Home Health & Hospice Week

Hospital-based agencies should review their processes, attorneys advise.

A patient steering lawsuit filed by a freestanding home health agency against a hospital in Indiana will move forward, possibly paving the way for similar suits.

American Home Healthcare Services Inc. in Jeffersonville is suing Floyd Memorial Hospital, alleging the hospital steered patients to its own home health agency for the six counties they both serve, according to American Home Healthcare Services Inc. v. Floyd Memorial Hospital and Health Services.

Argument: American says Floyd Home Health received 64 percent of the home health discharges from the hospital in 2015, and receives 70 percent of them currently. The remaining 30 percent were spread among six HHAs, American contends.

American does concede "that it is listed on a pamphlet of available home health agencies furnished by Floyd Hospital to its patients," according to the March 5 ruling. But American "alleges that Floyd Hospital has installed mechanisms into the discharge planning process which increase the likelihood that Floyd Home Health will receive the most patient referrals," including "that physicians ... must go through an extra step to select any home health provider besides Floyd Home Health due to the fact that the only two choices on the computer dropdown menu have been 'Floyd' and 'other,'" the ruling says. "If a patient wanted to use the 'other' category, the physician would have to go through an extra step to write down specifically which agency the patient chose."

In addition, "American alleges that based on several specific eyewitness reports from patients and their family, Floyd Hospital denied patient choice by referring patients to Floyd Home Health without offering any choices, advocating exclusively for Floyd Home Health, and/or assigning patients to Floyd Home Health despite the patient's choice to use American's services," the ruling says.

Bottom line: "American claims that Defendants have been, and continue to be, in a position to starve the competition to a point at which competition will cease and Defendants will hold a monopoly with respect to supplying the relevant product in the relevant geographic market," the suit says. "American has asserted claims for attempted monopolization under Section 2 of the Sherman Act, as well as state law claims for tortious interference with existing and business relationships with patients."

Floyd asked the court to judge the case based on the pleadings and tried to argue with American's definition of the relevant geographic market, but "the district court held that American's theory based on Floyd Home Health's market share of Floyd Hospital's home health care referrals met the Seventh Circuit's benchmark of at least 50 percent for an attempted monopolization case," note attorneys Bruce Sokler and Farrah Short with Mintz Levin Cohn Ferris Glovsky and Popeo in analysis posted on the firm's website.

Floyd also countersued American for defamation, and tortious interference with existing and business relationships, the ruling notes. That occurred after Dr. Abdul Buridi sent an email to Floyd Hospital-employed physicians, "which took issue with Floyd Hospital's referral process and implicitly warned that the physicians could be held responsible for violation of Stark and antitrust laws."

The court dismissed all but the defamation count, the ruling says.

Watch out for the possible impact of this case nationwide, says Tom Boyd with Simione Healthcare Consultants in Rohnert Park, California.

"Honoring patients' right to freedom of choice continues to be a source of great concern for agencies that are not hospital-based," notes Washington, D.C.-based healthcare attorney Elizabeth Hogue in analysis. "Hospitals should expect more lawsuits based on violations of patients' right to freedom of choice," she stresses.

"While not a decision on the merits, the district court's acceptance as plausible of a relevant market limited to a single hospital provides caution for health care providers with market power that refer within their own system," the Mintz Levin attorneys advise. "While there are often clinical and economic reasons to retain patients within a health care system, if the scales appear too heavily weighted toward the 'home team,' at a minimum, expensive litigation like this one can result."

Do this: "Health care systems are well advised to have their processes and materials reviewed from an antitrust perspective," Sokler and Short recommend.