Professional Documents
Culture Documents
Advocate Aurora Antitrust Lawsuit
Advocate Aurora Antitrust Lawsuit
Plaintiffs,
Case No. _________
v.
Defendants.
______________________________________________________________________________
A. Plaintiffs .................................................................................................................. 6
B. Defendants .............................................................................................................. 6
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A. AAH Imposes “All Or Nothing” and “All Plans” Contract Language
and Uses Other Tactics to Force Inclusion of Its Overpriced
Hospitals in Insurance Networks .......................................................................... 27
E. AAH Uses Gag Clauses to Suppress Competition and Further Its Other
Anticompetitive Schemes ..................................................................................... 36
A. AAH’s Prices Drive Costs for Self-Funded Commercial Health Plans ................ 48
COUNT ONE................................................................................................................ 62
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COUNT THREE ........................................................................................................... 65
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CLASS ACTION COMPLAINT
Plaintiffs Uriel Pharmacy Health and Welfare Plan and Uriel Pharmacy, Inc. (collectively
“Uriel”), individually, and on behalf of all others similarly situated, bring this action against
Aurora Health Care, Inc. and Advocate Aurora Health, Inc. (collectively, “AAH”) and state as
follows:
1. This is an action for restraint of trade, unlawful monopolization, and unfair methods
of competition seeking classwide damages and injunctive and equitable relief under the Sherman
Act, 15 U.S.C. §§ 1 et seq., and Wisconsin’s antitrust laws, Wis. Stat. §§ 133.01 et seq.
2. For the past several years, AAH has engaged in anticompetitive methods to restrain
trade and abuse its market dominance for the purpose of foreclosing competition and extracting
unreasonably high prices from the Plaintiffs and other Wisconsin businesses, unions, and
taxpayers. These abuses include unlawfully forcing commercial health plans to include in their
networks all of AAH’s overpriced facilities even if they would rather only include some, and
aggressively blocking employers and insurers from directing individuals to higher value care at
non-AAH facilities. AAH has gone to extraordinary lengths to suppress innovative insurance
products, such as tiered plans, that would reduce costs for employers. And it has used a
competition from other healthcare providers and attempt to expand its monopoly over acute
employers, workers, and taxpayers. According to national academic studies and state-specific
research in Wisconsin, those rising healthcare costs are primarily driven by the rapidly increasing
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prices charged by large hospital systems, and these price increases are driven primarily by
of hospitals causes higher prices without resulting in corresponding increases in quality or patient
satisfaction. This is because hospital systems with greater market power are able to extract higher
prices by engaging in anticompetitive behavior, such as imposing vertical restraints that leverage
the market power they have over one market to extract supracompetitive profits from other markets
5. AAH has used its vast market power to engage in anticompetitive behavior that
allows it to charge extremely high prices for healthcare services in Wisconsin. These prices would
not be possible without AAH’s anticompetitive behavior and have resulted in Wisconsin
employers, unions, and local governments overpaying for healthcare by hundreds of millions of
6. AAH’s high prices are apparent in routine, high-volume procedures like joint
replacements, which at AAH’s facilities in Milwaukee cost $21,000 more than a competitor
located only minutes away, a 50% higher price. And they are manifested in cumulative numbers
that show AAH is by far the most expensive hospital system in Eastern Wisconsin.
healthcare prices. According to a recent study, healthcare prices in Milwaukee are the fourth
highest in the entire country; they are higher even than those in New York City.
8. AAH has been able to impose these eye-watering prices on employers in Wisconsin
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• Forces employers’ health plans to include its overpriced facilities in-
• Goes to extreme efforts to drive out innovative insurance products that save
10. In 2019, AAH had $12.8 billion in revenue and earned $1.5 billion in profit. By
that same year, AAH had built up about $12 billion in assets. AAH’s high profits are a major
11. AAH has used its unlawfully inflated profits to engage in an acquisition spree of
competitor hospitals and independent facilities—a spree AAH has made clear it plans to continue
in the years to come. These acquisitions offer AAH two self-reinforcing anticompetitive financial
benefits: (1) the ability to impose higher prices at the acquired facilities than the previous owners
could, and (2) even greater systemwide power that AAH can leverage to force employers and
embarking on what it calls a ‘bold new strategy’ to more than double its annual revenue by 2025
via mergers and acquisitions of healthcare systems, health insurers and consumer-facing health
products.” AAH’s CEO speculated that the system’s profits could be used to acquire more
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hospitals “a thousand miles away,” and AAH’s Executive Vice President publicly stated AAH’s
13. And that’s exactly what AAH has done this month as it announced a merger with
Atrium, a multi-billion dollar hospital system based in Charlotte with operations in North Carolina,
South Carolina, Georgia, and Alabama. AAH has proposed to move its headquarters to Charlotte
only a few years after promising to its community that it was committed to Wisconsin as part of
14. That previous merger in 2018 combined Aurora Health Care of Wisconsin and
Advocate Health Care of Illinois and created one of the largest hospital chains in the country. The
merger created the renamed Advocate Aurora Health. The transaction increased both the new
system’s market power in Southeastern Wisconsin as well as the system’s overall leverage with
employers who pay for medical services in both states and with the companies that design many
commercial health plan networks that must span the Wisconsin-Illinois border.
buyout fund to engage in further acquisitions, venture capital investments, and other financial
transactions where, according to the new fund’s president, “there’s a lot of growth opportunity.”
He also stated that the fund would “invest in, acquire, do a transaction with a company where there
are synergy or cross-pollination opportunities with our core business.” Betraying just how far AAH
has strayed from its non-profit status, the “core business” referred to is the supposedly charitable
provision of healthcare services to Wisconsin families by AAH. And within that “core business,”
the buyout fund president was remarkably candid about AAH’s goals: “One way we measure that
is what we call ‘share of wallet,’ which is a sort of a retail measure of how many times and in what
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ways are we interacting with the people we serve beyond just traditional care delivery, and does
profitable enterprise, AAH avoids hundreds of millions in federal, state, and local taxes on profits
by promising to pursue a primarily charitable purpose. However, a study by the independent Lown
Institute released in April 2022 comparing non-profit hospital systems’ charitable impact found
that AAH spent $498 million per year less on charity care and community investment than the
estimated taxes AAH avoided through their non-profit, tax-exempt status. This “fair share deficit”
at AAH was the eighth worst out of 275 non-profit hospital systems evaluated.
17. In addition to using profits for an aggressive merger and acquisition strategy, AAH
pays extraordinary amounts to the executives of this supposed charitable institution. The CEO of
AAH paid himself over $13.4 million dollars from the charity in the most recent full year of
reporting, more compensation than most CEOs of Fortune 500 corporations received. Fifteen of
AAH’s “non-profit” executives were paid over $1 million in 2019. The “Chief Business
18. Without intervention, AAH will continue to use anticompetitive contracting and
negotiating tactics to raise prices on Wisconsin employers and use those funds for aggressive
acquisitions and executive compensation. This will reduce economic growth in Wisconsin, harm
patients and taxpayers, and drive employers out of Wisconsin. This case seeks to compensate the
employers, unions, and local governments that have been directly harmed by AAH’s past illegal
activity, and to enjoin AAH from continuing unlawful practices that harm Wisconsin’s economy
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II. PARTIES
A. Plaintiffs
19. Plaintiff Uriel Pharmacy, Inc. is a business in East Troy, Wisconsin with a self-
funded health plan for its employees. Uriel has paid AAH for healthcare at the rates negotiated by
20. Plaintiff Uriel Pharmacy Health and Welfare Plan is Uriel’s self-funded health plan.
B. Defendants
April 1, 2018, Advocate Aurora Health, Inc. became the sole corporate member of Advocate
Health Care Network, an Illinois non-profit corporation and Aurora Health Care, Inc., a Wisconsin
nonstock non-profit corporation. It may be served with process through its registered agent, The
22. Defendant Aurora Health Care, Inc. is a Wisconsin non-profit corporation. Its
principal place of business is 750 W Virginia Street, Milwaukee, Wisconsin, 53204. It may be
served with process through its registered agent at 301 S Bedford St, Ste 1, Madison, Wisconsin,
53703.
23. This Court has personal jurisdiction over AAH, because AAH is a resident of
Wisconsin, and because the anticompetitive conduct at issue in this litigation took place primarily
in Wisconsin.
24. This Court has subject matter jurisdiction over Plaintiffs federal claims under 15
U.S.C. § 15 and 28 U.S.C. § 1331. The Court has jurisdiction over Plaintiffs state-law claims under
28 U.S.C. § 1367, because they arise out of the same transactions and occurrences.
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25. Venue is appropriate in this Court under 28 U.S.C. § 1391 and 15 U.S.C. § 15,
because AAH is domiciled in this judicial district, and/or because a substantial part of the events
26. The market for hospital services is different from other product/services markets
because the person consuming the hospital services (the patient) does not negotiate—and in many
cases, does not even know beforehand—the prices of the services they are consuming.
27. Instead, hospitals negotiate the prices that commercial health plans pay for medical
services before they are consumed. These negotiated prices for in-network care are called “allowed
amounts.”
28. Many businesses, local governments, and unions have commercial health plans in
which the employers directly pay the vast majority of the healthcare expenses their employees (and
their dependents) incur. These “self-funded” plans rely on insurance companies to administer the
plans and negotiate on their behalf with hospitals. But the self-funded commercial health plans
directly pay bills from hospitals for services used by their employees or members. This is distinct
from the more commonly understood “fully insured” commercial health plans, in which companies
or individuals pay premiums to an insurance company and that insurance company pays most of
29. When an insurance company, such as Blue Cross or Cigna, manages a self-funded
health plan on behalf of an employer—rather than actually underwriting the risk itself, as it does
for fully insured plans—the insurance company is acting as a third-party administrator (“TPA”).
TPAs are in charge of processing claims and managing the day-to-day affairs of the self-funded
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health plan. TPAs may also help self-funded health plans select “networks,” which are groups of
healthcare providers. This leads to the commonly used term of a provider being “in-network” for
a health plan—a term that is well-understood by employees to mean facilities where their insurance
will be accepted and their costs as an employee will be determined by plan documents they can
consult beforehand. Going to an “out of network” provider generally means much higher costs and
uncertainty for both the employee (in terms of out-of-pocket costs, frequent surprise bills, and
paperwork burden) and their health plan (in terms of substantially higher prices than those offered
to plans that include the provider in-network and significant administrative burden).
30. For both obvious practical reasons and because of contractual restrictions, self-
funded health plans can almost never assemble their own “networks” of providers. This is
with hundreds of providers across all the geographies where an employer has employees and
dependents, and because providers would refuse to negotiate thousands of contracts with
negotiation with healthcare providers. Those “Network Vendors” then allow self-funded health
plans to “rent” or access the network they have assembled. Network Vendors tend to be large,
well-known insurance companies like Aetna, Anthem Blue Cross Blue Shield, and Cigna that have
the scale and technical knowledge to build networks. In some cases, a Network Vendor and TPA
are two divisions of the same company. A self-funded health plan can therefore contract with a
32. Network Vendors negotiate with hospitals and other providers to create networks.
For a network to be commercially viable (i.e., for it to be one an employer would choose to offer
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its employees), it must include enough providers throughout the geography where the network is
offered and across the full spectrum of healthcare services patients may need, from primary care
33. Network Vendors negotiate with providers on price, attempting to balance the need
to build networks with an adequate number of providers and the need to build networks that offer
reasonable prices for their potential customers, i.e., self-funded health plans.
basis. Rather, Network Vendors generally negotiate with hospitals for bundles of services that will
be available to many self-funded health plans that “rent” the network from the Network Vendor.
