Private equity firm, accused of trying to build a monopoly in radiology, dismissed as defendant in FTC lawsuit
A private equity firm accused of trying to build a monopoly in radiology was dismissed as a defendant in an ongoing lawsuit filed by the Federal Trade Commission.
The FTC first sued Welsh, Carson, Anderson & Stowe in September, claiming the New York investment outfit and US Anesthesia Partners have perpetrated an “anticompetive scheme” in anesthesiology. Though not named as a defendant, the complaint also accused Welsh Carson of trying to do the same in imaging via its investment in US Radiology Specialists.
However, a Texas judge on Tuesday ruled that the FTC “has not adequately alleged that Welsh Carson ‘is about to violate antitrust law,’” dismissing the firm as a defendant.
“The FTC alleges that nothing ‘prevent[s] Welsh Carson from re-upping its investment in [US Anesthesia Partners], retaking formal control of the company, and directing yet more anticompetitive positions,’” U.S. District Judge Kenneth M. Hoyt wrote May 13. “The FTC also points to Welsh Carson’s investments in the emergency medicine and radiology markets as evidence of intent to further consolidate the anesthesia market.”
“Indeed, the FTC does not allege any conduct by Welsh Carson in the past six years that is a plausible antitrust violation,” Hoyt added later. “Instead, the FTC argues that Welsh Carson designed and implemented a large, systematic scheme that still exists. This argument is to mean, if anything, that the violation is ongoing, rather than likely to recur. The only sense in which the scheme still exists is that USAP still exists, and that USAP still consolidates the market and reduces competition. But that goes to USAP’s violations, not Welsh Carson’s.”
While dismissing the private equity firm as a defendant, Hoyt ruled that the FTC can continue pursuing its claims against the anesthesiology group. Antitrust regulators allege US Anesthesia Partners has executed a strategy of consolidating and monopolizing the specialty market in Texas. The purported multi-year “scheme” came in three parts: (1) systematically buying up nearly every large practice in the Lone Star State; (2) further driving up prices through rate-setting agreements with other independent providers; and (3) sidelining a significant competitor by striking a deal to keep it out of Anesthesia Partners’ territory.
In his response, Hoyt deemed that the FTC “has plausibly alleged acquisitions resulting in higher prices for consumers."
According to Reuters, the FTC declined to comment on the decision this week while Welsh Carson welcomed it, contending the case is “without factual or legal basis.” The private equity firm emphasized that it is a “mere investor” in USAP and going after it in court would turn “decades of corporate law on its head.”
USAP, meanwhile, maintained that the case is “without merit.”
“We look forward to demonstrating this as the case proceeds and are confident in our position,” Texas-based anesthesiologist and USAP board member Scott Holliday, DO, MBA, said in a statement.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.