Health Care System’s ‘All-or-Nothing’ Contracts Called into Question, Class Action Filed by Patients
In February 2022, a group of Connecticut residents filed a 60-page complaint, alleging that Hartford HealthCare — one of the largest hospital networks in the state — used its anticompetitive practices to create a monopoly on inpatient hospital services.
The class action further alleges Hartford HealthCare leveraged its market power to charge higher rates for the state’s commercially insured residents. It “abuse[d] that monopoly by using it to extract higher prices from insurers, employers and patients throughout the areas it does business,” the complaint stated.
This is the second time this year Hartford HealthCare is being hit with a lawsuit.
Rival health care system Saint Francis Hospital sued Hartford over monopoly power concerns in January. Amid its accusations (which are also echoed in the 60-page class action), Saint Francis alleged Hartford HealthCare provides lesser quality service than other hospitals in the region; its rates are more than 15% higher; and the system “demands” its affiliate doctors refer to Hartford regardless of what’s best for the patient.
Details brought forth by the class action show the average cost for a hospital stay at Hartford HealthCare is around $4,000 more than at Saint Francis, and the average emergency room visit costs are 50% higher.
The residents in the complaint argue that “in a healthy and functioning market, [Hartford’s] price and quality disparities would be disciplined through competition. Commercial health plans would threaten to take … overpriced facilities out of their network.”
However, Hartford “has gone to extraordinary lengths to prevent such competition in the regions where it operates.”
The health care system has negotiated “all-or-nothing contracts” and “anti-steering and anti-tiering” clauses, which require insurers to include a network’s entire facilities in its coverage plan, regardless of expense. This, the class action alleges, raises insurance premium prices for medical care.
In an emailed statement to the Connecticut Mirror, a representative from Hartford HealthCare said the complaint was “without merit” and added the network plans to defend itself against the allegations in court.
Scorecard: A class action in its infancy, indeed, but not the first of its kind. The largest health care systems in both North Carolina and California faced similar suits, and each were required to change their practices.
Takeaway: Health care insurance is a necessity. When negotiating insurance for an employee benefits package, employers should review contracts carefully in order to find the best options to suit their company and their workers. &