Those self-funded health plans then offer that bundle of services to their members as “in-network”
benefits. Critically, self-funded health plans do not have control over the prices negotiated by their
35. If a self-funded health plan’s Network Vendor and a hospital reach a deal for a
bundle of services (for instance, all acute inpatient hospital services), the hospital will generally
be considered in-network for every service in that bundle. This means that for any service in that
bundle, if a self-funded health plan’s member receives that service from the hospital, the plan will
pay the hospital the allowed amount that the Network Vendor negotiated for that service, after the
commercial health plans need or want to offer their members—a Network Vendor will contract
with a hospital for a bundle of services only when the hospital offers services that are competitively
priced and sufficiently high quality. The Network Vendor may include as in-network only some
bundles of services at any given hospital. For instance, the network may have one hospital be in-
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network for all acute inpatient hospital services but may choose not to include that hospital in-
network for some acute outpatient hospital services (visits not requiring an overnight stay) because
the Network Vendor has identified ways for plans to purchase higher quality and/or less expensive
versions of those outpatient services from a nearby competing hospital or other outpatient provider.
Similarly, in a competitive market, a Network Vendor may decline to include any services from a
hospital “in-network” if the Network Vendor determines that the hospital’s price or quality of care
37. If a Network Vendor wishes to offer viable networks for self-funded health plans,
the Network Vendor must construct networks that include a comprehensive bundle of services that
employees/members of a plan can access in their region. Members generally insist on receiving
their healthcare near where they live or work. A plan will not be viable—for either employers or
their employees—if it does not offer in-network services that individuals commonly desire or need.
Similarly, a plan will not be viable if employees can only receive services at in-network rates at a
hospital that is a long distance from the employer’s office or many employees/members residences,
because individuals may not be able or willing to travel so far to receive those services.
38. The self-funded commercial health plans directly pay the costs for in-network
services at the prices negotiated by the Network Vendor. Self-funded health plans also pay the
Network Vendors for access to the network and pay TPAs a fee for the administration of the plan.
Network Vendors for inclusion in networks. Then, Network Vendors compete to have their
networks selected by self-funded health plans of employers, local governments, and unions.
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B. Hospital/Insurance Negotiations in a Market Distorted by Anticompetitive
Behavior
40. The unique mechanics of the healthcare market provide an opportunity for hospital
conglomerates with significant market power to anticompetitively restrain trade through unduly
restrictive negotiations and agreements with Network Vendors and TPAs in order to extract
supracompetitive prices. Supracompetitive prices are rates that are higher than what would be
found in the context of normal competition. In the market for hospital services, supracompetitive
prices come in the form of inflated allowed amounts, which are negotiated by Network Vendors
significant geographic area is monopolized by a single hospital system, that hospital system is in
effect a “must-have” for the network. Self-funded health plans with significant members in that
area will not choose a Network Vendor whose network does not include necessary services
42. A system with must-have facilities that engages in anticompetitive behavior can
cause significant financial harm to self-funded health plans. First, in negotiations with Network
Vendors, a hospital system with must-have facilities can demand allowed amounts that are grossly
above what the hospital could obtain if it faced competition. This is true both by virtue of the
hospital’s extant market power, as well as the enormously high barriers to entry when it comes to
many services hospitals provide, such as acute inpatient hospital services. These barriers to entry,
which include spending significant time and money to build facilities and hire skilled staff (such
as surgeons and anesthesiologists) as well as regulatory hurdles such as obtaining approval from
state and local officials before opening a new facility, prevent new entrants from entering the
market and reining in prices charged at must-have facilities. Wisconsin requires detailed regulatory
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oversight and approval of new hospital construction, creating another headwind for new facilities.
And Wisconsin has a cap on the total number of hospital beds in the state.
43. Second, if the must-have facilities are part of a larger hospital system that has other
facilities that do face competition, the hospital system can refuse to offer in-network services at
the must-have facility unless Network Vendors also agree to include in their networks services the
system’s other facilities, at higher allowed amounts than those other facilities could normally
demand standing alone. When negotiating with Network Vendors, a hospital system with must-
have facilities can link those facilities to the system’s facilities that would normally face more
competition, and by doing so extract supracompetitive prices from self-funded health plans.
Importantly, this results in the self-funded health plans paying supracompetitive allowed amounts
not only for services obtained at the must-have facilities but also for services at the system’s
44. These factors and others have led to a consensus in the field of healthcare
economics that monopolization of hospital markets significantly increase prices for hospital
services paid directly by self-funded health plans. As the Kaiser Family Foundation wrote, “A
wide body of research has shown that provider consolidation leads to higher health care prices for
private insurance; this is true for both horizontal and vertical consolidation.” And the economic
literature strongly suggests that there are no concomitant improvements in quality from such
monopolization.
contracts with Network Vendors, TPAs, or health plans. In a competitive market, a Network
Vendor may include both high-cost and low-cost hospitals in network but individual TPAs or
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health plans can take measures to incentivize employees/members to choose the lower-cost,
higher-quality provider where possible. These measures can include providing truthful information
about the cost of care and offering financial benefits (e.g., lower co-pays or more preferential risk-
sharing) when patients choose lower-cost providers. Such measures undertaken by health plans are
called “steering.” Another form of steering is the creation of “tiered” networks or “tiered” plans,
in which low-cost, high-quality providers are in a higher tier than more expensive and/or lower
quality competitors, and the plan’s members are financially incentivized to choose providers in a
46. Academic research by health economists has demonstrated that when commercial
health plans, TPAs, and Network Vendors are free to engage in steering and tiering, the plans pay
significantly lower costs for healthcare, with no corresponding reduction in health outcomes.
47. When a dominant hospital system—particularly a system with one or more must-
have facilities—negotiates with Network Vendors, the system can force the Network Vendor and
its health plan clients not to engage in these cost-saving measures by requiring “anti-steering” or
“anti-tiering” provisions in their contracts. Such provisions essentially require commercial health
plans to grant the dominant provider a “most favored nation” status, preventing the plans from
favoring other systems through financial incentives, information sharing, or placing any other
system in a plan’s higher “tier.” As detailed below, AAH engages in this anticompetitive conduct.
48. In 2016, former President Obama’s Department of Justice brought a Sherman Act
suit against a dominant North Carolina hospital system that imposed anti-steering and anti-tiering
provisions on commercial health plans. The government alleged that the system “prevent[ed]
insurers from offering tiered networks that feature hospitals that compete with [the system] in the
top tiers, and prevent[ed] insurers from offering narrow networks that include only [the system’s]
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competitors.” The government further alleged that these and other “steering restrictions reduce
competition resulting in harm to Charlotte area consumers, employers, and insurers.” The
government also alleged that the system had the market power necessary to be able to force these
provisions on unwilling insurers, because the system controlled approximately 50 percent of the
relevant market (acute inpatient hospital services). After a federal court held that the system’s use
of anti-steering provisions was plausibly anticompetitive under the Sherman Act, the case settled
and the system agreed not to impose anti-steering and anti-tiering provisions on commercial health
49. Former President Trump’s Assistant Attorney General for Antitrust also criticized
anti-steering provisions saying, “Without these provisions, insurers could promote competition by
‘steering’ patients to medical providers that offer lower priced, but comparable or higher-quality
services. Importantly, that practice benefits consumers, but the anti-steering restrictions prevented
it.”
50. President Biden’s Secretary of Health and Human Services Xavier Becerra, wrote
in his previous role as California Attorney General that contracting practices that “prevented
insurers from using steering and tiering” were among types of “anticompetitive conduct” that
prices on a system-wide basis that exceed its competitors and exceed the prices its hospitals and
51. Likewise, Senator Chuck Grassley, then chairman of the US Senate Judiciary
Committee, said such anti-steering practices were “restrictive contracts deliberately designed to
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V. RELEVANT MARKETS
52. Judgment may be entered against AAH for the illegal conduct described in this
complaint without defining the particular economic markets that AAH’s conduct has harmed. With
respect to Plaintiffs antitrust claims, AAH’s ability to impose anticompetitive contract terms in all,
or nearly all, of its agreements with commercial health plans and AAH’s ability to persistently
charge supracompetitive prices are direct evidence of AAH’s market power that obviates any need
53. Notwithstanding the foregoing, the markets that are relevant to the illegal conduct
described in this Complaint are properly defined herein. For each, the product market includes
only the purchase of medical services by self-funded health plans. The relevant product markets
do not include sales of such services to government payers, e.g., Medicare, Medicaid, and
commercial Network Vendors are separate from the process used to determine the rates paid by
government payers.
54. The primary relevant product markets in this action are the clusters of inpatient and
outpatient acute hospital care services offered by AAH. These inpatient and outpatient markets,
which are distinct product markets from each other for reasons discussed below, include sales of
such services to individual, group, fully insured, and self-funded health plans. AAH sells these
services at each of its facilities, although not every facility offers the same bundle of services.
55. Relevant Product Market #1: Acute Inpatient Hospital Services. Acute inpatient
hospital services consist of a broad group of medical and surgical diagnostic and treatment services
that include a patient’s overnight stay in the hospital. Although individual acute inpatient hospital
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services are not substitutes for each other (e.g., orthopedic surgery is not a substitute for
gastroenterology), Network Vendors typically contract for various individual acute inpatient
facilities, such as independent outpatient facilities, specialty facilities (e.g., nursing homes), and
facilities that provide long-term psychiatric care, substance abuse treatment, and rehabilitation
services are not viable substitutes for acute inpatient hospital services. Health plans’ and
consumers’ demand for acute inpatient hospital services is generally inelastic because such
services are often necessary to prevent death or long-term harm to health. Thus, such inpatient
56. Relevant Product Market #2: Outpatient Medical Services. Outpatient medical
services encompass all the medical services a hospital provides that are not inpatient medical
services (i.e., services that do not require an overnight stay). Although individual outpatient
medical services are not substitutes for each other (e.g., a CT scan is not a substitute for an annual
physical), Network Vendors often contract for various individual outpatient medical services as a
bundle in a single negotiation with a hospital system, and that is how AAH negotiates with
independent primary care providers, specialty facilities, ambulatory surgical centers, nursing
homes, and facilities that provide long-term psychiatric care, substance abuse treatment, and
Consequently, health plans’ and consumers’ demand for outpatient medical services from a
hospital is generally more elastic because, if given the opportunity, they could obtain some of these
services from non-hospital providers. But demand for outpatient medical services in general is
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inelastic because such services are often necessary to prevent illness, loss of physical mobility, or
long-term harm to health. Thus, outpatient medical services can be treated analytically as a single
product market.
58. These two product markets—acute inpatient hospital services and outpatient
medical services—are separate. Health plans often purchase outpatient medical services from
different providers (i.e., non-hospital providers) than those from which they purchase acute
inpatient hospital services, which can only be purchased from hospitals. The existence of non-
hospital competitors would, absent anticompetitive behavior, reduce the price health plans would
pay a hospital system for outpatient medical services, but those competitors would not affect the
price a hospital could charge for acute inpatient hospital services. There are also numerous
procedures that can only be performed in an inpatient setting instead of an outpatient setting. The
59. Patients generally seek inpatient and outpatient care from hospitals in the areas
where they live and work and where their local physicians have admitting privileges. As stated in
an FTC study, “In healthcare markets, distance to medical provider is one of the most important
predictors of provider choice.” Given this, patients do not typically regard hospitals located many
miles away from them as substitutes for local ones, particularly when they have little or no
financial incentive to travel greater distances. Consequently, an insurance network that does not
satisfy patient demand for access to conveniently located hospitals will not be commercially
viable.
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60. Hospital Service Areas (“HSAs”) are one widely accepted proxy for market
definition for inpatient acute care services, developed by The Dartmouth Atlas of Healthcare. The
Dartmouth Atlas defines HSAs as “local healthcare markets for hospital care.”
61. In the following HSAs (“AAH Monopolized Inpatient Markets”), AAH faces little
to no competition, and competition from providers of acute inpatient hospital services located
outside these HSAs would likely not be sufficient to prevent a monopolist provider of acute
inpatient hospital services located in the HSA from profitably imposing small but significant price
increases for those services over a sustained period of time. For many health plans—and thus
Network Vendors—AAH facilities in the following areas are considered “must-have” for a
network.
