Law360: ‘Concierge Medicine Co. Cut Deals To Corner Market, Suit Says’

By Linda Chiem, Law360

Law360, New York (July 16, 2014, 6:21 PM ET) – Florida-based concierge medicine provider MDVIP Inc. was hit with a suit in California federal court Monday accusing it of monopolizing the U.S. concierge medicine market by cutting exclusive multiyear deals with physicians and blocking them from working with other concierge medicine providers.

Signature MD Inc., a Marina Del Rey, California-based concierge medicine provider, launched the suit accusing MDVIP, which already operates the largest concierge medicine program in the U.S., of systematically tying up markets for concierge medicine membership programs by entering “lengthy and unduly restrictive” exclusive dealing agreements with physicians that are meant to squeeze out the competition in violation of the Sherman Act.

“Rather than compete for market share on the merits, defendant MDVIP has abused its dominance in the relevant markets by utilizing anti-competitive tactics and entering into anti-competitive agreements intended to unlawfully maintain and expand MDVIP’s monopolies and to preclude Signature MD and others from competing against it,” the complaint said.

For instance, the agreements bar the doctors from speaking with or contracting with Signature MD or any other company offering concierge medicine membership programs during the term of their agreement with MDVIP and for a period of two years after their agreement with MDVIP expires, the complaint says.

The companies are in the business of providing concierge medicine, described as a form of medical practice under which physicians offer their patients greater availability, longer appointments and more personalized medical care, including annual physicals or wellness exams, in exchange for the payment of a monthly or annual fee that can run into the thousands of dollars.

According to the complaint, Boca Raton, Florida-based MDVIP was one of the first companies to provide turn-key concierge medicine membership program to physicians who wanted to transition their existing practices to concierge medical practices.

The company already has a more than 70 percent market share of the U.S. concierge medicine membership program market, but the exclusive deals it cuts with doctors are blocking competitors like Signature MD from penetrating certain local markets such as Atlanta, Baltimore, Boston, Cincinnati, Houston, Las Vegas and others that are dominated by MDVIP, the suit claims.

MDVIP’s agreements with its affiliated physicians are in effect evergreen agreements that lock physicians into renewing their arrangement with MDVIP throughout the rest of their professional careers, rather than switching to a competing program, such as that offered by Signature MD, the suit says.

The agreements also lay out limits that force those doctors to drop any existing patient who don’t enroll in the MDVIP program, the suit alleges.

“MDVIP’s anti-competitive conduct has injured competition by denying physicians the ability switch to alternative concierge medicine membership programs and by denying patients the right to choose to enroll in alternative programs while maintaining a relationship with their existing physicians,” the suit said. “MDVIP’s anti-competitive agreements have effectively barred Signature MD and other competitors from access to many local markets.”

On top of that, MDVIP has further singled out Signature MD, which launched in 2007, by launching anti-competitive sham litigation against Signature MD to block it from hiring former MDVIP employees, the suit says.

MDVIP even filed what SignatureMD says was a “meritless sham lawsuit” in January 2013 against SignatureMD and some of its employees asserting theft of trade secret and tortious interference claims in order to interfere with SignatureMD’s business and employment relationships to try and force Signature MD out of the market by expending much needed growth capital on expensive litigation.

The suit asserts claims for violations of the Sherman Act, California’s Cartwright Act and the California Business & Professions Code.

Representatives for MDVIP did not immediately respond to requests for comment on Wednesday.

• Signature MD is represented by Wayne A. Mack, C. Mitchell Goldman, Cyndie M. Chang and Audra L. Thompson of Duane Morris LLP.

Counsel information for the defendant was not immediately available.

• The case is Signature MD Inc. v. MDVIP Inc., case number 2:14-cv-05453, in the U.S. District Court for the Central District of California.

–Editing by Andrew Park.

Source: http://www.law360.com/articles/558206/concierge-medicine-co-cut-deals-to-corner-market-suit-says