Hospital Merger Faces Class Action Lawsuit for Price Inflation

Since NorthShore University Health System (NorthShore) was formed from the merger of Evanston Northwestern and Highland Park Hospitals in January 2000,1 the system has suffered various legal challenges.  Most recently, on December 10, 2013, the U.S. District Court for the Northern District of Illinois certified a class action lawsuit against NorthShore for inflated healthcare prices due to market monopoly.2  The lawsuit, originally filed in 2007, was brought “on behalf of all end-payors who purchased inpatient and outpatient healthcare services directly from NorthShore…”3  Specifically, plaintiffs alleged that NorthShore charged prices at least 9% higher than normal inflation would allow over the years since the merger for both inpatient and outpatient healthcare services.4 Additionally, the plaintiffs’ expert assessed the overpayment by Blue Cross & Blue Shield of Illinois alone to total approximately $110 million.5

The NorthShore merger has a long litigious history, which spans 13 years. The Federal Trade Commission (FTC) challenged the acquisition in 2004, asserting that the merger lessened “competition for general acute care inpatient hospital services” in the northern Chicago suburbs, in violation of Section 7 of the Clayton Act.6 An FTC administrative law judge ruled in favor of the government and ordered a full divestiture of the merger.7 NorthShore appealed, and the Seventh Circuit again found the merger to be anticompetitive, but, instead of ordering the system to divest in accordance with the lower court’s order, the court instructed Highland Park to negotiate its contracts with health insurers independently from other NorthShore system hospitals, namely the Glenbrook and Evanston hospitals.8

The plaintiffs’ class certificate was initially rejected by the court, but was overturned on appeal.9 Plaintiffs allege that NorthShore violated Section 2 of the Sherman Antitrust Act and Section 7 of the Clayton Antitrust Act, which allows for treble damages – three times the difference between the system’s alleged inflated prices and what the prices would have been if the merger had not occurred.10

This most recent NorthShore lawsuit is the first private antitrust class action lawsuit regarding a hospital merger. The case is different from the typical antitrust lawsuit because most hospital mergers are challenged before the merger occurs, allowing plaintiffs to only request injunctive relief, which would stop the prospective transaction.11 In this case, however, if the court finds that NorthShore’s prices were inflated, and the plaintiffs were harmed as a result, monetary damages in the amount of hundreds of millions of dollars could be imposed on the Chicago hospital system. These damages may be further increased by the fact that the merger is now 13 years old, allowing a substantial period of time during which plaintiffs could have been harmed. The plaintiffs have yet to quantify the amount of damages they are seeking.

“Northern District of Illinois Court Certifies Class in Hospital Merger Antitrust Lawsuit” By James Buchanen Camden, The National Law Review, December 19, 2013, (Accessed 12/22/13).

“In re: Evanston Northwestern Corporation Antitrust Litigation,” No. 07-cv-04446, United States District Court for the Northern District of Illinois Eastern Division (December 10, 2013), p. 1.


“12-year-old Illinois Merger Faces Revived Lawsuit” By Joe Carlson, Modern Healthcare, January 28, 2012, (Accessed 12/22/13).

“Steven Messner et al. v. Northshore University HealthSystem,” No. 10-2514, United States Court of Appeals for the Seventh Circuit (January 13, 2012) p. 39.

Ibid, p. 4.

Ibid, p. 4-5.

“Commission Rules that Evanston Northwestern Healthcare Corp’s Acquisition of Highland Park Hospital was Anticompetitive: Unanimous Order Require ENH to Establish Two Separate and Independent Managed Care Organization Contract Negotiating Teams” Federal Trade Commission, Press Release, August 6, 2007, (Accessed 1/8/14).

“Antitrust suit against NorthShore wins class-action status” By Andrew L. Wang, Crain’s Chicago Business, December 12, 2013, (Accessed 1/8/14).

Ibid; “In re: Evanston Northwestern Corporation Antitrust Litigation,” No. 07-cv-04446, United States District Court for the Northern District of Illinois Eastern Division (December 10, 2013), p. 1.

Ibid, Buchanen, December 19, 2013.

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