This report originally appeared in the May 2010 issue of DOTmed Business News

Stealth, L.P., formerly doing business as Houston Town & Country Hospital, is suing several major insurers, claiming an illegal boycott. The defendants include Aetna Health, Inc., Blue Cross Blue Shield of Texas, a division of Health Care Service Corporation; Humana Health Plan of Texas; Humana HMO Texas Inc.; Humana Insurance Company; PCA Health Plans of Texas Inc.; Unicare Life & Health Insurance Company; and United Healthcare of Texas (after a tolling agreement is terminated). The complaint accuses the companies, through the Memorial Hermann Hospital System and Memorial Hermann Healthcare System (Memorial), of participating in an illegal boycott and violating state laws.

The complaint, filed in the District Court of Harris County, Texas, alleges that Memorial saw Houston Town & Country (Houston) as a "threat to market dominance" in the West Houston market. Houston was a physician-owned hospital that began operations in 2005. Houston says that smaller insurance companies had contracted with Houston, but the local market was dominated by the defendants, who had begun negotiations with Houston shortly after it began operating. However, Memorial Hermann then allegedly convinced the major insurers to deny "preferred provider" status to Houston. Houston claims that Memorial used its clout to "threaten insurers with severe economic consequences" if they contracted with Houston.

The complaint claims that Memorial let each insurer know of each other being "coerced," which insurers were agreeing to the boycott and which insurers would be punished for not doing so. Within months, Houston says, it went out of business, with damages estimated at $1 million. Houston also claims the community was harmed by lack of competition in the area and patients being forced to wait excessively long times in Memorial ERs. The complaint says the Texas attorney general had also filed suit after investigating Memorial's conduct. The complaint charges the defendants with violating the state's antitrust act and insurance code.

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