On June 9, 2017, the United States Court of Appeals for the Seventh Circuit affirmed the lower court’s grant of summary judgment in Methodist Health Services Corp. v. OSF Healthcare System d/b/a Saint Francis Medical Center, a case involving exclusive contracts between Saint Francis and health insurance companies that required Saint Francis to be an “in-network” hospital and Methodist to be an “out-of-network” hospital.  Methodist had argued that Saint Francis, allegedly the dominant hospital in the markets served by both hospitals, violated the Sherman Act by entering into exclusive contracts with insurance companies that prevented the insurance companies from contracting with Methodist.  In an opinion authored by Judge Posner, the Seventh Circuit rejected Methodist’s argument and affirmed the lower court’s grant of summary judgment in favor of Saint Francis.

The court noted that given the more extensive healthcare services offered by Saint Francis in the tri-county area, it was not a surprise that Saint Francis was a “must have” hospital among insurance companies and attracted more insurance companies than Methodist did.  The court also stated that there is nothing illegal about deals that require companies to limit the network of providers from which they obtain the healthcare.  Because the contracts between Saint Francis and insurance companies were of fixed duration, and because Methodist did not present evidence that the contracts had a significant exclusionary effect, the contracts were not in violation of antitrust laws.  The court noted that Methodist could outbid Saint Francis during the next round of contracts, and if it could not, then the logical inference is that Saint Francis offers a better deal because it provides a broader and deeper range of healthcare services than Methodist does.

The Seventh Circuit opinion is attached here.