HOUSTON (CN) - Houston's largest health-care provider, Memorial Hermann Hospital System, will pay $700,000 to settle the state's antitrust complaints. Memorial Hermann drove a competitor out of business by threatening to boycott insurers who offered in-network contracts to physician-owned Houston Town and Country, Hospital, the attorney general said.
When CIGNA offered Town and Country a contract, Memorial Hermann responded by giving CIGNA a notice of termination, then renegotiated the contract, "resulting in substantial rate concessions from CIGNA," the state said, after a 2-year investigation.
"Memorial Hermann notified the other health insurers in the Houston market of its termination of CIGNA as an example of what would happen to any other health insurer that contract with Town and Country," according to the complaint in Harris County Court.
"Similarly, on learning that Aetna was entering into a contract with Town and Country, Memorial Hermann notified Aetna that entry into such a contract would result in Memorial Hermann imposing a 25% rate increase, a rate increase far in excess of any reasonably foreseeable impact on Memorial Hermann from Aetna's addition of Town and Country to its network. Aetna did not enter into a contract with Town and Country.
"After failing to obtain contract with all of the health plans in the Houston market but CIGNA, Town and Country went out of business," according to the complaint.
Memorial Hermann admitted no wrongdoing. It agreed to pay the state $700,000 for legal fees and promised not to do such a thing again - for five years. It controlled about 20% of the Houston metropolitan market for in-patient, acute-care hospitals during the time covered by this complaint.