NorthShore University Health System will need to continue to
defend itself against a class action antitrust lawsuit, after a federal judge
ruled a group of patients and health insurers were not years too late in
bringing their legal action over NorthShore’s decision to allegedly jack up its
rates nearly 16 years ago following its acquisition of Highland Park Hospital.
On Sept. 9, U.S. District Judge Edmond E. Chang refused to
grant Evanston-based NorthShore’s request for summary judgment, saying he believed the lawsuit
was not precluded by the statute of limitations, the clock for which would not
have started ticking until the plaintiffs were first handed higher bills from
“As far as the Class could tell as of January 1, 2000,
NorthShore was touting that the merger was only going to benefit consumers,
(Managed Care Organizations), and the communities that the three hospitals
served,” Chang wrote. “And here, class members could not have discovered that
they suffered any injury as a result of the merger until they knew that
NorthShore had illegally overcharged them for its healthcare services.”
The dispute over NorthShore’s acquisition of Highland Park
Hospital has been long running, ever since the system formerly known as
Evanston Northwestern Healthcare formally completed its merger with what was
then its newest member suburban hospital.
In the years since, NorthShore has taken on its current
brand and moniker, and acquired Skokie Hospital, bringing its current total to
four, along with its Evanston and Glenbrook hospitals. NorthShore is also
currently in the process of merging with Downers Grove-based health care
services giant Advocate. That merger has been challenged by federal regulators in
federal court on antitrust grounds, and the case remains pending with the U.S.
Seventh Circuit Court of Appeals, after a federal judge sided with NorthShore
and Advocate in that case.
In 2004, however, the Federal Trade Commission also responded
to NorthShore’s Highland Park acquisition with an administrative complaint alleging
NorthShore’s acquisition violated federal antitrust law by all but eliminating
competition in that region, allowing it to sharply increase prices. The FTC
found in 2007 that the merger did indeed violate antitrust rules.
Immediately after the FTC wrapped up its proceedings on the
matter, plaintiffs filed a class action lawsuit, alleging patients and insurers
were forced to pay more than should have, if market competition had been
maintained, as required by federal law. The insurers noted that, while
NorthShore had notified them of the merger as early as 1999, at no time did
NorthShore indicate it intended to raise prices following the merger. They
asserted NorthShore had instead led them to believe they would continue to work
under their previous fee schedules and payment agreements.
However, shortly after the merger, NorthShore moved to renegotiate
those agreements and schedules, driving up prices. According to published
reports, insurers were forced to pay substantially more. The reports said an
expert testified that Blue Cross Blue Shield of Illinois, for instance, paid
$110 million more after the merger for equivalent services.
NorthShore has moved several times to dismiss the case or
secure summary judgment in its favor. However, each time those motions have
A plaintiffs’ class was formally certified in the action in
In its most recent motion for summary judgment, NorthShore
asked the court to find the plaintiffs’ claims were time barred, because
NorthShore said the clock on the four-year statute of limitations should have
begun rolling at the time the plaintiffs first became aware of the merger, or
when the merger was completed – meaning the statute of limitations would have
expired before the FTC launched its action against the merger in 2004.
The judge, however, sided with the plaintiffs, who argued
the statute of limitations should have begun at the time NorthShore first
raised its post-merger rates, and then should have been paused, or “tolled,”
while the FTC action continued. Thus, even though they filed suit seven years
after the merger was completed, the judge said he believed federal precedent,
established by the U.S. Supreme Court, would come down on the side of the
plaintiffs in this case.
“Because NorthShore instituted a supracompetitive pricing
policy after February 10, 2000— again, four years before the FTC brought its
action—and because the merger made that policy possible, the Class’s Section 7
claim based on that policy can go forward,” Chang wrote.
Named plaintiffs in the case include Amit Berkowitz, Steven
Messner and Painters District Council No. 30 Health & Welfare Fund. They
are represented by the firms of Wolf Haldenstein Adler Freeman & Herz;
Miller Law LLC; and Grant Eisenhofer, each of Chicago; and attorneys David
Balto, of Washington, D.C., and Mary
Jane Fait, of Chicago.
NorthShore is defended by the firm of Winston & Strawn,