HCA Healthcare Facing More Litigation, This Time in Florida

HCA Healthcare is facing federal antitrust litigation in Florida after a group of doctors from an orthopedic surgical practice in Sarasota filed suit against the sprawling healthcare system earlier this year.

Location 24 — a limited liability company (LLC) comprised of a dozen doctors who are part of the Kennedy White Orthopedic Center — filed suit against HCA and its Doctors Same Day Surgery Center in January. The litigation remains ongoing, according to court filings, with the doctors from Kennedy White alleging inappropriate restraints on trade and attempts to monopolize the orthopedic surgical services market in the Sarasota area.

The litigation comes amid antitrust suits that the Nashville, Tennessee-based HCA also faces in North Carolina after the for-profit operator’s purchase of nonprofit Mission Health in 2019. However, the Florida case centers around a different HCA deal.

In its complaint, Location 24 detailed that it executed a limited partnership agreement with HCA to create Doctors Same Day Surgery Center in 1995, and this agreement was amended and restated in 2017. Since the inception of the partnership, HCA has required that it hold 51% or more of the ownership units in it, through which the health system has completely controlled all decisions made, the LLC alleged.

HCA owns and operates four hospitals and four ambulatory surgery centers in the Sarasota area, with the health system’s wholly owned hospitals in close proximity to the surgical centers.

“HCA’s scheme entails the formation of partnerships in ambulatory surgery centers with the largest and most successful orthopedic surgery practices in various locations in and around Sarasota County and the United States,” Location 24 wrote. “After forming partnerships with these surgical practices, HCA, in an attempt to divert business to its privately owned hospitals, methodically breaks down the efficiency and reputation of these practices.”

HCA’s alleged scheme is a “premeditated plan that is implemented all over the country and over an extended period to reach its desired result,” they added. “The scheme inevitably breaks down HCA’s partners’ medical practices to ensure that the number of market participants has been reduced, enabling HCA to control the specific specialty surgical market in the region.”

Location 24 also pointed to the prior litigation against HCA in North Carolina, noting that “HCA’s involvement in litigation stemming from its fraudulent actions speaks for itself. Among the litany of lawsuits HCA is involved in, HCA is currently being sued in an antitrust class-action lawsuit in North Carolina alleging anti-competitive tactics involving monopolization and price-fixing. The lawsuit alleges that HCA, as holder of more than 70% of inpatient services in seven North Carolina counties, acquired medical facilities from another company, cut costs and staff at the newly-acquired facility, and then diverted patients to HCA’s flagship facility in an effort to consolidate hospitals and raise prices.”

The LLC further pointed out that HCA is able to conduct its alleged anticompetitive conduct due to its sheer size and power, which make it possible to manipulate vendor pricing and market salaries of nurses and medical staff, and direct when and where patients have surgeries performed, adding that doctors that comprise the LLC are prohibited from establishing other surgical centers for a 2-year period, ensuring that HCA retains market power in the Sarasota area.

The complaint also alleged that HCA breached the contract between the two parties with its anticompetitive conduct and failure to operate the surgery center as required. One example, Location 24 claimed, is HCA’s refusal to implement the 23-hour stay, the result of a 2019 bill that amended a Florida healthcare statute to allow patients to remain in an ambulatory surgery center for up to 24 hours (23 hours and 59 minutes).

“The Florida legislature’s new provision regarding the 23-hour stay gives ambulatory surgery centers and its surgeons the opportunity to perform higher-acuity procedures that have historically remained in hospital settings due to the required recovery time,” the LLC wrote, alleging that patients requiring certain procedures and recovery time are diverted to HCA hospitals for the health system’s benefit and at Location 24’s expense.

Despite these breaches of contract, HCA continues to receive a management fee of 6% of the average monthly net revenues of the surgery center, while investing the “bare minimum of time and capital” into the operation of the center, the LLC stated in the complaint.

Neither legal counsel for Location 24, nor HCA and Doctors Same Day Surgery Center responded to requests for comment.

According to court documents filed in the case, HCA and Doctors Same Day have argued that Location 24 has contorted a commercial dispute into a federal antitrust lawsuit, pointing out that the complaint fails to plead antitrust standing. The health system also said that Location 24 wants to end the relationship without abiding by legitimate non-compete obligations.

Location 24 said that it is seeking for its partnership with HCA to be dissolved, and that related non-competition and non-solicitation agreements be deemed invalid and unenforceable. The LLC is also seeking to include an order that HCA purchase Location 24’s remaining ownership units in the partnership at fair market value, and that HCA give up certain gains, such as management fees paid by Location 24.

A mediation conference in the case is scheduled for November.