Herman Memorial settles Texas AG's antitrust claims for $700,000

By Chris Rizo | Jan 27, 2009

Greg Abbott (R)

HOUSTON, Texas (Legal Newsline)-Memorial Hermann Healthcare System in Houston has settled antitrust claims by Texas Attorney General Greg Abbott, his office announced Monday.

Memorial Hermann was accused of trying to prevent insurers such as Cigna and Aetna from entering into contractual relationships with doctor-owned start up Town & Country Hospital.

The company allegedly told insurers that it would terminate their contracts or would raise their rates if they added Town & Country Hospital to their coverage networks. The hospital went out of business in 2007.

To settle the claims, the company has agreed to pay $700,000 in costs and will be enjoined for the next five years from entering into any agreements with health care plans to boycott any competing hospitals.

"Free and fair competition is the cornerstone of our free market system," Abbott said. "Today's injunction will preserve healthy competition and will help ensure that Houston-area patients have more hospital choices. Open competition on the free market amongst providers will help improve care, lower prices, and foster greater choices for patients."

Harris County Civil District Judge Sylvia Matthews approved the settlement. Memorial Hermann currently is the largest hospital provider in the Houston area.

"Memorial Hermann's existing contracting practices are consistent with those outlined in the injunction, so we can readily comply with them. We are pleased to resolve this matter," said Hermann Memorial President and CEO Dan Wolterman.

There is a separate lawsuit pending against Memorial Hermann, filed by Town & Country's former doctors. The complaint alleges that Memorial Hermann forced the physician-owned hospital out of business through anti-competitive practices.

Their lawsuit contends that Memorial Hermann coerced insurance companies to boycott Town & Country.

"This is a huge victory for the doctors who built Town & Country Hospital, and for the general public seeking quality health care at competitive prices," attorney Rusty Hardin, who represents the doctors, said of the attorney general's actions.

"The AG's office should be congratulated for taking such a bold, non-political action on behalf of consumers," added Hardin of the Houston law firm of Rusty Hardin & Associates.

From Legal Newsline: Reach reporter Chris Rizo at chrisrizo@legalnewsline.com.

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