(The Center Square) — The Department of Justice filed a lawsuit Thursday against New York City’s largest hospital systems, accusing it of colluding with private health plans to drive up the cost of medical care.
The lawsuit, filed in the U.S. District Court for the Southern District of New York, alleges that New York-Presbyterian Hospital is violating the Sherman Act — a 136-year-old federal antitrust law — by imposing contractual restrictions that preclude insurers and employers from offering New Yorkers “budget-conscious” health insurance plans.
“NYP’s restrictions deter the emergence and development of money-saving health insurance plans and reduce competition among hospitals and other providers on both price and quality,” the DOJ wrote in the 21-page complaint. “The result is reduced choice of insurance plans, higher healthcare costs, and less competition for high-quality healthcare for employers and patients who purchase healthcare in New York City.”
The DOJ alleges in the lawsuit that the hospital’s “anticompetitive conduct” insulates it from price competition, allowing it to maintain its artificially high prices for medical care and health care services. The federal agency asks the court to block the hospital from setting restrictions on health plans.
“Without its unlawful contracts, NYP would need to compete more vigorously against other providers, and its rivals could compete to attract additional patients by lowering their own prices or investing in quality improvements,” the DJO wrote in the complaint. “All employers and patients who purchase healthcare in New York City would benefit from lower prices and higher quality as the healthcare marketplace becomes more competitive.”
The lead prosecutor in the case, Acting Assistant Attorney General Omeed A. Assefi of the DOJ’s Antitrust Division, said New York-Presbyterian has “known for years that the American consumer wants budget-conscious health plans that reduce healthcare costs.”
“But rather than offer consumers choice, New York-Presbyterian uses its market power to protect its margins, impede competition from rival hospitals, and prevent employers and unions from creating these plans,” he said in a statement.
In a statement, a NewYork-Presbyterian spokesperson said the hospital is “disappointed” by the DOJ’s legal challenge but called it “meritless” and it expects to prevail in court.
“We have been cooperating with the department’s inquiries into our contracting practices and had begun what we thought were productive discussions with the department’s leadership,” the statement said. “As we have explained to the department, NewYork-Presbyterian complies fully with all applicable federal and state laws and regulations. We stand behind our policies and processes, which we believe are pro-competitive.
The hospital said its policies don’t aim to exclude other hospitals from health insurers’ networks or to secure favorable market treatment.
“In our contract negotiations with insurers, we seek to maximize access to the highest quality of care. Insurance companies hold the market power and use it to restrict patient choice,” the hospital’s statement said. “The obligation of insurance companies is to their shareholders, while ours is to our patients. We believe all New Yorkers should be able to choose their health care provider.”
The DOJ’s investigation is the latest federal probe into “hidden” hospital contracts that critics say are aimed at increasing their share of the nation’s health care market but end up driving up costs for consumers.
“Millions of New Yorkers pay more for healthcare because of these anticompetitive practices,” Attorney General Pam Bondi said in a statement. “At the direction of President Trump, this Justice Department will fight relentlessly to ensure that Americans get the healthcare they need without facing exorbitant costs.”
