Labaton Sucharow Files Class Action Lawsuit against General Electric for Allegedly Freezing Out Competitors Servicing GE Anethesia Machines

by Labaton Sucharow

March 15, 2019

Labaton Sucharow LLP announced that it has filed a class action lawsuit against General Electric and two of its healthcare subsidiaries, seeking damages and injunctive relief, arising from the companies’ alleged freeze-out of independent competitors who service and maintain GE gas anesthesia machines used in hospitals and health clinics nationwide.

The lawsuit, which it filed with three other law firms, asserts that plaintiff Monroe County Health Care Authority and hundreds of other facilities and medical providers throughout the county are owed significant compensation because GE violated the federal antitrust prohibition against monopolization. Plaintiffs assert that GE terminated access of independent service organizations (ISOs) to the GE parts, training, and knowledge necessary for repair and upkeep of the anesthesia machines.

The case, brought as a class action, was filed in U.S. District Court for the District of Massachusetts. GE is headquartered in Boston.

Since GE parts and training are not interchangeable with those developed by other companies, the company’s policy secured and maintained an anticompetitive monopoly for GE in the parts and training market for the specialized machines. It also discouraged new ISOs from entering what is normally a busy and lucrative market.

In 2017 a federal court jury hearing a lawsuit from ISOs, Red Lion Medical Safety Inc. et al v. General Electric Company et al, found that GE had indeed monopolized the market and charged inflated prices that it could dictate. GE failed in its motion to have the Court set aside the jury’s monopoly finding. At issue in Monroe County Health’s lawsuit is the extent of damages suffered by hospitals, clinics, and others over the course of nearly a decade of GE’s exclusionary business conduct.

“That GE successfully used its size and dominance to corner the market for these repair and maintenance services and overcharge its clients is not in question,” said Gregory Asciolla, Co-Chair of Labaton Sucharow’s Antitrust and Competition Litigation Practice. “The current case will decide the amount of financial damage suffered by the medical facilities that overpaid for services for which there had once been a competitive choice of providers. Servicing gas anesthesia machines is an attractive business, especially since medical facilities try to use the same products and service providers over time rather than purchasing new ones.”

Asciolla added, “We hope that GE will make good with the institutions it hurt through its exclusionary tactics, and we will ask the Court to prohibit it from pursuing such schemes in the future.”

According to the complaint, GE used to compete with ISOs around the country in servicing its gas anesthesia machines. But plaintiffs allege that in 2011 the company began imposing new policies that crippled the ability of independent companies to offer updated services. It refused to sell GE replacement parts directly to ISOs, designating instead a single exclusive parts distributor who charged significantly higher prices. In 2014 GE took the additional anticompetitive step of refusing provide training to ISOs unless they disclosed competitively sensitive information to GE.

The complaint notes that internal company documents reveal GE’s goal: its policies were intended to “slow down,” “add cost,” and ultimately “phase out” GE’s competitors, forcing customers to use only GE. Documents further show the company knew that service and repair prices were going to go up for customers using its gas anesthesia machines.

Monroe County Health Authority, also known as Monroe County Hospital, is located in Monroeville, Alabama, and purchased servicing for GE gas anesthesia machines.

The defendants are General Electric Company Inc., based in Boston, and subsidiaries GE Healthcare Inc. of Chicago and Datex-Ohmeda Inc. of Madison, Wisconsin.

The Labaton Sucharow partners leading the case are Gregory Asciolla, Jay Himes, and Karin Garvey, all of the firm’s New York office.

The suit filed is captioned Monroe County Health Care Authority d/b/a Monroe County Hospital v. General Electric Company, Inc., GE Healthcare Inc., and Datex-Ohmeda.


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