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DLA
PIPER
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JACKSON,BarNo.243095veronica.jackson@dlapiper.comDLAPIPERLLP(US)401BStreet,Suite1700SanDiego,CA92101-4297Tel:619.699.2700Fax:619.699.2701AttorneysforPlaintiffPRIMEHEALTHCARESERVICES,INC.UNITEDSTATESDISTRICTCOURTSOUTHERNDISTRICTOFCALIFORNIAPRIMEHEALTHCARESERVICES,INC.,aDelawareCorporation,Plaintiff,
v.
COMPLAINTFORVIOLATIONOFTHESHERMANACTANDDEMANDFORJURYTRIAL
CivilActionNo.
----
SERVICEEMPLOYEESINTERNATIONALUNION,aLaborUnion;SERVICEEMPLOYEESINTERNATIONALUNION-UNITEDflEALTHCAREWORKERSWEST,aLaborUnion;KAISERFOUNDATIONHEALTHPLAN,INC.,aCaliforniaCorporation;KAISERFOUNDATIONHOSPITALS,aCaliforniaCorporation;SOUTHERNCALIFORNIAPERMANENTEMEDICALGROUP,INC.,aCaliforniaCorporation;andDoes1-10,inclusive,Defendants.
NATUREOFTHEACTION
1.ThisactionchallengesanantitrustconspiracybetweenandamongDefendantstoeliminatethehospitalsinSouthernCaliforniaownedbyPrimeHealthcareServices,Inc.("Plaintiff'or"Prime").Asmorefullydiscussedbelow.PrimeistheonlyindependenthospitalsysteminTheMarket(asdefinedbelow),inthatPrimehospitalsarenotownedbyorotherwiseaffiliatedwithhealthcareserviceplansorhealthmaintenanceorganizations(collectively
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servicesavailableatPrimefacilities.WhenKaisermembersreceiveemergencycareataPrime"HMOs")andPrime'sbusinessmodelisbasedonbeinglargelynon-contractedwithsuchpayorcontrolledplans,includingKaiser.Tothatextent,Primeoffersauniquealternativeto,andthereforethreatensthedominanceof,thepayor-controlled,closed-staffmodelonwhichDefendantKaiser(asdefinedbelow)hasbaseditsmulti-billiondollarbusiness,particularlywithregardtoemergencycareservices.Ultimately,thisisanactiontoprotectsomeofthemostvulnerableofconsumers-consumersmakinglifeanddeathchoicesregardingwhereandwhentheywillreceivehospitaltreatment.2.MostpatientsenterPrimehospitalsthroughemergencyroomsandthereforetendtobemoresickorinjuredthanmosthospitalpatients.Primehasmadeasignificantinvestmentincapital,equipment,andhumanresourcesinordertoprovidetherequiredcareforthesecriticallysickandseverelyinjuredpatientsandtherebyimprovechoicesforthispatientpopulation.Suchimprovementsincludeshorterwaitingtimesforemergencyservicesandfasteradmissionswherenecessarytostabilizeemergencypatients.3.FederalandStateregulationspermitKaisermemberstoseekemergencycareatanyhospital,andtoremain
in
thathospitaluntiltheyarestableandreadytobedischargedortransferredtoaKaiserowned,affiliated,contracted,orapprovedhospital.Therefore,Kaisermemberswithemergencymedicalconditions,includingtheseverelyinjuredorcritically
ill,
theirfamilies,andinsomecasesambulancedriversorothersWhotransportpatientstohospitals,maychoosetoseekemergencycareataPrimefacilitybasedonthelocation,accessibility,andfacility,KaisermustcompensatePrimeforthecareprovidedtothoseKaisermembers.4.Asfurtherallegedbelow,thepresenceofPrimeinTheMarketthreatenstheobjectivesofDefendants.AstoDefendantSEIU(definedbelow),Prime'spositioninTheMarketthreatensthesuccessoftheSEIU'scampaigntoexpanditsrepresentationofandraisethepriceoflaborforHealthcareWorkers(asdefinedbelow)inTheMarket.AstodefendantKaiser,thepresenceofPrimepresentsacompetitivealternativetoconsumersthatthreatensKaiser'sprofitsandultimatelythesuccessofitsbusinessmodel.Defendantshavejoinedforcestoaddress
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thiscommonthreatbyseekingtoraisePrime'scostsofdoingbusiness,withtheultimateobjectiveofeliminatingPrimefromTheMarket.5.Infurtheranceofthisconspiracy,Kaiser,amongotheractsasdescribedbelow,oftenrefusestopayPrimeforservicesrenderedtoKaisermembersandrequiresPrimetopursueadministrativeappealsandlitigationtorecoverpaymentforPrime'streatmentofKaisermembers.Thesheeramountofthereceivableatanypointintime(currentlybelievedtoexceed$100million)andthetimeandexpenseincurredinlitigatingamajorityofclaimsforreimbursementforservicesrenderedtoKaisermembershasasignificantadverseimpactonPrime'soperations.6.
In
contrasttotheKaisermodel,thesuccessofPrime'smodeldependsonoffering,delivering,andpreservingitsreputationforofferinganddeliveringqualitymedicalcaretoitspatients.Thus,byeliminatingPrimefromTheMarket,KaiserthreatenstoeliminatethepotentiallylifesavingcompetitivechoicePrimeofferstoKaisermembersandotherconsumersinneedofemergencycareandavoidthehighercostsassociatedwithsuchvitalcare.7.Asnotedabove,KaiserandSEIUshareacommonobjective,toprotecttheirrespectivebusinessmodelsfromthecompetitivethreatpresentedbyPrimeinTheMarket.Infurtheranceoftheircommonobjective,KaiserjoinedforceswiththeSEIU,inanillegalconspiracyinviolationofSections1and2oftheShermanAntitrustActof1890("ShermanAct"),15U.S.C.§§1-2.Thisillegalconspiracyincludedanagreementtoengageinanticompetitive,unfair,exclusionary,anddeceptiveconducttoeliminatePrimeasacompetitorinTheMarket.8.TheSEIU'sengagementinunlawfulactivitiestoachievemarketdominationispartandparceloftheSEIU'sapproachtoforcingemployercapitulation.AstheSEIU'schiefstrategist,StephenLerner,statedwhenarguingfortheadoptionofthemarketdominationstrategythattheSEIUhaslongsinceimplemented:Wecan'tengageinsuccessfulmassorganizingorprotectexistingcollectivebargainingifweoperatewithintheconfinesofthelawbecauseactivitiesthatallowustoexercisepowerareincreasinglyineffectiveand/orillegal.
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