62. Elkhorn HSA: In the Elkhorn HSA, AAH controls 60% of inpatient admissions in
the HSA. 1 AAH owns the only hospital in Elkhorn, Aurora Lakeland Medical Center. The next
nearest hospital for residents of Elkhorn is Mercyhealth Hospital which is not a viable competitor
because it lacks certain essential services that Aurora Lakeland offers. For example, dialysis
treatment including both hemodialysis (dialysis requiring appointments at a hospital multiple times
per week), peritoneal dialysis (self-dialysis done seven days a week), as well as an Extracorporeal
1
This inpatient market share data is primarily based on Medicare admissions or discharges.
According to the federal government’s Centers for Medicare & Medicaid Services (CMS),
Medicare data can be “a useful proxy” for evaluating provider market saturation for “private
insurance” and academic research has “found market share based on the Medicare discharge data
to be representative of all discharges, not just those for Medicare beneficiaries. This is because a
hospital’s volume of Medicare patients in a given area is associated with its total volume of
patients.” Furthermore, a review of non-Medicare sources indicates Medicare admissions are
useful estimates of market share. For example, a broader State of Wisconsin analysis in 2018
indicated that “the [AAH] System operates ten acute care facilities with a 45 percent inpatient
market share” in the “Greater Milwaukee South, Southern Wisconsin, and Northern Illinois
Region” – the same percentage of inpatient admissions as Medicare numbers for the Milwaukee
HSA.
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ShockWave Lithotripter (to the most common way to treat kidney stones) are available at Aurora
Lakeland but not Mercyhealth. Additionally, Mercyhealth Hospital has only 25 inpatient beds
total, meaning that it would be an entirely inadequate substitute for AAH for plans in Elkhorn
HSA. As discussed below, employers and individuals would be unwilling to accept a plan that
excluded 72% of all inpatient beds available in the Elkhorn HSA, which would be the result of a
network that did not include AAH. Even in the actual small zip code where Mercyhealth is
located, it only accounts for 16% of inpatient admissions, showing that it is simply not a significant
63. For families living north or east of Elkhorn, both of the closest two hospitals are
AAH facilities: Aurora Lakeland Medical Center and Aurora Medical Center Burlington.
64. The Elkhorn HSA is entirely within Walworth County, Wisconsin. Wisconsin
Physicians Services (“WPS”)—a prominent TPA and insurance company—has stated that in
Walworth County, “the Aurora network is a necessary component of any health insurance product
sold to employers or other groups of any size.” (emphasis in original). Thus, for the Elkhorn HSA,
the AAH network is a necessary component of any network sold to self-funded health plans in the
Burlington HSA.
65. Burlington HSA. AAH controls over 78% of inpatient admissions in the HSA with
significantly over 80% in some portions. AAH owns the only inpatient facility in Burlington,
Wisconsin. The next nearest inpatient acute care facility for residents of Burlington and nearby
towns is about 20 minutes away with no traffic and is another AAH facility, Aurora Lakeland
Medical Center. For many residents west of Burlington, the three closest inpatient acute care
facilities are all AAH hospitals. To get to a non-AAH facility, a resident of Burlington or nearby
towns would need to drive 25 or more minutes if there is no traffic to Mercyhealth Hospital, a
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much smaller facility in Lake Geneva without the inpatient bed capacity for a viable network and
without many common hospital services available at Aurora Lakeland Medical Center. For just a
few examples, Mercyhealth Hospital does not have a PET scanner, a cardiac catheterization
way to treat kidney stones), all of which are available at AAH’s Aurora Medical Center Burlington.
Because of this, Mercyhealth would not be a viable competitor for many services even if it were
close enough to compete. Additionally for many residents of Salem Lakes (within the Burlington
HSA), the closest three inpatient facilities are all owned by AAH. The nearest non-AAH inpatient
facility is 30 minutes or more for most Salem Lakes residents and would involve driving past an
AAH facility.
66. As described previously, WPS, a leading TPA and insurance company, has stated
that AAH is a must-have system in Walworth County. Walworth County has significant overlap
with the Burlington HSA. Walworth County is larger than the Burlington HSA and AAH has a
smaller inpatient market share in Walworth County than it does in the Burlington HSA. Therefore,
WPS’s statements reasonably imply that the AAH network is a necessary component of any
67. Hartford HSA: AAH owns the only inpatient facility in Hartford, Wisconsin and
68. Marinette HSA: AAH owns the only inpatient facility in Marinette, Wisconsin and
controls about 90% of inpatient admissions in Marinette, Wisconsin and 86% of admissions in
Menominee, Michigan. In the HSA overall, which spans the Michigan-Wisconsin border, AAH
controls 82% of inpatient admissions. AAH did not build this monopoly through outcompeting
rivals on price and quality as our antitrust laws envision. Instead, in mid-2019, AAH purchased
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the only hospital in Marinette. The next closest hospital for many residents of Marinette or
which fails to offer commensurate services. For example, Bellin Hospital does not have many of
the birth-related facilities that are available at AAH in Marinette and lacks many facilities and
much equipment necessary for intensive care. Thus, Bellin Hospital would be a non-viable
competitor for many services even if it was close enough to compete with AAH in this HSA. For
other Wisconsin and Michigan communities farther north, the next closest facility after Aurora
69. Two Rivers HSA: AAH owns the only inpatient facility in Two Rivers, Wisconsin.
AAH controls about 68% of inpatient admissions in Two Rivers and over 65% of inpatient
admissions in the HSA overall. For many residents of Two Rivers, the next closest non-AAH
facility is the smaller Holy Family Memorial Medical Center in Manitowoc, which is about 20
minutes away with no traffic. Furthermore, for residents who live farther north, the two closest
70. Sheboygan HSA: AAH controls over 58% of inpatient admissions in the
Sheboygan HSA and 70% of inpatient admissions in parts of Sheboygan. For some residents living
south of Sheboygan, the next-closest facility is also an AAH hospital. This increases the market
power that AAH has in Sheboygan and areas south of Sheboygan. AAH’s market power in
Sheboygan is also demonstrated by its ability to control prices, including charging significantly
more for inpatient procedures than the other, much smaller inpatient facility in Sheboygan.
71. Plymouth HSA: AAH controls about 70% of inpatient admissions in the Plymouth
HSA.
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72. Port Washington HSA: AAH controls over 63% of inpatient admissions in the Port
Washington HSA, primarily due to its ownership of Aurora Medical Center Grafton, the only
hospital in Grafton.
73. In all the AAH Monopolized Inpatient Markets above, AAH’s monopoly market
power is also reflected in its ability to control prices for inpatient acute care services.
74. In all the AAH Monopolized Inpatient Markets above, AAH is also a significant
provider of outpatient medical services. Through abuse of its monopoly on acute inpatient hospital
services, AAH is able to charge supracompetitive prices for outpatient medical services as well, as
75. In the following HSAs, and in other areas of Wisconsin, AAH faces some
competition, yet it is able to impose anticompetitive terms on Network Vendors and charge
supracompetitive prices for inpatient and outpatient services through anticompetitive conduct.
Some examples of HSAs where AAH has been able to charge supracompetitive prices include:
Milwaukee HSA, West Allis HSA, Kenosha HSA, 2 Oshkosh HSA, Manitowoc HSA,
Oconomowoc HSA, West Bend HSA, Brookfield HSA, Cudahy HSA, Green Bay HSA, Racine
HSA, Sturgeon Bay HSA, Waukesha HSA, Chilton HSA, Watertown HSA, Shawano HSA, Fort
Atkinson HSA, Berlin HSA, Kewaunee HSA, Fond Du Lac HSA, and Menomonee Falls HSA.
AAH has also been able to impose anticompetitive terms in several other HSAs in Eastern
76. These HSAs, combined with those that comprise AAH Monopolized Inpatient
2
AAH is also a provider for nearby Illinois communities. For example, AAH controls about 47%
of inpatient admissions from Winthrop Harbor, Illinois.
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77. In the Milwaukee HSA and nearby HSAs, AAH primarily faces competition from
two hospital systems: Froedtert and Ascension. Froedtert’s flagship facility is Froedtert Hospital
and the Medical College of Wisconsin, and Ascension’s flagship facility is Ascension Columbia
St. Mary’s Hospital. Both have higher safety ratings than AAH’s flagship St. Luke’s Hospital and
both are less than 20 minutes away from St. Luke’s. Yet, AAH’s inpatient and outpatient prices
are dramatically higher than either. As explained below, AAH’s supracompetitive prices are due
to anticompetitive contracting and its abuse of its market power in other markets to extract rents
in Milwaukee.
78. AAH is the largest hospital system in all of Wisconsin and the dominant hospital
system in Eastern Wisconsin. AAH built its substantial market power through acquisitions,
aggressive contracting and negotiating, and other anticompetitive tactics. As explained below,
AAH’s market power is manifested in its ownership of specific “must-have” facilities, its
ownership of specialty facilities, its overall market share, and its ability to control prices.
79. Demand for the care provided by hospitals (and especially acute inpatient care) is
particularly inelastic because care is often necessary to prevent permanent injury or death and
generally cannot be obtained from far away geographies. While per capita demand for healthcare
may vary between markets based on demographics (younger communities require less healthcare,
for example), the demand within a specific market is much less variable.
80. Similarly, supply for medical care is particularly inelastic because of the difficulties
of constructing new facilities that provided such care (especially acute inpatient care facilities) and
the lack of excess capacity (especially acute inpatient care capacity). Therefore, in a region with
only a few large providers of acute inpatient care and a lack of significant excess capacity, it is
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practically impossible for a large Network Vendor to indefinitely remove the largest hospital
system from its networks; there would simply not be enough alternative inpatient capacity to
accommodate all the Network Vendor’s plans’ members in need of lifesaving care. And
individuals would simply not be willing to enroll in a health plan lacking such a dominant hospital
system if there was a risk that changes to a network meant they were unable to receive in-network
goals that controls even a large plurality of inpatient care capacity in a region can force insurers
and consumers to accept prices and contractual terms that would only be possible for a monopolist
in other product markets. This is evidenced by the fact that hospital systems in other states with
only 40-50% of inpatient market share in a specific market but substantial operations across a
Vendors and health plans. For example, the North Carolina system that the U.S. Department of
Justice sued for forcing insurance plans to include anti-steering provisions was alleged to have
50% of the market for acute inpatient hospital services. While this is below the normal market-
share threshold for monopoly power in other industries, the hospital system nonetheless was able
to impose those vertical restraints because, practically speaking, insurance carriers in the Charlotte
area could not viably exclude that system from their networks.
82. Similarly for AAH, two Network Vendors told an employer in the Milwaukee
region that AAH was the “dominant player” who was able to force contractual terms on Network
Vendors, despite the fact that AAH does not have a majority of inpatient or outpatient market share
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83. AAH told a large Network Vendor in the context of a contract discussion that “you
need us more than we need you.” This indicates that AAH is both aware of its market power and
understands it can use that market power to force Network Vendors to accept terms they otherwise
would not.
84. Separate and apart from the systemwide market power AAH’s total regional
dominance gives it, AAH also has market power due to its control of several “must-have” facilities.
AAH controls a number of facilities that Network Vendors must include in their networks in order
to be viable for self-funded health plans with significant members living near that AAH facility.
AAH hospitals in Burlington, Elkhorn, Hartford, Marinette, Two Rivers, and Sheboygan are
“must-have” facilities for many self-funded health plans with a significant number of members
living near those facilities, and thus are “must-have” for Network Vendors seeking to offer plans
those communities and by the unwillingness of patients to travel long distances for healthcare
services.
85. A hospital system can obtain effective monopoly power for inpatient acute care in
geographic markets while holding a smaller percentage of market share than would be needed in
many other industries. Many of these reasons are intuitive barriers to entry: enormous financial,
legal, and regulatory barriers to entry to building a new competitor inpatient acute care hospital;
difficulty of attracting specialized staff in a tight labor market featuring non-competes (including
those used by AAH); referral networks and medical records rules that disadvantage new entrants.
