Houston’s Largest Hospital System Reaches Antitrust Settlement Agreement

Memorial Hermann, Houston’s largest hospital system, settled an antitrust action on January 11, 2010, brought by Stealth LP, a limited partnership physician group that owned one of Memorial Hermann’s former competitors, Town & Country Hospital.  After Town & Country closed in 2007, Stealth filed an antitrust suit alleging that Memorial Hermann improperly threatened to raise prices or pull business from health insurers who worked with Town and Country.1 In its defense, Memorial Hermann claimed that it acted fairly and aggressively in reacting to a reasonable competitive threat from the smaller hospital.2 The attorney for Memorial Hermann claims that while his client has in fact told insurance companies it would change rates if insurers elected to do business with a competitor, it is not unfair, wrong, or illegal for Memorial Hermann to exercise its contractual right to do so.3

The terms of the settlement have not yet been released, but the attorney representing Stealth said his clients are very satisfied.4 A growing number of settlements of this nature indicate a heightened level of scrutiny regarding hospital billing practices.  In January 2009, Memorial Hermann had been questioned about other anti-competitive behavior towards Town & Country.5 In that investigation, the Texas Attorney General alleged that Memorial Hermann had threatened costly contract terminations or rate increases to punish insurers that signed on with Town & Country.6 Memorial Hermann again settled, agreeing to pay $700,000 to the state for the cost of the investigation, and suffered an injunction requiring them to refrain from similar anti-competitive actions, such as those alleged in the lawsuit, for a minimum of five years.7


“Memorial Hermann Settles Part of Antitrust Lawsuit” by Mary Flood, Houston Chronicle, January 11, 2010, http://www.chron.com/disp/story.mpl/metropolitan/6810199.html (Accessed January 22, 2010).

“Memorial Hermann Settles Part of Antitrust Lawsuit” by Mary Flood, Houston Chronicle, January 11, 2010, http://www.chron.com/disp/story.mpl/metropolitan/6810199.html (Accessed January 22, 2010).

“Views Differ Starkly in Hospital Clash” by Mary Flood, Houston Chronicle, January 12, 2010, http://www.chron.com/disp/story.mpl/business/6812450.html (Accessed January 22, 2010).

“Memorial Hermann Settles Part of Antitrust Lawsuit” by Mary Flood, Houston Chronicle, January 11, 2010, http://www.chron.com/disp/story.mpl/metropolitan/6810199.html (Accessed January 22, 2010).

“Memorial Hermann, Texas Attorney General Settle Dispute”, Memorial Hermann, January 26, 2009, http://www.memorialhermann.org/newsroom/content.aspx?id=5218 (Accessed January 22, 2010).

“Texas Hospital Settles Charges of Boycotting Physician-Owned Hospital” by Amy Lynn Sorrel, American Medical News, March 16, 2009, http://www.ama-assn.org/amednews/2009/03/16/gvsc0316.htm (Accessed February 1, 2010).

“Memorial Hermann Settles Part of Antitrust Lawsuit” by Mary Flood, Houston Chronicle, January 11, 2010, http://www.chron.com/disp/story.mpl/metropolitan/6810199.html (Accessed January 22, 2010).

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