GE sued for allegedly 'freezing-out' ISOs in anesthesia equipment maintenance

March 25, 2019
by John R. Fischer, Senior Reporter
A class action lawsuit has been filed against General Electric and two of its healthcare subsidiaries, accusing the multinational conglomerate of "freezing-out" independent service organizations in the maintenance of gas anesthesia machines.

Plaintiff Monroe County Health Care Authority, along with hundreds of other facilities and medical providers throughout the county, allege that GE and its subsidiaries GE Healthcare Inc. of Chicago and Datex-Ohmeda Inc. of Madison, Wisconsin cut off access for independent service providers to GE parts, training and knowledge required to repair and maintain the machines, thereby violating the federal antitrust prohibition against monopolies. The lawsuit was filed by four law firms, including Labaton Sucharow.

"That GE successfully used its size and dominance to corner the market for these repair and maintenance services and overcharged its clients is not in question," said Gregory Asciolla, co-chair of Labaton Sucharow's Antitrust and Competition Litigation Practice, in a statement. "The current case will decide the amount of financial damage suffered by the medical facilities that overpaid for services for which there had once been a competitive choice of providers.”

GE parts and training are not interchangeable with those developed by other vendors, according to the suit, which says the company used this advantage to form and maintain an anticompetitive monopoly policy in the parts and training market for gas anesthesia machines. It also asserts that GE discouraged new ISOs from entering the market.

The litigation argues that the violations began in 2011 with the formation of new policies by GE that hindered the ability of independent enterprises to update the equipment, and its refusal to sell replacement parts directly to ISOs, instead opting to appoint a single exclusive parts distributor who charged significantly higher prices.

The suit then alleges that the company stepped up its anticompetitive policy in 2014 by refusing to train ISOs unless they relayed competitively sensitive information, and says that internal company documents indicate that GE purposely constructed its policies to “slow down,” “add cost to” and “phase out” competitors so that customers would only rely on it for services. The documents are also said to show that awareness on GE’s part in regard to an increase in service and repair prices for clientele using gas anesthesia machines.

"We are proud to deliver lifesaving technologies and services to our customers," a GE spokesperson told HCB News. "While we don't comment on pending litigation, we believe our actions have been appropriate."

The nature of the lawsuit is familiar territory for GE, which was deemed guilty in 2017 by a federal court jury of monopolizing the anesthesia service market and inflating prices in the case, Red Lion Medical Safety Inc. et al v. General Electric Company. The company failed to convince the court to set aside the jury’s ruling.

The current case calls for injunctive relief and compensation for damages suffered by hospitals, clinics and other facilities over nearly a decade due to GE’s actions.

“Servicing gas anesthesia machines is an attractive business, especially since medical facilities try to use the same products and service providers over time rather than purchasing new ones," said Asciolla. "We hope that GE will make good with the institutions it hurt through its exclusionary tactics, and we will ask the court to prohibit it from pursuing such schemes in the future."

The suit was filed in the U.S. District Court for the District of Massachusetts.