Nev. AG settles with Renown Health

Bryan Cohen Aug. 7, 2012, 1:31pm


LAS VEGAS (Legal Newsline) - Nevada Attorney General Catherine Cortez Masto announced a settlement on Monday with Renown Health allowing physicians to be released from non-compete terms.

Masto announced both the settlement and the filing of a lawsuit against Renown Health, the largest hospital provider in Reno. The hospital allegedly acquired the two largest cardiology practices in Reno, Sierra Nevada Cardiology Associates and Reno Heart Physicians, in violation of federal and state antitrust laws.

"My office worked closely with the Federal Trade Commission," Masto said. "The settlement with Renown Health restores competition for cardiology services in the Reno Sparks area as quickly as possible. Renown Health will release a certain number of its cardiologists from their employment contracts, freeing them to practice either as employees of other health care entities or as part of independent medical practices in Reno or Sparks."

When Renown Health acquired the two practices, it became the employer of 88 percent of the cardiologists regularly practicing in the Reno Sparks area. Under the terms of the settlement, Renown Health must suspend the enforcement of non-compete terms in its employment agreements with cardiologists to restore competition in the market.

The lawsuit alleges that by consolidating the two practices into one, Renown Health increased its bargaining power and could create higher prices for cardiology services in the Reno Sparks area. The non-compete terms in the employment agreements between Renown Health and its cardiologists allegedly created an entry barrier into the market, because the terms deterred cardiologists from joining medical practices in competition with Renown Health if they left its employment.

Under the terms of the settlement, which is subject to court approval, Renown Health must give its cardiologists a limited time to explore other professional and employment opportunities in the Reno Sparks area. During the limited time, Renown Health may not interfere with the discussions and cannot enforce the non-compete terms prohibiting the discussions.

The cardiologists may terminate their employment with Renown Health without risk of breaching the terms or other retaliation if they submit notice of an intention to terminate employment with the company to a monitor appointed by Masto for the purpose of assuring confidentiality, leave employment with the company within 60 days of Renown Health receiving notice from the monitor, state their intention to continue to practice in the Reno Sparks area for at least one year and be among the first 10 cardiologists to submit notice to terminate employment.

If, by the end of the period, fewer than six cardiologists have notified a monitor of the intention to leave Renown Health, the period will remain open until six cardiologists have terminated their employment. The requirement ensures that at least six cardiologists can leave the employment of Renown Health and remedy the alleged decreased competition.

The process with the non-compete terms is the same process Renown Health will use in a parallel action brought by the Federal Trade Commission.

Also under the terms of the settlement, Renown Health must implement an antitrust compliance program for its executive and cardiologist staff meant to ensure compliance with the settlement and antitrust law, provide Masto's office with advance notification of future acquisitions that affect cardiology services in the Reno Sparks area and reimburse Masto's fees and costs resulting from the matter, currently valued at $550,000.

If Renown Health fails to comply with the settlement, the hospital would be subject to injunctive relief, monetary penalties and other relief deemed appropriate by the court.

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