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Ball Memorial Hospital v. Mutual Hospital Insurance, Inc.
United States Court of Appeals for the Seventh Circuit
784 F.2d 1325 (1986)
Mutual Hospital Insurance, Inc. (Blue) (defendant) began offering individuals in Indiana the option to enroll in a preferred-provider-organization (PPO) plan. Enrollees paid a monthly fee and received coverage for medical services provided by preferred providers. To secure preferred providers, Blue sought bids from acute-care hospitals, who offered to provide Blue a discount for services in exchange for being deemed a preferred provider. Blue presented the opportunity to submit bids to all 115 acute-care hospitals. A total of 91 hospitals submitted bids to become preferred providers. Blue selected 61 of the hospitals. Ball Memorial Hospital and other acute-care hospitals (collectively, the hospitals) (plaintiffs) filed an action in federal district court against Blue. The hospitals argued that Blue had violated the Sherman Act, which regulated anticompetitive practices, by improperly gaining control of the healthcare financing-services market. The hospitals’ argument relied on the large percentage of insurance sales that Blue had within the market. The district court returned a verdict in Blue’s favor on the ground that Blue was unable to restrict competition because of the lack of barriers to entry in the healthcare-financing market. Specifically, the district court relied on the fact that other healthcare-finance organizations could quickly establish a PPO and enter the market. The matter was appealed.
Rule of Law
Holding and Reasoning (Easterbrook, J.)
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