that stems from defendants’ alleged anticompetitive practice of contractual restraints that help them maintain a monopoly over a particular region in the state. The court also held that the amended monopoly leveraging claim was plausibly stated because it alleged a sufficient causal link between the anticompetitive acts and the ability of the defendant’s to leverage their existing monopoly for inpatient services into a new monopoly for the same services in the western North Carolina counties covered by Mission. However, the renewed claim for monopoly acquisition and all claims regarding monopolization of outpatient services were dismissed with prejudice.

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