[This story was updated at 5:20 PM.]
A group of Connecticut residents filed a proposed class-action lawsuit against Hartford HealthCare Monday, alleging the network uses its market dominance to charge higher prices to the state’s commercially insured residents.
The 60-page complaint filed in Hartford Superior Court claims HHC used anticompetitive practices to create a monopoly on inpatient hospital services and leveraged its market power to charge insurers higher rates for those services and others, the costs of which were passed onto the state’s employers and consumers.
“As one of Connecticut’s major hospital networks, the result of HHC’s anticompetitive conduct has been a dramatic increase in prices on acute care and in the cost of commercial health insurance for commercially insured individuals and their employers,” the lawsuit alleges.
In an emailed statement, a representative from Hartford HealthCare said the complaint was “without merit,” and added that the network plans defend itself against the allegations in court.
The plaintiffs are being represented by New York City-based law firm Perry Guha and Fairmark Partners. E. Danya Perry, founding partner of Perry Guha stated, “Connecticut has one of the highest rates of health care spending in the country and patients are being saddled with rising insurance premiums for needed medical care.”
The complaint comes just a month after another lawsuit was filed against Hartford HealthCare by rival hospital system Saint Francis Hospital and Medical Center, alleging similar anticompetitive tactics. Lawyers for Saint Francis said HHC is attempting to create a monopoly by acquiring physician practices and demanding they refer patients exclusively to HHC facilities.
Karen Staib and Patrick Fahey, lawyers with Hartford-based Shipman & Goodwin, who are representing HHC in that litigation, didn’t immediately respond to emails Tuesday.
In Connecticut, both the attorney general and the Office of Health Strategy are paying close attention to the issue of hospital consolidation and the impact it can have on the cost of care. A spokesperson for the office of the Attorney General William Tong stated in an email Tuesday that they are “concerned about the allegations and reviewing the matter.” The state’s Office of Health Strategy declined to comment.
The six plaintiffs are seeking class action status in the lawsuit, defining the group as anyone who was enrolled in a commercial health plan in the relevant market, who paid insurance premiums or co-pays for services at HHC facilities. A judge must determine whether to grant class status to the case.
Alleged harm
The allegations the plaintiffs outlined in their complaint Tuesday include several instances where HHC charged more than its competitors for similar services.
In Hartford, HHC’s prices for procedures requiring an overnight hospital stay are higher than all other hospitals in the city, according to the lawsuit. The average price for a hospital stay at Hartford Hospital is about $4,000 more than at Saint Francis, and the price for the least serious type of emergency room visit is 50% higher, the six plaintiffs alleged in the lawsuit.
In New Britain, HHC’s Hospital of Central Connecticut charges “prices that are about 70% higher for inpatient procedures relative to its closest competitor, John Dempsey Hospital, which is less than six miles away.”
In three of the markets in which it operates, Hartford HealthCare has a monopoly, according to the lawsuit. These include Windham, Norwich and Torrington, where HHC accounts for around 80% of all in-patient admissions.
HHC has been able to charge these higher prices by using that leverage to engage in anticompetitive practices when negotiating with insurance agencies, including “all-or-nothing contracts,” “anti-steering and anti-tiering” and gag clauses.
According to a September 2021 presentation to the state legislature’s Insurance and Real Estate Committee, “all or nothing contracts” require insurers to include all of a network’s facilities in its coverage plan, regardless of how expensive they are.
“Anti-steering and anti-tiering” clauses require insurers to “place all hospitals in a health system in the most favorable tier with the lowest cost-sharing tier,” which discourages patients from finding providers that might be lower-cost and higher-quality.
Gag clauses, according to the complaint, prevent health plans from “revealing the terms of HHC’s payer/provider agreements,” thus decreasing price transparency for patients.
“In the context of a hospital system with both significant market power in cities like Hartford and Bridgeport and monopoly market power in three other markets [Willimantic, Torrington, and Norwich], these contract provisions have an especially harmful impact on price and quality,” the lawsuit states.
The CT market follows a pattern
The use of contract clauses to discourage competition and drive up prices have come under scrutiny over the last several years.
In 2016, the Department of Justice and the North Carolina Attorney General went after the state’s largest health system for its use of “anti-steering and anti-tiering” clauses. The case settled two years later, and the system was prevented from using the clauses in future contracts.
In 2018, the state of California, under then-Attorney General Xavier Becerra, filed a lawsuit against the largest hospital system in Northern California for its use of anticompetitive practices to drive higher prices, including “all or nothing” contracts. The case settled a year later, with the hospital system agreeing to pay $575 million and adopt several reforms to its practices.
Becerra now serves as Secretary of the U.S. Department of Health and Human Services under President Joe Biden, and some have speculated that he’ll use the office to zero in on anticompetitive practices at hospitals.
Staff writer Erica E. Phillips contributed to this report.