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Judge dismisses Sisters of Charity’s antitrust suit against Palmetto Health

Chuck Crumbo
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 A $50 million lawsuit stemming from Palmetto Health’s recruitment of the Moore Clinic orthopedics practice away from Providence Hospitals may be headed to state court after U.S. District Judge Joseph Anderson dismissed federal antitrust counts.

Anderson tossed all 11 antitrust claims in the lawsuit against Palmetto Health by Sisters of Charity Providence Hospitals Legacy Corp. In his order released Friday, Anderson approved sending nine state claims in the lawsuit to a state court “without prejudice.”

The Sisters of Charity’s next step was not announced. Wyche P.A.’s John Moylan, attorney for the Sisters of Charity Health Systems, said in a statement released today: "This is one step in a very long process. We are in the early stages of this litigation."

Possible legal actions Sisters of Charity could take include appealing Anderson’s ruling, filing a lawsuit in state court, settling the lawsuit out of court, or dropping the case.

“We are very pleased with Judge Anderson’s decision,” Palmetto Health CEO Charles Beaman said in a statement. “We have been committed from the beginning to the partnership with our orthopedic physicians. Together, we will ensure community members have access to even more complete and comprehensive orthopedic care.”

In August, Sisters of Charity filed a federal lawsuit accusing Palmetto Health of illegally recruiting the orthopedics practice away from the Providence system.

The Moore practice, which the lawsuit said had about 330 employees, joined Palmetto Health in April 2015 as Providence was nearing a deal to be sold to Brentwood, Tenn.-based LifePoint Health.

The lawsuit said that in 2013 Sisters of Charity had started talking with a number of other health care systems, including Palmetto Health, to find a partner for Providence.

During the discussions, Palmetto Health learned that the Moore practice was Providence’s most profitable service line, the suit said. Using that information, Palmetto Health went to work to secretly sign up the Moore Clinic to provide orthopedic services, the lawsuit said.

The lawsuit claimed that Sisters of Charity, which said it spent about $30 million to renovate Northeast Columbia hospital for orthopedic services, had to accept a reduced price for Providence Hospitals because it lost Moore Clinic to Palmetto Health.

“In July 2105, after a series of negotiations, LifePoint ultimately agreed to acquire Providence for a substantially lower amount, without the line of business that had been taken by Palmetto Health, and the transaction was consummated on February 1, 2016,” the lawsuit said. “The damage to Providence’s ability to compete resulting from defendants’ wrongful acts is at least $50 million.”

LifePoint is a for-profit company with operations in 22 states offering comprehensive inpatient, outpatient and post-acute services. In 2015, LifePoint reported revenues of about $6.5 billion.

Palmetto Health is a not-for-profit organization with 12,000 employees and 1,000 physicians. With annual revenues of more than $1 billion, Palmetto Health has some 1,700 beds at hospitals in Richland County and Sumter, and another 109 beds at Baptist Easley Hospital, which operates as a joint venture with the Greenville Hospital System.

Reach Chuck Crumbo at 803-726-7542.

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