Chicago Hospitals Facing Class Action Lawsuit Over Price Hikes

Chicago hospital patients will be allowed to sue NorthShore University Health System after an Illinois federal judge certified a class action lawsuit accusing the hospital group of driving up prices through an anti-competitive merger.

NorthShore is the result of a 2000 merger between rival hospitals Evanston Northwestern Healthcare Corp. and Highland Park Hospital. Consumers and health insurance companies allege in the class action lawsuit that when the hospitals merged, it led to anti-competitive practices because the organization could reportedly arbitrarily raise prices due to a lack of local competition. The Federal Trade Commission reportedly agreed at first, requesting that it sell off the hospital it just bought, but allowed the merger to proceed as long as a separate unit handled the finances.

Federal Rule 23 requires a number of requirements in order for a class action lawsuit to be certified and after at least six years of litigation, the hospital chain, consumers and insurers were only split on the superiority of such litigation compared to other methods to settle the legal issues. Evanston Northwestern had argued that a previous judge’s order should be vacated and all requirements, including typicality and adequacy.

Those two conditions require that class action attorneys acting on behalf of the plaintiffs must demonstrate that the claims are typical of the class that they are seeking to represent and that they have adequately pleaded their case to survive a motion to dismiss by not merely reciting the statutes from which they seek to obtain damages. Judge Edmond E. Chang ruled that these issues had been addressed prior to a Seventh Circuit Court of Appeals ruling on the alleged anti-competitive practices.

What is left is the superiority requirement, whether a class action lawsuit would be better able to resolve questions of fact than other methods. Judge Chang was not so sure that the managed care organizations could even be members of the class, as they had not been named in the initial motion for certification, and as such would remain outside of the proposed lawsuit, numbering principally self-insured patients.

They can’t be bound by the court’s decision, and as such the certification should continue in order to better establish the class. As arbitration can take numerous forms, a judge can later decide on whether or not various parties should submit to that adjudication procedure outside of the anti-competitive price fixing class action lawsuit. Doing so will help the potential “hundreds… of thousands of self-insured subscribers” who have putative class representatives.

The plaintiffs are represented by class action attorneys Mary Jane Fait of Law Offices of Mary Jane Fait and Marvin A. Miller of Miller Law LLC.

The case is In re: Evanston Northwestern Healthcare Corp. Antitrust Litigation, Case No. 07-cv-04446, U.S. District Court, Northern District of Illinois.