Others reasons are specific to the inpatient market: Because there is limited excess capacity in
most markets for inpatient acute care services (a large percentage of empty beds can drive a
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hospital out of business) but demand that varies based on external events (seasonal disorders,
disease spikes, natural disasters, new substance abuse trends, etc.), it is generally not practical for
larger Network Vendors to have a hospital system with over 50% of inpatient beds in a specific
86. These facts are borne out by experience. As noted above, a system in North
Carolina was able to impose anti-steering restrictions on Network Vendors despite “only”
controlling 50% of the inpatient market. In Wisconsin a Network Vendor and TPA stated that it
was not possible to assemble a viable network in a geography that excludes a hospital system with
only 50-60% inpatient market share in that geography. Insurers, Network Vendors, TPAs, and self-
funded health plans elsewhere have made similar points about the must have nature of systems
with only 50-60% inpatient market share in other markets, and leading health care economists have
concluded that hospitals can have higher market power relative to their market share than other
industries. This means that a hospital system with over 50% inpatient market share can have
87. As explained previously, there are also rural communities—like those in Keuwanee
County or northern Marinette County, for example—where reaching a non-AAH inpatient facility
would involve the practical impediment of driving long distances directly past an AAH hospital.
88. As explained below, AAH has explicitly told Network Vendors that if they want an
AAH facility in any one of their networks, they must include all relevant AAH facilities in every
plan using any network. It was possible for AAH to make this demand (and the demand is credible
with Network Vendors) because (1) AAH owns least some facilities that it knew Network Vendors
needed in their networks, i.e., must-have facilities, and (2) AAH has systemwide power throughout
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B. AAH’s Ownership of Many Specialty Services in Eastern Wisconsin Increases
Its Market Power
89. For some specialized procedures, AAH touts its regional or statewide status as the
“only” provider of many of these services. For commercial health plans, that makes the inclusion
90. For example, Aurora Healthcare Centers for Comprehensive Wound Care &
Hyperbaric Medicine includes the only center in Washington County offering hyperbaric oxygen
therapy. And Aurora St. Luke’s, in Milwaukee, is the only hospital in the region with a 24/7 on-
site heart-care team. AAH operates the only psychiatric hospital in Sheboygan.
91. In other cases, an AAH hospital’s specialty services may make it difficult for self-
funded health plans to accept a network that excluded the hospital with those services. For
example, one AAH hospital has the equipment necessary for the treatment of most kidney stones
whereas the closest non-AAH hospital does not. Members of a self-funded health plan who have
a history of kidney stones would resist participation in a plan that didn’t include the only nearby
A. AAH Imposes “All Or Nothing” and “All Plans” Contract Language and Uses
Other Tactics to Force Inclusion of Its Overpriced Hospitals in Insurance
Networks
92. AAH uses its overall market power in Eastern Wisconsin to extract higher prices
even at its facilities that face significant competition. If a Network Vendor seeks to include an
AAH facility that it needs to build a viable network, AAH forces the Network Vendor to also
include facilities that the vendor does not want in its network.
variation in prices also has drawn attention to ‘all-or-nothing’ clauses that require health plans to
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include all of a health system’s hospitals in a network and that bar health plans from placing the
hospitals in a tier that requires higher cost-sharing. Aurora Healthcare, now part of Advocate
Aurora Health, has long had those clauses in its contracts.” Such all-or-nothing clauses are a
vertical restraint that Network Vendors would not include but for AAH’s demand that they do so.
94. AAH has gone as far as to sue health plans that attempt to only include some of its
hospitals in their networks for violating the all-or-nothing clauses that AAH forces Network
Vendors to accept in their contracts. In a suit that was confidentially settled in 2007, AAH stated
that its contracts require that all AAH facilities be included in all of a Network Vendor’s
commercial health plans or none of them can be. AAH sued WPS, a commercial health insurer
and Network Vendor, for “operating and marketing of plans without Aurora providers in violation
of our agreement.”
95. According to that AAH contract, WPS agreed to “Identify all AURORA
Participating Providers as Participating Preferred Providers in all WPS Plans within Aurora’s
defined service area of Eastern Wisconsin.” Therefore, not only does AAH force “all-or-nothing”
contract language on Network Vendors for any given plan—it also insists that even if a Network
Vendor needs to include just one AAH provider in one network, the Network Vendor must include
all AAH providers in every plan it offers, including all networks offered to self-funded commercial
health plans. This “all-plans” condition is a vertical restraint that enables AAH to extract
supracompetitive rents even in markets where it does not have a dominant market share. And AAH
makes its “all-plans” condition clear in the definitions appendix to its contracts: The WPS/AAH
contract stated explicitly that “‘Plan’ shall include individual health insurance policies, group
health insurance certificates issues by WPS and self-insured plans administered by WPS.” On
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information and belief, AAH continues to use similar contract language and has used such
language in contracts with most Network Vendors during the relevant period.
96. According to WPS, AAH forces all or nearly all insurance companies and Network
Vendors to agree to the same all-or-nothing terms, and “every other major health insurer with
which Aurora has contracted, including United Health Group, Inc., WellPoint Health Networks,
Inc., Humana, Inc., Aetna, Inc., and others, has been forced to accede to Aurora’s anticompetitive
interpretation of the all-plans requirement, regardless of the specific text of that requirement in
their respective contracts.” Thus, these vertical restraints have foreclosed a substantial amount of
97. AAH treats these all-or-nothing and all-plans clauses as non-negotiable and forces
them on Network Vendors. A consultant who has negotiated contracts with AAH stated that
AAH’s negotiating posture on its anticompetitive contractual terms is, “you either sign it or we
don’t do business.”
98. A 2006 report by the Milwaukee Journal Sentinel noted that, “Aurora’s contracts
go further [than most hospital systems]: They generally require Aurora hospitals to be included in
99. By virtue of its overall market power and/or its market power over acute inpatient
hospital services in certain key regions, AAH can and does impose its all-or-nothing and all-plans
conditions to force Network Vendors (and by extension self-funded health plans) to include
outpatient medical services in their networks at supracompetitive rates. For example, AAH
cancelled its entire contract with a Network Vendor because, according to AAH, the Network
Vendor sought a “carve-out” for radiology. In a competitive market and absent AAH’s restraints,
TPAs, Network Vendors, and/or and self-funded health plans would normally use these kinds of
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carve outs to encourage members/employees to seek lower cost outpatient care from non-AAH
providers. But AAH forces its all-or-nothing and all-plans vertical restraints on Network Vendors
100. These terms are forced on Network Vendors who have to accept them because of
AAH’s market power. As Wisconsin Physicians Service, a prominent Network Vendor, wrote, “If
Aurora had not possessed market power sufficient to condition WPS’s access to those markets
upon WPS’s acceptance of the Agreement’s anticompetitive terms and conditions, WPS would not
101. AAH has also aggressively used its market power to suppress the introduction of
innovative insurance products in Wisconsin. Absent AAH’s successful efforts to foreclose the
entrance of these cost-saving products, self-funded health plans in Wisconsin would be paying
102. For example, effective October 1, 2020, AAH implemented a “policy” conveying
to TPAs that it refuses to accept payment from or even submit claims to self-funded health plans
that use “reference based pricing.” Health plans that use reference based pricing base their
payments to hospital systems on a percentage above the hospital’s Medicare rates. Plans with
reference based pricing allow hospitals to make a significant profit but limit the ability of hospitals
to charge supracompetitive prices relative to an accepted and government approved baseline (i.e.,
the Medicare rate, which itself is calculated to ensure a hospital makes a profit on each service).
103. In addition to pressuring employers and TPAs to avoid using innovative plans,
AAH will actually turn down payment checks sent from self-funded health plans using reference
based pricing. On information and belief, AAH foregoes immediate profit because it seeks to make
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these plans non-viable in the areas where AAH operates. Thus, AAH is consciously forgoing profit
104. And AAH has created specific administrative burdens for the individual
beneficiaries of plans using reference based pricing, including refusing to provide standard forms
and documentation. On information and belief, this action was taken to prevent beneficiaries from
105. AAH has also conveyed to representatives of a self-funded plan that it will not
directly negotiate with the plan, creating another barrier to innovative insurance products.
106. In another example, in 2008 AAH allegedly pressured a Network Vendor to stop
doing business with a TPA and health plans that AAH disfavored. AAH then falsely told members
of plans administered by that TPA that they would be refused service by AAH providers, even if
they were existing patients of AAH. On information and belief, AAH engaged in this and other
extreme measures that in the short term appear economically irrational and harmful to AAH’s
reputation with the goal of eliminating innovative insurance products from the Eastern Wisconsin
area. And, on information and belief, the Network Vendor agreed to AAH’s demand to cancel a
lucrative contract with a health plan only because of credible threats from AAH to use its market
107. In previous years, AAH has taken other efforts to punish Network Vendors
attempting to offer innovative insurance products. In one example, AAH sought to punish a
network that did not include AAH facilities. In response to the creation of a small narrow network
that excluded AAH, AAH created a new insurance product that would cover the costs for members
of the narrow network who used AAH’s “out-of-network” facilities for only $20. This scheme,
which effectively amounts to predatory pricing, would eliminate the incentives for members of
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plans using the narrow network to visit lower cost non-AAH providers. An insurer alleged that
AAH was offering a money-losing product with the intent of eliminating the narrow network: “It’s
clearly a proposal not designed to be self-sufficient.” This is another way AAH appears to engage
108. Given that many employers wish to use reference based pricing and that they would
significantly reduce what employers pay for healthcare, AAH’s refusal to accept payment from
such plans and discrimination against them forecloses a substantial amount of competition.
109. During the relevant time-period, AAH forced most Network Vendors, health plans,
110. Through its coercive contracting practices, AAH deliberately limits the use of
tiering by self-funded health plans in order to lessen the competition it faces from higher quality,
111. Anthem, one of the largest insurers and Network Vendors in Wisconsin, told a local
self-funded health plan that “due to their contracts with the dominant player, which is Aurora,” it
was barred from allowing local employers to offer health plans that would incentivize employees
to seek out lower cost, higher quality care. Through this action, AAH was forcing self-funded
health plans to pay AAH’s supracompetitive rates more often than they would have otherwise.
112. UnitedHealthcare, also one of the largest insurers and Network Vendors in
Wisconsin, told the same health plan that they were barred by AAH from allowing local employers
to offer health plans that would incentivize employees to seek out lower cost, higher quality care.
Through this action, AAH was forcing self-funded health plans to pay AAH’s supracompetitive
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113. Notably, AAH’s ability to force two of the country’s largest insurance companies
to accept such onerous, anticompetitive terms is itself evidence of the dominant market power
114. Another way AAH limits tiering is by insisting that it be in the top tier of any tiered
plan, even if it is a low-value provider relative to others. For example, in a review of several large
national and regional commercial health plans, AAH facilities are all listed in the top tier despite
being higher-cost than nearby competitors. This can only be explained by AAH forcing Network
Vendors and TPAs to include its facilities in a plans top tier, regardless of price or quality—thereby
defeating the purpose of creating a tiered plan in the first place. This results in self-funded health
plans paying AAH’s supracompetitive prices more often than they would absent AAH’s conduct.
115. AAH forces self-funded health plans to include AAH in the top tier by threatening
that it would otherwise not allow any AAH facilities to be included in the plan at all, which would
make the plan non-viable in many key markets. An AAH contract specifically states that for any
plan offered by a TPA, the plan “shall . . . [i]dentify all AURORA Participating Providers as
Participating Preferred Providers.” (emphasis added). The intent and practical impact of this
clause is to limit the ability of health plans to honestly communicate about the availability of lower-
cost, higher value care available at non-AAH providers in Wisconsin, causing self-funded health
plans to pay AAH’s supracompetitive prices for care more often than they would absent AAH’s
conduct.
