A closely watched antitrust case pitting a prominent Kansas City area radiologist against the area’s biggest radiology practice got underway Monday in Johnson County District Court.
Mark E. Idstrom alleges Alliance Radiology terminated him without cause in February 2012 and, because of the exclusive contracts it negotiated with area hospitals, prevented him from obtaining employment since then.
Idstrom says the group was formed more than 15 years ago through the combination of four previously separate practice groups. He contends they combined in order to leverage their size to extract higher reimbursement rates from hospitals and insurance companies.
Although they now operate under the umbrella of Alliance, Idstrom says the groups still operate independently, with each assuming its own financial risks and booking its own profits. Each also has its own assigned turf to avoid the need to bid against one another, according to Idstrom.
Idstrom is suing under Kansas’ antitrust statute, the Kansas Restraint of Trade Act, which prohibits trusts or agreements “by two or more persons” to prevent competition. He claims that Alliance and members of its board engaged in a “continuing conspiracy” to violate antitrust laws.
In response, Alliance says in court documents that its four divisions have limited autonomy and no legal existence apart from Alliance. Because Alliance is a single corporation, it says, it can’t be a combination of “two or more persons,” as defined by the Kansas Restraint of Trade Act.
“It is a fundamental principal (sic) of Kansas conspiracy law that a corporation cannot conspire with itself,” Alliance states in a trial brief.
The Federal Trade Commission, which enforces federal antitrust laws, has rarely challenged physician combinations in recent years. The agency has moved to quash mergers that it deems likely to lead to higher prices or reduced quality, but it has generally allowed efforts to coordinate care – something encouraged by the Affordable Care Act – to proceed as long as a combination doesn’t result in the accumulation of market power.
“The real question for antitrust purposes is that you may not combine strictly for the purposes of upping your collective bargaining power against insurers or against other former of payers,” says Ann Marie Marciarille, a law professor at the University of Missouri-Kansas City who specializes in health law antitrust issues.
“But you may combine if you can show that there are sufficient efficiencies that overwhelm any anticompetitive effect, and those efficiencies are typically things like the benefits to consumers of both clinical and financial integration.”
Marciarille, who is not involved in the Idstrom case, said examples abound of providers getting together to combine, “but in reality only combined for financial purposes to increase their leverage. And often an accompaniment of that would be something like exclusive contracting.”
Idstrom joined Alliance in 2005 and became a shareholder and head of its Midwest Division in 2007. At the time, Midwest’s main contract was with Saint Luke’s Hospital on the Country Club Plaza.
That contract was due to expire on April 30, 2007. In negotiations to renew the contract, Saint Luke’s sought to carve out an exception to Alliance’s exclusivity provision and allow radiologists not affiliated with Alliance to perform neuroradiology procedures, according to court documents.
The contract with Alliance was not renewed, and Idstrom says Alliance subsequently blocked him from working at the Kansas City Cancer Center, part of U.S. Oncology, because of “turf” conflicts with another Alliance division, as well as at Centerpoint Medical Center.
Alliance counters that U.S. Oncology made the decision to work exclusively with the members of one of Alliance’s divisions. And it says that Centerpoint likewise decided it wanted to work with a single radiology group and ultimately awarded the contract to one of Alliance’s competitors.
Alliance says it terminated Idstrom because members of his division “lost faith in him.”
“His productivity had steadily declined, he became unreliable, and his negative attitude was detrimental to the division,” Alliance states in its trial brief.
Idstrom says he was removed because Alliance viewed him as “a threat to its anticompetitive scheme.”
He also claims that after he was terminated, physicians in the Midwest Division discussed ways to damage his reputation.
“This type of behavior by Dr. Idstrom’s former partners, combined with the exclusive contracts Alliance insists on maintaining at hospitals at which Dr. Idstrom has fostered relationships over years of first-rate work, has prevented Dr. Idstrom from obtaining full-time employment since his termination, despite substantial efforts to do so,” Idstrom says in his trial brief.
The trial is expected to last two weeks. Idstrom is seeking unspecified compensatory and punitive damages.
Dan Margolies, editor of the Heartland Health Monitor team, is based at KCUR.
