St. Luke’s Health System gets ‘shocking’ $10M bill for lawsuit

March 19--A hospital system, a surgical center and Idaho's attorney general say St. Luke's Health System owes them $10 million in legal costs, after St. Luke's lost a federal antitrust lawsuit over its multimillion-dollar purchase of a doctor group.

St. Luke's calls the fees "shocking."

U.S. District Judge B. Lynn Winmill ruled in January in favor of Saint Alphonsus Health System, Treasure Valley Hospital, Idaho Attorney General Lawrence Wasden and the Federal Trade Commission. They argued that St. Luke's broke laws meant to protect competition when it bought Nampa-based Saltzer Medical Group in 2012. Winmill agreed, concluding the deal would raise health-care prices for local consumers.

St. Luke's plans to appeal the ruling. The Boise-based system says Saltzer is crucial to its plan to become more efficient and to slow the rise of health-care costs in Idaho. Pending the appeal, St. Luke's wants Winmill to relent on his order that St. Luke's and Saltzer immediately sever their relationship.

Saint Alphonsus requests more than $8.1 million, mostly for work by outside attorneys and a document-review firm. The attorneys spent more than 18,000 hours on the lawsuit, at hourly rates from $120 to $770. The document reviewers put in about 33,000 hours, at hourly rates of $35 or $45.

Antitrust law says the court can award reasonable attorneys' fees "to encourage private parties ... to undertake the legal expense associated with challenging activity that violates the antitrust laws, in order to protect the public," said Stephanie Westermeier, general counsel at Saint Alphonsus. The court filing does not ask for reimbursement of Westermeier's fees.

Wasden's office asked to be reimbursed roughly $1 million for attorneys' fees and other legal costs.

"The Legislature made it very clear in adopting the Idaho Competition Act that taxpayers should not have to bear the financial burden of defending the law and protecting the marketplace," Wasden said.

Treasure Valley Hospital wants about $460,000 in fees and costs, including compensation for 2,614 hours of legal work.

The Federal Trade Commission did not request any payment for legal work and fees.

St. Luke's expects "most of" the fees it incurs from the lawsuit, and whatever it is required to pay the winners, will be covered by insurance, said spokesman Ken Dey.

The costs "could have been avoided because we believe that the lawsuit was both unnecessary and regrettable," Dey said. "Prior to Saint Alphonsus and Treasure Valley Hospital's decision to file the lawsuit, we had been working with both the FTC and [Wasden] in offering solutions that could have avoided the need for a lawsuit."

Before the lawsuit was filed, Wasden's office sent St. Luke's and Saltzer letters warning them not to close on the deal -- at least not while the FTC and Wasden were in the middle of the antitrust investigation that culminated in the lawsuit.

One of the solutions St. Luke's says it pitched to regulators, it also pitched to the judge. Winmill rejected it.

Dey said the fees requested by Saint Alphonsus are "certainly not warranted" because the "government presented the bulk of the case."

He said St. Luke's could not tell the Statesman how much the lawsuit has cost so far. St. Luke's kept track of costs for "more than two years since the start of the investigation," so it would be unfair to compare those costs with those reported Friday by Saint Alphonsus, he said.

Audrey Dutton: 377-6448, @IDS_Audrey

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