Hospital operator Prime Healthcare Services on Tuesday filed a federal lawsuit against Kaiser Permanente and the Service Employees International Union, alleging the rival medical group and labor union violated the Sherman Antitrust Act by conspiring to squeeze Prime from the marketplace.

The filing is the latest in a series of allegations and counter-allegations that have lately been related to Prime Healthcare's affiliate's attempt to purchase a troubled Victorville hospital.

Prime's lawsuit accuses Kaiser and SEIU of a conspiracy in which the labor union is aiding Kaiser's attempt to decrease Prime's market viability in exchange for wage concessions.

Kaiser and SEIU both issued statements denying Prime's allegations and accusing their Ontario-based rival of its own misdeeds.

In its lawsuit, Prime alleges that SEIU's activities include pushing false media stories about problems at its facilities - such as reports of unusually high rates of blood infections - as well as campaigning against the plaintiff's efforts to acquire Victor Valley Hospital in Victorville.

"What we're focused on is what Kaiser is trying to do to Prime Healthcare, to increase their monopoly," Prime Healthcare general counsel Michael Sarrao said in a conference call with reporters.

Prime filed its complaint in the federal court serving the Southern District of California. The lawsuit seeks unspecified money damages and injunctive relief that would prevent Kaiser and SEIU from activities that Prime alleges the defendants have done, including:

"Colluding to disrupt plaintiff's business through the dissemination of biased research studies.


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"Coercing and threatening patients, not to seek or continue their care at plaintiff's hospitals.

"Withholding payment from plaintiff to services provided to Kaiser members without just cause."

In a statement, Kaiser responded "we have only just received the lawsuit by Prime Healthcare, and find it deeply puzzling. At first glance, Prime's allegations appear to be that Kaiser Permanente's 66-year-old model of integrating the delivery and financing of care, coupled with our nationally well-regarded labor management partnership, are somehow conspiracies designed to illegally compete with Prime Healthcare."

Kaiser went on to accuse Prime of improperly driving up health care costs at its own hospitals.

The SEIU also issued a statement claiming Prime's lawsuit is frivolous and accusing Prime of billing Medicare for treating blood infections and malnutrition at abnormally high rates.

"Those rates are a matter of serious public concern, whether they result from alleged fraudulent billing or from public health crises at Prime hospitals," SEIU spokesman David Tokaji said in the statement.

During a conference call Tuesday, Sarrao said a state Department of Public Health investigation cleared Prime of misdiagnosing blood infection cases.

Prime's general counsel also said the company has received no subpoenas related to any investigations of faulty Medicare billing.

In September, state Attorney General Kamala Harris blocked Prime's foundation's bid to buy Victor Valley Community Hospital.

The hospital's leaders have filed their own suit to appeal Harris' decision, Sarrao said.


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