Court: Bloomington surgeon's antitrust, defamation suit against IU Health can proceed

A lawsuit filed by a Bloomington surgeon alleging Indiana University Health is engaging in anti-competitive behavior in Bloomington can proceed, an appeals court ruled.

A three-judge panel of the U.S. Court of Appeals in Chicago on July 8 overturned a decision by a lower court in Indianapolis finding the case should be dismissed.

Dr. Ricardo Vasquez, a vascular surgeon in Bloomington, alleged in the suit, filed in June 2021, that IU Health is "building a monopoly in primary care services through a series of anticompetitive acquisitions."

"As a result, healthcare costs to patients and health insurance companies … in Bloomington have increased, quality of care has decreased, and some patients are unable to receive care, because the monopolist IU Health sends those patients to its higher cost sister facilities in Indianapolis or has made the decision not to perform certain procedures at all," the suit reads.

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Vasquez' attorney, Katharine O'Connor, a partner with Chicago law firm McDermott Will & Emery, said IU Health's market power also is making it difficult for her client to get new patients.

Vasquez has a practice in Bloomington, Vascular Center and Vein Clinic on Second Street, and he normally would get most of his patients through referrals from local and regional primary care doctors. However, O'Connor said as nearly all of the primary care doctors in Bloomington and most in the surrounding counties are affiliated with IU Health, most of them will no longer refer patients to Vasquez.

The lawsuit alleges IU Health engaged in this behavior because Vasquez was competing with IU Health and therefore "threatened IU Health's monopoly."

O'Connor said her client would not comment on pending litigation.

IU Health spokeswoman Samantha Kirby declined to address the case specifically but issued this statement: "IU Health continues to have both employed and non-employed physicians with privileges at our facilities, who provide leading-edge care to our community members."

The lawsuit also alleges IU Health and Dr. Daniel Handel, the health system's chief medical officer in south-central Indiana, made false statements about Vasquez "to destroy his reputation and practice" and filed "meritless complaints" against the local surgeon with the Indiana Professional Licensing Agency and the Indiana Attorney General.

"Neither agency has determined it proper to pursue an investigation against Dr. Vasquez based on those complaints," the suit reads.

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The suit also alleges IU Health is violating federal antitrust laws, which protect competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up.

Among other things, Vasquez requests a court stop IUH from enforcing its internal referral policy that prohibits IUH-affiliated primary care physicians from referring patients to vascular surgeons not affiliated with the health system.

In addition, Vasquez has asked the court to require IU Health to sell part of its health system in Bloomington to break up the monopoly over primary care services.

IUH in court documents said it revoked Vasquez' privileges at its Bloomington hospital because of his "behavior toward patients, colleagues and staff" and that Vasquez filed the suit "to coerce IU Health into reconsidering."

The health system sought to dismiss the antitrust portion of the case in part because Vasquez did not adequately describe a relevant geographic market, filed the complaint too late and provided contradictory arguments.

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O'Connor said IU Health could request the case be heard by the full appeals court — rather than just a three-judge panel — but if the health system does not do that or the court denies such a request, the case would move back to Indianapolis.

O'Connor also said IUH tried to dismiss the case early in the proceedings and she would expect a trial to take place no sooner than a year from now.

Contact Boris Ladwig at bladwig@heraldt.com.