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U.S. Charges GE With Restricting Competition in Medical Repair

August 02, 1996|From Associated Press

WASHINGTON — The Justice Department charged General Electric Co. on Thursday with restricting competition to fix high-tech medical equipment and driving hospital costs substantially higher.

In a civil antitrust lawsuit, the government said the company would let hospitals use its servicing software only if they agreed not to fix machines at other hospitals and doctor offices.

The GE practice "affected every state in the nation" and its effect "has been to raise the cost of service to other hospitals," Deputy Assistant Atty. Gen. Joel Klein of the department's antitrust division said.

GE called the suit "a minor, meritless civil suit" that wastes taxpayer money. The company added that competition is intense in the equipment service business.

In some cases, hospitals had to pay up to twice what they would otherwise have paid to repair and service X-ray machines, magnetic resonance imaging equipment, CT scanners and other advanced machines, Klein told a news conference. Because the extra costs varied in each local market and were not so high in some markets, the government could not calculate the total extra cost of the practice, he added.

Nationwide, health-care providers spend more than $3 billion a year servicing medical equipment.

Fairfield, Conn.-based GE is the world's largest manufacturer of medical imaging equipment and is also a leading provider of service for the machines.

The lawsuit was filed in U.S. District Court in Montana after a yearlong investigation of what Klein called numerous complaints. He said Montana was chosen for the lawsuit because the government had a great deal of evidence about how the practice worked in Montana.

The government alleges that GE used illegal, restrictive licensing agreements to curb competition. GE signed contracts with more than 500 hospitals that used its diagnostic software to service and repair their GE imaging equipment.

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