116. AAH also engages in other kinds of anti-steering. For example, AAH has in the
past prevented a Network Vendor that wanted to direct patients to non-AAH radiology centers
(presumably because of their lower cost) from accessing any of AAH’s network.
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117. In addition to undermining the tiered commercial health plans that do exist, AAH’s
aggressive anti-tiering practices also mean that Network Vendors will decline to introduce tiered
networks in the first place because they would serve little purpose in a market where AAH is a
major provider. This results in self-funded health plans paying AAH’s supracompetitive prices
more often than they would in a competitive market with more tiered plans.
118. Because steering practices and tiered plans are a common cost-saving tool that most
Network Vendors would engage in absent AAH’s restraints, AAH’s conduct prohibiting
119. AAH has forced physicians to agree to onerous non-compete agreements that limit
their ability to work for other hospital systems in Wisconsin or to open independent practices. This
anticompetitive practice drives up prices for self-funded health plans because it precludes
numerous potential lower-cost independent providers from operating. It also increases prices by
artificially creating a tighter labor market for physicians, creating an impediment to rival hospital
121. For example, in one case, AAH attempted to enforce an aggressive non-compete
against a family practice physician. Family practice is a very competitive market where providers
compete for patients. It also is a practice that can generate a significant amount of business for a
practice doctor from practicing, even though the non-compete only covered urgent care. Despite
the physician not having provided urgent care in decades, AAH sought to bar them from practicing
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even in a different field. The Milwaukee County Circuit Court found AAH’s non-compete
provisions unenforceable.
practice market and, on information and belief, the same type of non-competes have eliminated or
124. AAH also forces onerous non-competes on physicians it acquires from other
practices. For example, as part of its abandoned effort to purchase a hospital chain in Michigan,
AAH insisted that many doctors of the acquired hospitals would be required to sign a non-compete
preventing them from working for any other hospital system within 35-miles for at least three
years. The long duration and broad geographic limitations of such coerced non-competes result in
substantial reductions in competition in markets where AAH acquires facilities by preventing the
entry of new provider competitors and limiting the options for members of self-funded health plans
125. A medical professional who has worked at both AAH and Froedtert remarked in an
online post that AAH “is known for problematic non-compete agreements.”
independent physicians who do not agree to directly affiliate with AAH, AAH instituted a policy
that required 24-hour a day, 7-day a week continuous call coverage for independent physicians
and then denied the independent physicians the ability to seek backup call coverage from another
physician. If independent physicians did not agree to these “nearly impossible conditions,” AAH
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would refuse to renew medical staff privileges. Meanwhile, AAH’s own employed physicians
128. According to a local physician, this policy encouraged the “systematic elimination
of independent physicians by Aurora” and “reduced the overall output of family practice
129. The American Academy of Family Physicians criticized AAH’s policy saying it
130. Moreover, in 2018, AAH agreed to settle claims that it illegally overpaid two
physicians so that they would keep referrals within the AAH system. On information and belief,
AAH has engaged in other practices to limit physicians from referring outside of the AAH system
to competitors. These practices drive up costs and reduce quality for self-funded health plans by
preventing physicians from referring patients to the highest value care. And they limit the ability
compete for patients and would assist other hospitals in competing for referrals, AAH’s restrictions
E. AAH Uses Gag Clauses to Suppress Competition and Further Its Other
Anticompetitive Schemes
132. AAH insists on strict gag clauses with Network Vendors that limit their ability to
disclose anticompetitive contract terms to self-funded health plans. These gag clauses have also
been used by AAH to prevent self-funded health plans from knowing the price for AAH’s services
133. The Wall Street Journal identified AAH as among several hospital systems in the
United States that use “secret contract terms” to prevent transparency on prices and quality.
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134. In properly functioning markets pricing information is freely available, allowing
purchasers to determine the prices they will be obligated to pay their suppliers if they purchase the
suppliers’ products and services. The ability to determine the amount of the purchase price before
the purchase decision is made allows the customer to compare the prices offered by various
competitors and allows the purchase decision to be influenced by price competition. However, on
information and belief, to prevent self-funded health plans and the members who enroll in them
from searching out or demanding better pricing, AAH has required terms in its agreements with
Network Vendors that forbid them from disclosing the allowed amounts that AAH has negotiated
for the healthcare services and products offered to self-funded commercial health plans. On
information and belief, the gag clauses also forbid disclosure of other, non-price terms.
135. On information and belief, these gag clauses are partially intended to prevent
136. Because AAH’s gag clauses prevented self-funded health plans and their enrollees
from determining what they will be obligated to pay AAH for healthcare services (and how much
those prices exceed the prices charged by AAH’s nearby competitors), TPAs and self-funded
health plans are less able to exert commercial pressure on AAH to moderate its inflated pricing by
137. AAH’s use of gag clauses and other anticompetitive terms has effectively
undermined price competition for healthcare in the Wisconsin markets AAH serves and foreclosed
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F. The Combination of AAH’s Anticompetitive Conduct is Especially Harmful
138. AAH’s market power aggravates the anticompetitive nature of its contracting and
negotiating tactics. The forced imposition of all-or-nothing and all-plans conditions, as well as
anti-tiering and anti-steering provisions is problematic any time it is imposed on Network Vendors,
TPAs, and self-funded health plans by a dominant provider, because each such contractual term
limits the ability of employers and patients to competitively select healthcare options. However,
in the context of a hospital system with both significant market power and monopoly facilities,
these contract provisions have an especially harmful impact on price and quality. This is
particularly true—and such restrictions are particularly anticompetitive—when they are forced on
nearly all Network Vendors and TPAs in the region, against their will. That is exactly what AAH
has done.
TPAs, and self-funded health plans cause greater harm in concert than any individual vertical
restraint would in isolation. For example, if AAH engaged only in all-or-nothing contracting but
did not impose anti-steering, anti-tiering, or gag clauses on Network Vendors, self-funded health
plans could at least mitigate harm caused by AAH’s tying schemes by incentivizing patients to
obtain in-network care from one of AAH’s competitors. Thus, while each contractual restriction
described herein is unlawful in isolation, taken together their impact is especially harmful to self-
140. AAH has gone on an aggressive acquisition spree that increases its market power
and the leverage it holds over Network Vendors and self-funded health plans. In 2020, AAH’s
CEO touted a “bold new strategy” to double AAH’s annual revenue by 2025 via mergers and
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acquisitions. AAH’s Executive Vice President actually publicly stated that AAH’s intention is to
be a “multi-market consolidator.”
141. This acquisition strategy has several self-reinforcing anticompetitive benefits for
AAH. First, AAH is able to impose higher prices at facilities it acquires than the previous owner
because of its use of the anticompetitive contracting terms described above. After AAH takes over
a new facility, it employs the anticompetitive contracting terms described above in negotiations
with Network Vendors at the newly acquired facility. For example, during a proposed AAH
takeover in Michigan, Crain’s Detroit Business summarized the arguments from AAH’s CEO as:
“Advocate Aurora wants Beaumont’s physicians to expand its managed care contracting strategy
142. Second, the newly acquired facilities further increase AAH’s leverage with
Network Vendors and health plans, thereby reinforcing AAH’s ability to force Network Vendors
and health plans to accede to anticompetitive contracting terms. As the CEO of AAH stated in
143. Third, AAH leverages its market power to force newly acquired physicians and
facilities to refer to AAH, depriving health plans of the benefit of having their members referred
to the highest value provider and suppressing competition by eliminating a source of revenue for
AAH competitors. AAH executive Pat Trotter was explicit that AAH aims to “leverage” its overall
market power to control referrals in new markets it enters. The Appleton Post-Crescent described
AAH’s public statements: “Aurora, however, can leverage the advantages of its larger size by
referring patients to other in-system hospitals for care if they need it, Trotter said.”
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144. This increased leverage is especially true when AAH acquires another “must have”
hospital facility. For example, in mid-2019, AAH purchased the only hospital in Marinette,
145. AAH has also worked to acquire outpatient facilities and other non-hospital assets
that increase its market power. According to Fitch, a leading bonds rating agency, AAH now has
one of largest integrations of physicians of any firm in the hospital industry. Or, as a Wisconsin
newspaper columnist wrote, “Aurora Health Care has set the standard by buying up physician
practices and clinics and forcing doctors to send patients to Aurora’s hospitals.”
146. This strategy of non-hospital acquisitions adds to AAH’s overall market power and
is part of its attempt to suppress competition for outpatient medical services in Eastern Wisconsin
and to ensure that members of self-funded commercial health plans are more likely to be directed
to their high-cost inpatient facilities. AAH executives appear to have hinted at this strategy
publicly, with the CEO of AAH saying in a 2020 article that growing AAH’s number of affiliated
or employed physicians is “our secret sauce,” with the article noting that the desired outcome for
AAH was to get paid more. In 2021, the President of AAH’s buyout fund was remarkably candid
about AAH’s goals: “One way we measure that is what we call ‘share of wallet,’ which is a sort
of a retail measure of how many times and in what ways are we interacting with the people we
serve beyond just traditional care delivery, and does that generate more revenue?”
147. In 2008, AAH acquired Comprehensive Cardiovascular Care Group, which was
described as “the largest cardiology group in Wisconsin.” That acquisition resulted in the U.S.
Department of Justice alleging in 2018 that some of the acquired physicians’ “compensation
arrangements were not commercially reasonable . . . exceeded the fair market value of the
physicians’ services, took into account the physicians’ anticipated referrals, and was not for
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identifiable services.” AAH subsequently settled the case for $12 million for the alleged
overcharges to government health programs resulting from its payments to physicians for referrals.
On information and belief, the same practice of compensating cardiologists and other specialists
in order to obtain more internal AAH referrals also has improperly increased prices for self-funded
health plans. This occurs because AAH’s above-market payments to acquired physicians result in
them directing members of self-funded health plans to higher-cost care at AAH facilities instead
Healthcare, a group of “250 primary care physicians and specialists providing care at 14 clinics
located in Milwaukee, Ozaukee, Washington and Waukesha counties.” On information and belief,
part of the reason for this affiliation was to eventually allow AAH to use its market power to
substantially raise prices paid by self-funded health plans for services at these locations. Shortly
after the acquisition, local reporting indicated that AAH would impose its “all-or-nothing”
contracting on Network Vendors, forcing them to include the facilities built to house the newly
acquired physicians from Advanced Healthcare in their networks if they needed access to any part
149. After the Advanced Healthcare acquisition, AAH announced plans to build a new
hospital in Grafton, Wisconsin that, among other things, would allegedly house some of the newly
acquired AAH physicians. Executives from a different hospital system claimed that their analysis
of health care data showed that a new hospital was not necessary in the area based on population.
AAH built a new 107-bed facility anyway. In the following years, the next closest non-AAH
hospital immediately lost a significant portion of its patients, forcing layoffs and restructuring.
