Hospital Company Accused of Unfair Restraint of Trade
In a 39-page complaint peppered with charges of malice, misrepresentations and fraud, Salick Health Care has accused giant hospital conglomerate Columbia/HCA of unfair restraint of trade and trying to stifle competition.
Cancer specialist Salick, once a tenant of Columbia’s at Westlake Medical Center and now owner of the small hospital on the Ventura-Los Angeles counties border, has been fighting with Columbia for months over terms of the sale. But the true extent of the battle is spelled out for the first time in an amended complaint to a lawsuit filed in July in Los Angeles County Superior Court.
The amendment, made Wednesday, represents Salick’s first step in its legal drive to gain the right to operate a full-service hospital in the former Westlake Medical Center, renamed Salick Health Care Specialty Hospital. According to the purchase agreement--signed July 25--Salick is limited to providing cancer treatment, dialysis, organ transplants and treating immune-deficient diseases.
But a legal victory for Salick overturning those restrictions would mean that Westlake’s emergency room could be reopened, answering the clamors of Conejo Valley residents who protested when it was closed last month during tense negotiations between Salick and Columbia.
No court dates have been set in the lawsuit. Columbia’s attorneys have 30 days to respond to last week’s amended complaint.
On Monday, Kris Carraway, a local spokeswoman for Columbia, said the company’s attorneys have not finished reviewing the amended complaint and are not ready to make a statement. “We will certainly have comments on every single one of the issues in there,” Carraway said. “We certainly want the public to know how strongly we feel about the misinformation that has been reported.”
The suit attacks Columbia for a variety of alleged misdeeds. It accuses the Tennessee-based corporation of trying to shut down Westlake to eliminate competition with the two hospitals it owns locally, Los Robles Regional Medical Center and West Hills Regional Medical Center.
Columbia acquired the Westlake hospital in July 1995 from Universal Health Services, in a swap ordered by the Federal Trade Commission to eliminate the possibility of a Columbia monopoly in South Carolina.
Citing cost effectiveness, Columbia quickly began closing down services at the hospital: The obstetrics ward shut down within two months of the acquisition. Now, Salick’s suit alleges that Columbia never had any intention of running it as a hospital. It said Columbia “acquired the hospital, not for the purpose of operating it, but solely to satisfy concerns of antitrust enforcement agencies.”
Furthermore, it contends that Columbia has illegally attempted to stifle competition by severely limiting Salick’s medical use of the hospital to cancer treatment only.
“We have to seek redress in the court because the [purchase] agreement will not allow us to do anything but treat cancer,” said Salick founder and chief executive officer Dr. Bernard Salick in an interview. “And we’ll hope that the community and the doctors raise enough of a stink to help change that.”
Even though recent full-page advertisements in several local newspapers tout Salick’s new expanded cancer center without mentioning emergency service, Salick said Monday he will consider opening an emergency room if a judge will allow it.
The advertisements also do not say anything about SalickNet, the company’s new division that focuses on opening cancer-specific HMOs. But one Salick official said Monday it is possible that the former Westlake hospital could eventually become a cancer HMO hospital.
“It wouldn’t surprise me if the program that we have will be found to be extremely attractive to insurance companies,” said Les Bell, executive vice president.
In the meantime, Salick is concentrating on winning the lawsuit against Columbia, which the company accuses of trying to “unreasonably restrain trade or commerce in the market for hospital and cancer treatment services in portions of the western San Fernando and Conejo valleys.”
Salick asserts that Columbia deliberately poisoned Salick’s relationship with the medical staff at Westlake by “spreading the word” that the sale would not go through and that the cancer specialists had no intention of closing the deal.
The Los Angeles-based company also contends Columbia attempted to manipulate one of Salick’s major investors, the British pharmaceutical company Zeneca.
Zeneca, which owns half of Salick’s stock, is a major supplier to Columbia’s more than 300 hospitals worldwide. Six out of Salick’s 12-member board of directors are representatives from Zeneca. According to Salick, Columbia tried to wield its purchasing influence with Zeneca board members to push through an unfavorable deal with Salick.
Finally, Salick officials are indignant over events that occurred the night it took over the hospital. In the complaint, Salick maintains that Columbia officials broke the sterility of an operating room by entering in street clothes and tearing open surgical packs. The company accuses Columbia of “willfully and maliciously contaminating the operating room of the hospital just hours before conveyance of the hospital to . . . [Salick],” thereby jeopardizing patient care.
Columbia officials have said they were only retrieving property they owned that Salick had opted not to buy. They said they found it hard to believe that Salick did not have a cleaning crew in place for the takeover and that they believe Salick used the events of that evening as a publicity stunt.
