General Electric Company faces a proposed class action lawsuit filed by an Alabama hospital that claims GE's anticompetitive conduct has caused healthcare providers to pay inflated prices for the maintenance and servicing of GE gas anesthesia machines.
General Electric Company, Inc. and two subsidiaries face a proposed class action lawsuit filed by an Alabama hospital that claims the companies’ anticompetitive conduct has caused healthcare providers to pay inflated prices for the maintenance and servicing of GE gas anesthesia machines. According to the lawsuit, GE has been restricting the ability of independent service organizations (ISOs) to operate in the market by limiting their access to necessary parts and training. Absent healthy competition, the lawsuit alleges, GE has been able to charge supracompetitive prices for the servicing of its gas anesthesia machines.
In April 2011, GE appointed Alpha Source, Inc. as the exclusive distributor of GE parts to ISOs, the lawsuit explains. Alpha Source, however, does not keep a full inventory of GE parts, the suit says, and charges a premium price—approximately 18 to 20 percent above GE’s published list price—for the parts it does have. If a part is not in stock and needs to be ordered overnight from GE, the ISO is allegedly required to pay a premium price along with a flat $1,000 fee, regardless of actual shipping costs. It’s this difficulty in accessing necessary repair components, the plaintiff argues, that above all else puts ISOs in an unfortunate predicament.
“Because timely access to required parts is necessary for servicing, this lack of access has harmed ISOs’ ability to provide the same quality of servicing as GE does,” the complaint reads.
Moreover, GE in 2013 began restricting ISOs’ access to training courses on how to service GE anesthesia machines, the case states. The company allegedly shut down all of its training facilities to ISOs for “nearly a year” and, in October 2014, reopened just one facility with “new, restrictive policies.” The suit says GE frequently hinders ISOs’ ability to complete training by canceling or overbooking its courses, refusing to enroll ISOs in courses for newer machines, and requiring that ISOs disclose “numerous competitively-sensitive details” about their customers’ businesses during the application process.
The defendants’ allegedly anticompetitive conduct, the case says, has caused healthcare providers to pay inflated prices for the servicing of their GE anesthesia machines, as ISOs have been unable to provide lower-cost alternatives as they had in the past.
The suit points out that another lawsuit, Red Lion Medical Safety, Inc. v. General Electric Company, et al., was filed against GE in May 2015 over similar allegations and is currently awaiting final judgment.