This reduction in competition is directly linked to AAH’s other anticompetitive conduct: Because
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of its all-or-nothing, all-plans, anti-steering, anti-tiering, and gag clause provisions, the competitor
hospital would have been unable to effectively compete for business from commercial health plans
on price and quality. Thus, AAH was able to build a new hospital where adequate demand
allegedly did not exist and gain significant market share by leveraging its broader system power
and imposing anticompetitive provisions on Network Vendors. Because of these actions, AAH has
gone from being a non-meaningful inpatient provider in Grafton, Wisconsin to controlling nearly
150. This reflects a broader trend of AAH entering markets that do not have adequate
demand with the goal of suppressing competition. As the senior associate dean for clinical affairs
for the Medical College of Wisconsin stated of AAH’s business practices generally: “They say
think it’s the latter. They have a track record of that. . . . Is this adding choice or unnecessary
redundancies, which will raise the cost of care?” This type of expansion into areas that do not have
adequate demand can only be successful in the presence of anticompetitive practices imposed on
151. For example, in 2010, AAH opened the Aurora Summit Medical Center in
Oconomowoc less than four miles from the existing Oconomowoc Memorial Hospital. At the time,
Oconomowoc Memorial Hospital was nowhere near capacity and local reporting indicated there
was not adequate demand for a second hospital nearby. Nevertheless, AAH opened the facility and
tolerated less than 35% inpatient occupancy. Local reporting indicated that the occupancy
percentage would have been even lower had AAH not acquired a number of independent
physicians. On information and belief, AAH imposed the same types of non-competes and referral
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restrictions on those doctors as is its normal business practice in order to reduce business to
152. The outcome is that AAH has secured 37% of the inpatient market share in the
Oconomowoc HSA, up from virtually none ten years ago. That market share has continued to
153. AAH’s growing market power is also reflected in its ability to control prices:
According to data released in May 2022, AAH’s inpatient prices at Aurora Summit Medical Center
are 446% of Medicare compared to only 297% of Medicare less than four miles away at
Oconomowoc Memorial Hospital. This is despite Oconomowoc Memorial Hospital having higher
quality ratings than Aurora Summit Medical Center from the US Government’s Centers for
154. Despite having lower prices and higher quality than Aurora Summit Medical
Center, Oconomowoc Memorial Hospital’s inpatient visits have declined almost every year AAH
has operated Aurora Summit Medical Center. Oconomowoc Memorial Hospital’s inpatient visits
have declined from 4,563 in 2009 (the year before AAH opened Aurora Summit Medical Center)
to 3,141 in 2010 and now steadily down to 2,948 in 2021, despite the overall number of inpatient
visits in the Oconomowoc HSA increasing substantially over that time period.
155. Oconomowoc Memorial Hospital has a very slim profit margin per inpatient visit.
While Aurora Summit Medical Center makes $4,341 average profit per inpatient visit and the
Wisconsin state average is $3,048 profit per inpatient visit, Oconomowoc Memorial Hospital now
makes only $1,168 per inpatient visit. Overall, Oconomowoc’s margin is only 4%, lower than any
other ProHealth or AAH hospital in Wisconsin and lower than AAH’s 23% profit margin at Aurora
Summit Medical Center. These very thin margins—that have fallen into a loss as recently as
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2017—create a dangerous probability that Oconomowoc Memorial Hospital will be forced to
reduce or close inpatient services that account for about 40% of the Oconomowoc HSA, with the
resulting benefit to AAH. If Oconomowoc Memorial Hospital closes or downsizes, this will harm
self-funded health plans because AAH will be able to raise its prices further while reducing quality.
156. AAH’s attempted monopolization of the Oconomowoc HSA inpatient market has
been facilitated by anticompetitive behavior. For example, as explained in greater detail elsewhere,
the dramatic price difference for inpatient care between AAH’s Aurora Summit Medical Center
and Oconomowoc Memorial Hospital would not be possible absent AAH’s use of all-or-nothing,
all-plans, anti-steering, anti-tiering, and gag clauses. If Network Vendors, TPAs, and self-funded
health plans were free to direct people towards lower cost care, Oconomowoc Medical Center
would see a substantially higher inpatient market share and inpatient occupancy than Aurora
Summit Medical Center. As described earlier, AAH’s non-competes and referral restrictions limit
both staffing availability and patient flow for competitors like Oconomowoc Medical Center. And,
as documented earlier, AAH has taken action to undermine nearby innovative health plans that
would foster price competition, including its effort to suppress plaintiff Uriel’s reference based
pricing plan.
157. On information and belief, AAH has pursued a similar strategy of attempted
monopolization of inpatient care in other HSAs in Wisconsin using the same types of tactics.
158. Similarly, AAH acquired a large outpatient practice called Family Health Plan,
which the Milwaukee Business Journal characterized as, “a transaction that would further add to
Aurora’s dominance of the southeastern Wisconsin market.” During the acquisition, AAH insisted
that, as part of the acquisition, it be able to impose a provision that would require the acquired
Family Health Plan providers to “exclusively” refer to AAH facilities. This provision was
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projected to be “crippling” for other health care providers in the area. On information and belief,
it was only possible for AAH to insist on the exclusive referral provision because it knew that
Network Vendors and self-funded health plans (who would be forced to pay higher costs as their
members are exclusively referred to higher cost AAH facilities) could not challenge the clearly
159. The acquisition worked as AAH appears to have intended: The hospital that press
reports predicted “stands to lose the most if Aurora buys Family Health Plan’s medical group and
clinics” ended up quickly facing “the biggest decline in net income by percentage of any
Milwaukee-area hospital” after the AAH transaction. And, about six years later, a competitor
hospital was forced to close since it “doesn’t have the ability to fund indefinitely the types of losses
we’ve incurred,” according to the competitor’s CEO. On information and belief, this closure
significantly increased costs for self-funded health plans over the following years by eliminating
160. In late 2010, the Milwaukee Journal Sentinel reported that AAH’s other recent
acquisitions have included “a large radiology practice, and the practices of the heart surgeons and
related specialists who practice at Aurora St. Luke's Medical Center.” On information and belief,
these acquisitions were partly driven by the ability of AAH to impose higher prices for the exact
same imaging services on self-funded health plans after the radiology acquisition and to control
161. In 2013, AAH acquired The Manitowoc Surgery Center which reduced competition
for outpatient services in the region. AAH described the goal of the acquisition as increasing
“outpatient surgery services within Aurora’s integrated health care system.” On information and
belief, the acquisition was partly driven by the ability of AAH to impose higher prices for the exact
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same surgery services, by the desire to reduce competition from outpatient surgery centers that
academic literature has indicated provide effective and lower-cost competition to hospitals, and by
the desire to use referral restrictions to direct more patients in the Manitowoc HSA to AAH
inpatient facilities, where AAH now controls over 39% of inpatient admissions.
162. In 2016, the Wisconsin Heart Hospital in Wauwatosa closed. This closure took
place after independent providers reported they were “punished” by AAH for investing in or being
affiliated with the Wisconsin Heart Hospital, including a well-documented decision by AAH to
remove a respected physician from the role of medical director at AAH’s Aurora West Allis
Hospital because of her affiliation with the Wisconsin Heart Hospital. Physicians and medical
associations also expressed concern that AAH was using coercive referral practices to force
specialist physicians to refer to AAH instead of competitors, including Wisconsin Heart Hospital.
On information and belief, AAH’s actions contributed to the closure of Wisconsin Heart Hospital,
eliminating a potential competitor that could have contained costs, particularly in the Milwaukee
163. After the acquisition of a home care company for seniors in 2021, the CEO of
AAH’s internal buyout fund stated that, “This opens a lot of opportunities for us, thinking about
what we can be in the broader healthcare continuum. How do you control the overall continuum?
How do you own it? It’s very hard for one person, one company or one organization to have all of
the parts. Well, I think we’re the first organization in the country that now can say we own the full
164. In its largest financial transaction in the past decade, AAH was created by the
merger of Aurora Health Care in Wisconsin and Advocate Health Care in Illinois. This merger
made AAH one of the largest hospital systems in the country. The transaction both increased
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AAH’s combined market power in Southeastern Wisconsin and Northeastern Illinois 3 and
increased AAH’s overall leverage over Network Vendors, especially those with networks designed
for self-funded health plans with members in both Illinois and Wisconsin. AAH is thus in an even
165. Even prior to the merger, AAH was acquiring physician groups in Northern Illinois.
166. The CEO of a Wisconsin company with a self-funded health plan remarked that the
merger would raise prices for Wisconsin self-funded health plans like his, writing:
For the life of me, I [can’t] see how the proposed mega-merger between
Aurora Health Care of Wisconsin and Advocate Health Care Network of
Illinois will benefit payers like my company Serigraph or its co-workers.
The main rationale for the executives and boards of the two non-profit
corporations must be that bigger is better in a rapidly changing and
consolidating industry. They must believe they will have more clout when
dealing with the major health insurance carriers. But more clout on the
provider side means higher prices, not lower. Do corporations seek more
leverage so they can lower prices? Don’t be naïve.
167. After the merger, inpatient prices increased at AAH facilities in Wisconsin. This is
reflected in the median net profit margin AAH earned from patients increasing over 20% for its
facilities in Wisconsin from 2017 to 2019. This merger and resulting market power growth has
already resulted in higher prices for Wisconsin self-funded commercial health plans and will
168. Similarly, inpatient prices increased at AAH’s facilities in Illinois with the median
net profit margin AAH earned from patients increasing from 7.1% in 2017 (the last full year before
the merger) to 7.8% (the first full year after the merger). As discussed previously, there is
3
For example, Aurora controlled about 32% of inpatient admissions in the border community of
Winthrop Harbor, Illinois before the merger to about 47% of inpatient admissions after the merger.
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significant evidence that AAH uses its market power to impose supracompetitive prices and
anticompetitive contract terms at newly acquired facilities. A nearly 10% growth in inpatient net
profit margins for AAH Illinois facilities immediately after a merger fits that well-documented
169. And the academic literature supports the fact that prices have increased at AAH’s
newly integrated Illinois and Wisconsin facilities because of market power. As the Kaiser Family
Foundation wrote, “One reason that prices rise when there are hospital mergers across markets is
that they increase hospital bargaining positions with insurers, which seek to have strong provider
networks across multiple areas in order to attract employers with employees in multiple locations.”
170. AAH has not stopped there. Earlier this month it announced a proposed merger
with Atrium Health of North Carolina. This combination would create a conglomerate that would
do business in seven states. If permitted to go through, this merger would further increase AAH’s
market power with Network Vendors, especially the Network Vendors who operate in both the
existing AAH and Atrium markets, according to healthcare economists. Separately, Professor
Barak Richman of Duke University said that the proposed merger was “very, very alarming” and
would likely lead to higher prices. “This does not point to a new frontier of competition. It points
to a new scale of lack of competition. A new scale of monopoly power,” Richman said.
171. Prices set by hospital systems like AAH are the primary driver of cost for self-
funded health plans. And, as explained previously, AAH’s anticompetitive conduct allows it to set
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172. A Harvard University analysis concluded that, “Variation in spending in the
commercial insurance market is due mainly to differences in price markups by providers rather
commercial spending is attributable to price markups, most likely reflecting the varying market
power of providers.”
173. In fact, a Milwaukee Journal Sentinel report on AAH’s acquisition and negotiation
strategy noted that, contrary to Aurora’s claims of improved efficiency, studies have found that
high considering the ostensible level of competition in the market. The unjustifiably high prices
paid by Eastern Wisconsin businesses, unions, and local governments are made possible by AAH’s
anticompetitive behavior and are evidence of AAH’s market power and ability to control prices in
175. These data make clear that AAH’s anticompetitive conduct facilitates the
supracompetitive prices it bills to self-funded commercial health plans. Under federal and state
antitrust and unfair trade practices precedents, when vertical restraints like those AAH has forced
on Network Vendors lead to higher prices and lower quality, that is direct evidence that they are
anticompetitive.
176. Milwaukee employers and residents pay extraordinarily high prices for healthcare.
Overall, Milwaukee has the fourth highest prices for healthcare in the entire country with overall
prices 44% above the national median. Indeed, Milwaukee’s healthcare prices are higher than those
in New York City. Overall healthcare spending per person in the Milwaukee metro area is 21%
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above the national median, making it the seventh highest metro area in the country for per person
healthcare spending.
177. Moreover, Milwaukee’s already high prices are continuing to rise: From 2015 to
2019, hospital prices rose in Milwaukee at the fifth highest rate of the entire country.
178. These high prices are despite the existence—on paper—of a healthy level of
competition in Milwaukee. This competition should control prices. But the vertical restraints
described above that AAH has used to undermine competition have been key drivers of
179. AAH is by far the most expensive hospital system in Greater Milwaukee, charging
supracompetitive prices for inpatient and outpatient procedures and significantly driving up the
180. A comparison of inpatient prices shows that AAH’s prices are 65% more expensive
than an average of the other large hospitals in the Milwaukee area. This dramatic price differential
181. Overall, AAH’s prices at its flagship facility in Milwaukee are 373% the Medicare
rates compared to a state average of 307%, according to data published in May 2022.
