(CN) – A California appeals court reinstated an antitrust lawsuit accusing Mater Misericordiae Hospital of trying to squeeze a competing outpatient surgery center out of business by insisting on exclusive contracts with local health insurers.
Not long after UAS Management, a physician-owned outpatient surgery center, opened for business in 2002, Mater Misericordiae began negotiating exclusivity agreements, UAS claimed.
The hospital allegedly refused to sell inpatient services to the insurers unless the insurers agreed to use Mater Misericordiae as its outpatient provider.
UAS claimed the contracts restrained trade in violation of antitrust law and unfair competition law.
The district court granted the hospital summary judgment, but the appeals court in Fresno reversed.
California’s Cartwright Act outlaws “tying agreements,” in which an incumbent seller uses its market power to coerce a buyer into doing business with the seller instead of a competitor with an inferior bargaining position.
Justice Vartabedian determined that the exclusivity arrangements amounted to illegal tying agreements.
However, the court agreed that the evidence did not support the plaintiff’s claim for group boycott and “unreasonable restraint” on competition.