182. For example, prices for common procedures at Aurora St. Luke’s Medical Center
are dramatically higher than they are at Ascension St. Francis Hospital, a facility only 5 minutes
183. Similarly, prices are higher at AAH’s St. Luke’s facility than they are at Froedtert
Hospital, a different competitor less than 20 minutes away that is generally rated as higher quality
by patients and safer by independent ratings agencies. US News and World Report ranks Froedtert
Hospital as the number one hospital in Milwaukee, and a higher percentage of patients would
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recommend Froedtert Hospital than would recommend AAH’s St. Luke’s according to
Healthgrades.
184. When evaluating prices for specific procedures, academic literature suggests one
useful analysis is comparing “narrowly defined” procedures, i.e., those that have little variation
within the procedure and occur with sufficient frequency to support empirical analysis.
185. One example of a “narrowly defined” procedure that is also a very high revenue
procedure for hospitals is a joint replacement. For a major commercial network, AAH’s price for
a hip or knee replacement in Milwaukee is $62,538, over $21,000 higher than the price for the
same procedure five minutes away at a competitor hospital. Charging customers approximately
50% more than a nearby competitor for a common procedure would not be possible in a
functioning, competitive market. This price differential cannot be explained by AAH’s market
power in Milwaukee, where it only controls about 40% of the market for acute inpatient hospital
services. Thus, this price differential is the result of the anticompetitive contracting restrictions
AAH imposes on Network Vendors and self-funded health plans in Milwaukee, by virtue of its
dominant power both systemwide and over the AAH Monopolized Inpatient Markets.
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186. For other very common surgeries, including appendectomies and angioplasties,
AAH charges supracompetitive prices. For both procedures, AAH’s price is almost double that of
Ascension, the other main competitor in Milwaukee. For appendectomies, AAH’s price is $46,002
$43,319 at Ascension.
187. For inpatient treatment of other common diseases like sepsis, pneumonia,
esophagitis, and heart failure, AAH is also significantly more expensive than other hospitals in
Milwaukee. AAH is 54-105% more expensive than Ascension for those procedures and 15-53%
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188. Additionally, prices for outpatient procedures are significantly higher at AAH’s
flagship facility in Milwaukee than competitors. This includes substantially higher prices than
independent outpatient providers and extends even to its large hospital peers, where AAH’s prices
for outpatient services average over 22% higher than other large hospitals. These outpatient prices
in Milwaukee relative to other providers can only be explained by AAH’s abuse of its systemwide
market power in its monopoly power in other markets to control outpatient prices in Milwaukee.
Without the vertical restraints that AAH uses to leverage its market power systemwide, AAH
189. For example, AAH’s price for a colonoscopy with biopsy—an extremely common
and uncomplicated procedure—is over $10,700 for a common commercial health plan whereas the
procedure costs only about $4,700 at Froedtert & the Medical College of Wisconsin for the same
plan, a facility that is about 15 minutes away and has generally higher quality and safety ratings.
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Prices for a routine procedure that are more than double a nearby competitor cannot be explained
190. A CT scan of the head or brain is one of the procedures that drives a large portion
of hospital imaging revenue. It is also a procedure that academic literature considers “plausibly
undifferentiated” because “there is little variation in how these services are delivered across
hospitals or across patients within a hospital.” Thus, academic literature considers “plausibly
undifferentiated” procedures like CT scans a useful way to compare hospital prices, because any
price differential is likely explained by market power and/or anticompetitive restraints rather than
quality. While there is not differentiation as to quality, AAH does find a way to differentiate as to
price: Its price is over $300 more than nearby Froedtert & the Medical College of Wisconsin.
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191. Another important way to compare prices is by looking at low-cost but extremely
high-volume procedures like routine blood tests. On this count, AAH’s prices are egregious, with
a commercial health plan paying more than double the price at AAH compared to the nearby
Froedtert & the Medical College of Wisconsin. Because these tests are conducted hundreds of
times a day at AAH, the impact of such dramatically supracompetitive prices on self-funded
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192. Since 2015, healthcare prices in Milwaukee have risen at the fifth highest rate in
the entire country. AAH’s high and rising prices driven by anticompetitive behavior are a major
193. AAH also charges supracompetitive prices for inpatient and outpatient procedures
in Green Bay, despite facing some ostensible competition from three other non-AAH hospitals. As
a result, Green Bay is one of the top five metro areas in the entire country for the price of medical
194. As to inpatient care, AAH’s Aurora Baycare Medical Center has dramatically
higher prices than nearby facilities according to data published in May 2022. Its average inpatient
prices are almost 328% of the Medicare rates while the other three hospitals in Green Bay are only
195. As to outpatient care, AAH’s average prices across all outpatient procedures are
even more inflated, registering at 350% of Medicare. All three other hospitals have lower prices
than AAH, with an average markup over Medicare of 311%. These outpatient prices relative to
other providers can only be explained by AAH’s abuse of its market power in other parts of
196. These high prices are despite AAH’s Baycare Medical Center having lower quality
ratings from the federal government’s Centers for Medicare & Medicaid Services and lower safety
ratings from the independent ratings agency Leapfrog than the next two nearest competitor
hospitals.
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D. AAH Charges Supracompetitive Prices Throughout Wisconsin
198. For example, in Oshkosh AAH’s price for an angioplasty is about double that of
the two nearest hospitals, one of which is less than 2 miles away. Similarly, AAH’s price for joint
199. In Kenosha, AAH’s price for a joint replacement is over $15,000 higher than a
Froedtert facility that is less than 7 miles away. Similarly, the price for an angioplasty is nearly
$7,000 higher.
200. In Sheboygan, AAH’s prices for outpatient procedures are extremely inflated:
AAH’s prices are 358% of Medicare compared to the nearest competitor with prices of 308% of
Medicare.
201. In Oconomowoc where AAH opened Aurora Summit Medical Center four miles
away from the existing Oconomowoc Memorial Hospital, AAH’s prices for inpatient services
Hospital.
202. A major Wisconsin insurer and Network Vendor stated in 2006 that “Aurora is a
high-price healthcare provider relative to other providers.” Since then, AAH’s prices have
203. After the merger of Advocate and Aurora to form AAH, the combined system
substantially raised prices in Illinois. This occurred both in the areas previously serviced primarily
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by Advocate as well as in the areas near the Wisconsin border where Aurora had previously
operated.
204. Two sets of data from the highly-respected, independent RAND Corporation
indicate the substantial price increases AAH imposed as a result of the merger: During the period
of 2016-2018 (almost entirely before the merger was finalized in April 2018), what were then the
Advocate hospitals in Illinois had average commercial prices (both inpatient and outpatient) of
231% of Medicare. During the period of 2018-2020 (primarily after the merger), the same hospitals
in Illinois, now owned by AAH, had average commercial prices of 253% of Medicare. This
substantial increase in prices was on an absolute level, relative to competitors, and compared to
205. The combined power of the two systems gave the merged entity even more ability
and referral restrictions described above that increase prices for self-funded health plans.
206. Uriel Pharmacy is a business located in East Troy, Wisconsin with a self-funded
health plan, the Uriel Pharmacy Health and Welfare Plan. Like other businesses in Eastern
Wisconsin, it has struggled with the rising cost of health care and the rising prices charged by
AAH.
207. Uriel has operated a self-funded health plan from 2000 to present. During that
period, it made payments to AAH for medical services for plan members at AAH facilities. These
payments were made at the supracompetitive prices that AAH forces Network Vendors to accept
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208. In 2020 and 2021, Uriel’s self-funded health plan used National General (which
was purchased by Allstate) as a TPA. Uriel paid providers, including AAH, through reference
based pricing. As described previously, AAH took actions to punish and suppress Uriel’s reference
based pricing actions in a way that is typical of how AAH has behaved towards other employers
209. Partially because of AAH’s actions to suppress reference based pricing, in 2021
Uriel made changes to its self-funded health plan. It began using Cigna as a Network Vendor and
Allstate remained the TPA. Cigna is a Network Vendor that has entered agreements with AAH
typical of those described previously between Network Vendors and AAH. As is typical of self-
funded health plans, Uriel does not have the ability to negotiate directly with AAH—instead, it
has paid for services its members received at AAH facilities at the rates negotiated between Cigna
and AAH.
X. CLASS ALLEGATIONS
A. Class Definition
All businesses, unions, local governments, or other entities with self-funded health
plans that are considered citizens of Illinois, Michigan, and/or Wisconsin for
purposes of 28 U.S.C. §1332 and that, during the past six years, compensated AAH
for general acute care hospital services or ancillary products at an AAH facility in
the Relevant Geographic Markets during any period that AAH employed All-or-
Nothing, All-Plans, Anti-Steering, Anti-Tiering, Non-Competes, Gag Clauses,
and/or other vertical restraints in one or more agreements or negotiations with
Network Vendors (the “Class Period”).
211. The Class is ascertainable because it is defined to include only Self-Funded Payors
that are entities within the Relevant Geographic Markets that caused at least one individual claim
for acute hospital services or ancillary products to be paid to AAH during the Class Period.
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212. Excluded from the Class are the Presiding Judge, employees of this Court, and any
appellate judges exercising jurisdiction over these claims as well as employees of that appellate
court(s).
B. Certification Requirements
213. Plaintiffs do not yet know the exact size of the Class; however, based upon the
nature of the industry involved, Plaintiffs expect that there are several hundred Class members.
Therefore, Class members are so numerous and geographically dispersed that joinder is ultimately
impracticable.
214. Because AAH has acted in a generally consistent manner applicable to the Class
writ large, questions of law and fact common to the Class exist as to all members of the class and
predominate over any questions affecting only individual members of the class. The common
Clauses, and/or other conduct that foreclosed competition in the relevant markets;
prices;
e. Whether AAH’s ongoing conduct continues to restrain trade and reinforce its market
power;
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f. Whether AAH’s anticompetitive conduct results in the foreclosure and/or substantial
lessening of competition;
215. Plaintiffs’ claims are typical of the claims of the other Class members. Plaintiffs
and the other Class members have been injured by the same wrongful practices. Plaintiffs’ claims
arise from the same practices and course of conduct that give rise to the other Class members’
216. Plaintiffs will adequately represent the interest of all Class members. Plaintiffs has
retained class counsel who are experienced and qualified in prosecuting such class action cases.
Neither Plaintiffs nor class counsel have any interests in conflict with those of the Class members.
217. This class action is appropriate for certification because questions of law and fact
common to the members of the Class predominate over questions affect only individual members,
and a class action is superior to other available methods for the fair and efficient adjudication of
the controversy. Individual joinder of all members of the class is impracticable and class treatment
will permit a large number of similarly situated self-funded health plans to prosecute their claims
in a single forum simultaneously, efficiently, and without the unnecessary duplication of evidence,
218. Furthermore, the prosecution of the claims of the Class in part for injunctive relief
is appropriate because AAH has acted, or refused to act, on grounds that apply generally to the
class, such that final injunctive relief or corresponding declaratory relief is appropriate respecting
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XI. CLAIMS FOR RELIEF
COUNT ONE
RESTRAINT OF TRADE IN VIOLATION OF THE SHERMAN ACT
(15 U.S.C. § 1)
220. Defendant AAH entered into and continues to enter into anticompetitive contracts
with Network Vendors and is engaging in unreasonable restraints of trade in violation of Section
221. AAH hospitals located in the AAH-dominated markets have overwhelming market
power in each of their AAH Monopolized Inpatient Markets. Moreover, AAH writ large has
systemwide power that gives it market power over its entire service area. That market power has
enabled AAH to impose anticompetitive vertical restraints such as All-or-Nothing, All-Plans, Anti-
Steering, Anti-Tiering, Non-Competes, and Gag Clauses in written agreements and/or in contract
222. AAH has imposed these vertical restraints in its negotiations with all or nearly all
Network Vendors it negotiates with in Wisconsin, as well as all or nearly all TPAs and self-funded
unlawfully restrains trade and the limits the ability of competitors to compete in the Relevant
Geographic Markets for general acute care hospital services and ancillary products. The
anticompetitive effects of AAH’s conduct far outweigh any purported non-pretextual, pro-
competitive justifications.
224. These vertical restraints, together and individually, have foreclosed a substantial
amount of competition. Because AAH imposes them on all or nearly all Network Vendors, TPAs
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and self-funded health plans, these anticompetitive contracting terms have affected competition as
225. As a proximate result of AAH’s unlawful conduct, Plaintiff and members of the
Class have paid supracompetitive prices directly to AAH, prices that are higher than they would
226. Thus, Plaintiff and members of the Class have been injured in their business or
property during the last four years in violation of the Sherman Act, having been subjected to and
paying supracompetitive pricing to AAH for acute general care hospital services and ancillary
products during the Class Period. Such overcharges are the type of injury that the antitrust laws
were explicitly designed to prevent, and they are a direct result of Defendant’s unlawful conduct.
Under 15 U.S.C. § 1 and 15 U.S.C. § 15, Plaintiff and the members of the Class have standing to
declaratory and other equitable relief, as well as attorneys’ fees and costs.
COUNT TWO
MONOPOLIZATION IN VIOLATION OF THE SHERMAN ACT
(15 U.S.C. § 2)
228. Section 2 of the Sherman Act makes it unlawful for any person to “monopolize, or
attempt to monopolize, or combine or conspire with any other person or persons, to monopolize
any part of the trade or commerce among the several States.” It is also unlawful to willfully
229. Defendant has monopolized, and continues to monopolize, the AAH Monopolized
Inpatient Markets alleged herein in violation of 15 U.S.C. § 2. During the pertinent times,
Defendant engaged in the willful and unlawful attempt to maintain and abuse its monopoly power.
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It did so by using its market power in those geographies to impose on Network Vendors, TPAs,
and self-funded health plans anticompetitive vertical restraints, including All-or-Nothing, All-
230. These vertical restraints have had the direct effect of inhibiting competition from
existing and/or would-be competitors that would compete with AAH on price and quality.
231. These restraints have also allowed AAH to leverage its monopoly power over the
AAH Monopolized Inpatient Markets to extract supracompetitive prices in the other geographies
in which it operates.
232. Plaintiff and members of the Class have been harmed by AAH’s abuse, willful
maintenance, and leveraging of its monopoly power. They have paid higher prices at AAH
facilities in the Relevant Geographic Markets than they would have absent AAH’s unlawful
monopolization, both directly due to the vertical restraints themselves and due to the substantial
233. Thus, Plaintiff and members of the Class have been injured in their business or
property during the last four years in violation of the Sherman Act, having been subjected to and
paying supracompetitive pricing to AAH for acute general care hospital services and ancillary
products during the Class Period. Such overcharges are the type of injury that the antitrust laws
were explicitly designed to prevent, and they are a direct result of Defendant’s unlawful conduct.
Under 15 U.S.C. § 2, and 15 U.S.C. § 15 Plaintiff and the members of the Class have standing to
declaratory and other equitable relief, as well as attorneys’ fees and costs.
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COUNT THREE
ATTEMPTED MONOPOLIZATION IN VIOLATION OF THE SHERMAN ACT
(15 U.S.C. § 2)
235. Section 2 of the Sherman Act makes it unlawful for any person to “monopolize, or
attempt to monopolize, or combine or conspire with any other person or persons, to monopolize
236. During the pertinent times, AAH engaged in the willful and unlawful attempt to
maintain or expand its monopoly power. Specifically, AAH attempted to monopolize the market
237. During the pertinent times, AAH attempted to acquire or expand its monopoly
through illegitimate means, including but not limited to through tying and unlawful restraints such
238. One motivation AAH had in imposing these restraints was its intent to monopolize
the market for acute inpatient hospital care in the Oconomowoc HSA.
239. There is a dangerous probability that AAH will be successful in its attempt to
240. Plaintiffs and members of the Class have been injured during the last four years by
AAH’s use of these vertical restraints, and would be further injured if AAH is successful in
241. Under 15 U.S.C. § 2 and 15 U.S.C. § 15, Plaintiff and the members of the Class
have standing to and do hereby seek monetary relief—including treble damages—together with
injunctive, declaratory, and other equitable relief, as well as attorneys’ fees and costs.
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COUNT FOUR
RESTRAINT OF TRADE IN VIOLATION OF WISCONSIN ANTITRUST LAW
(Wis. Stat. § 133.03(1))
243. Defendant AAH entered into and continues to enter into anticompetitive contracts
244. AAH hospitals located in the AAH-dominated markets have overwhelming market
power in each of their AAH Monopolized Inpatient Markets. Moreover, AAH writ large has
systemwide power that gives it market power over its entire service area. That market power has
enabled AAH to impose anticompetitive vertical restraints such as All-or-Nothing, All-Plans, Anti-
Steering, Anti-Tiering, Non-Competes, and Gag Clauses in written agreements and/or in contract
245. AAH has imposed these vertical restraints in its negotiations with all or nearly all
Network Vendors it negotiates with in Wisconsin, as well as all or nearly all TPAs and self-funded
unlawfully restrains trade and the limits the ability of competitors to compete in the Relevant
Geographic Markets for general acute care hospital services and ancillary products. The
anticompetitive effects of AAH’s conduct far outweigh any purported non-pretextual, pro-
competitive justifications.
247. These vertical restraints, together and individually, have foreclosed a substantial
amount of competition. Because AAH imposes them on all or nearly all Network Vendors, TPAs
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and self-funded health plans, these anticompetitive contracting terms have affected competition as
248. As a proximate result of AAH’s unlawful conduct, Plaintiff and members of the
Class have been injured in their business or property in violation of Wis. Stat. § 133.03(1), having
been subjected to and paying supracompetitive pricing for acute general care hospital services and
ancillary products during the Class Period. Such overcharges are the type of injury that the antitrust
laws were explicitly designed to prevent and they are a direct result of Defendant’s unlawful
conduct. Under Wis. Stat. § 133.18, Plaintiff and the members of the Class have standing to and
do hereby seek monetary relief—including treble damages—for harm to their business or property
they suffered during the last six years, together with injunctive, declaratory, and other equitable
COUNT FIVE
MONOPOLIZATION IN VIOLATION OF WISCONSIN ANTITRUST LAW
(Wis. Stat. § 133.03(2))
250. Wis. Stat. § 133.03(2) makes it unlawful for any person to “monopolize[] . . . any
part of trade or commerce.” Like its federal counterpart, 15 U.S.C. § 2, Wis. Stat. § 133.03(2) also
prohibits the acquisition, willful maintenance, abuse, and leveraging of monopoly power.
251. Defendant has monopolized, and continues to monopolize, the AAH Monopolized
Inpatient Markets alleged herein in violation of Wis. Stat. § 133.03(2). During the pertinent times,
Defendant engaged in the willful and unlawful attempt to maintain and abuse its monopoly power.
It did so by using its market power in those geographies to impose on Network Vendors, TPAs,
and self-funded health plans anticompetitive vertical restraints, including All-or-Nothing, All-
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252. These vertical restraints have had the direct effect of inhibiting competition from
existing and/or would-be competitors that would compete with AAH on price and quality.
253. These restraints have also allowed AAH to leverage its monopoly power over the
AAH Monopolized Inpatient Markets to extract supracompetitive prices in the other geographies
in which it operates.
254. Plaintiff and members of the Class have been harmed by AAH’s abuse, willful
maintenance, and leveraging of its monopoly power. They have paid higher prices at AAH
facilities in the Relevant Geographic Markets than they would have absent AAH’s unlawful
monopolization, both directly due to the vertical restraints themselves and due to the substantial
255. Thus, Plaintiff and members of the Class have been injured in their business or
property, having been subjected to and paying supracompetitive pricing to AAH for acute general
care hospital services and ancillary products during the Class Period. Such overcharges are the
type of injury that the antitrust laws were explicitly designed to prevent, and they are a direct result
of Defendant’s unlawful conduct. Under Wis. Stat. § 133.18, Plaintiff and the members of the
Class have standing to and do hereby seek monetary relief—including treble damages—for harm
to their business or property they suffered during the last six years, together with injunctive,
declaratory, and other equitable relief, as well as attorneys’ fees and costs.
COUNT SIX
ATTEMPTED MONOPOLIZATION IN VIOLATION OF WISCONSIN ANTITRUST
LAW
(Wis. Stat. § 133.03(2))
257. Wis. Stat. § 133.03(2) makes it unlawful for any person to “attempt[] to monopolize
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258. During the pertinent times, AAH engaged in the willful and unlawful attempt to
maintain or expand its monopoly power. Specifically, AAH attempted to monopolize the market
259. During the pertinent times, AAH attempted to acquire or expand its monopoly
through illegitimate means, including but not limited to through tying and unlawful restraints such
260. One motivation AAH had in imposing these restraints was its intent to monopolize
the market for acute inpatient hospital care in the Oconomowoc HSA.
261. There is a dangerous probability that AAH will be successful in its attempt to
262. Plaintiffs and members of the Class have been injured by AAH’s use of these
vertical restraints and would be further injured if AAH is successful in monopolizing the
Oconomowoc HSA.
263. Under Wis. Stat. § 133.18, Plaintiff and the members of the Class have standing to
and do hereby seek monetary relief—including treble damages—for harm to their business or
property they suffered during the last six years, together with injunctive, declaratory, and other
COUNT SEVEN
INJUNCTIVE, EQUITABLE, DECLARATORY RELIEF
265. The Court has authority to award injunctive relief pursuant to 15 U.S.C. § 26, Wis.
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266. The Court has authority to award declaratory relief under 28 U.S.C. § 2201 and
267. Plaintiff pleads that to the extent the facts and law allow for the imposition of
equitable, declaratory, or injunctive remedies, they plead recourse to any and all such remedies.
268. Plaintiff requests the Court order the reformation of AAH’s practices, and/or
contractual and agreement terms, including, for example express language against use of the use
269. Plaintiff and the Class members have standing to and do seek equitable relief
against AAH, including an injunction to prohibit AAH’s illegal conduct as well as an order of
equitable restitution and disgorgement of the monetary gains AAH obtained from its unfair
competition.
WHEREFORE, Plaintiff prays that this Court enter judgment on its behalf, and on behalf
A. Certify the proposed Class, designate the named Plaintiff as class representative
and the undersigned counsel as class counsel, and allow Plaintiff and the Class to
have trial by jury;
C. Find that Defendant has monopolized, and continues to monopolize, the relevant
markets alleged herein in violation of 15 U.S.C. § 2 and Wis. Stat. § 133.03(2) and
that Plaintiff and the Class members have been damaged and injured in their
business and property as a result of these violations;
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D. Find that Defendant engaged in a trust, contract, combination, or conspiracy in
violation of 15 U.S.C. § 1 and Wis. Stat. § 133.03 and that Plaintiff and the Class
members have been damaged and injured in their business and property as a result
of this violation;
E. Order under 15 U.S.C. § 15 that Plaintiff and members of the class recover treble
threefold the damages determined to have been sustained by them as a result of
the Defendant’s misconduct complained of herein, and that judgment be entered
against Defendant for the amount so determined;
F. Enter judgment against Defendant and in favor of Plaintiff and the Class awarding
restitution and disgorgement of ill-gotten gains to the extent such an equitable
remedy be allowed by law;
H. Award equitable, injunctive, and declaratory relief, including but not limited to
declaring Defendant’s misconduct unlawful and enjoining it, its officers, directors,
agents, employees, and successors, and all other persons acting or claiming to act
on its behalf, directly or indirectly, from seeking, agreeing to, or enforcing any
provision in any agreement that prohibits or restricts competition in the manner as
alleged herein above; and
I. Award such other and further relief as the Court may deem just and proper.
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Respectfully submitted this 24th day of May, 2022.
-and-
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