Veterinarian's suit alleging monopolistic behavior ends in confidential settlement
A provocative legal case in which a veterinarian alleged that one of the largest veterinary diagnostic laboratories in the world engages in monopolistic behavior by pressing veterinarians into lengthy exclusive contracts while, at the same time, producing unreliable results, won't go to trial.
The case ended this month in a confidential settlement.
The complaint brought by Dr. Jill Patt and her practice, Little Critters Veterinary Hospital, was noteworthy — some might say daring or audacious — in taking on Antech Diagnostic Laboratories, which is owned by Mars Inc., a global giant in veterinary and pet-related business.
Patt, an independent practitioner in Arizona, confronted Antech over the legality of exclusive multiyear contracts that it routinely persuades veterinary clinic owners to accept in return for presumably favorable pricing. The agreements often include incentives such as expensive diagnostic equipment for which practices receive a loan that is forgiven when they fulfill the terms of the contract.
Over the past decade, Antech has sued dozens of veterinarians for attempting to exit their respective contracts early. Most have resulted in confidential settlements or court outcomes in Antech's favor.
Not only are the contracts difficult to end midterm, they might be tricky to end at all. The 6-year agreement Patt signed in 2017 with Antech specified that the contract would automatically renew for 24 months unless the company received at least one year's advance notice.
The contract committed her to purchasing $24,000 in diagnostic services from Antech each year, for a total of $144,000. However, about five months into the contract, Patt began to doubt the validity of results she received from the lab for a variety of patients, including dogs, reptiles and a bird. Despite her lost trust, Antech would not release her from the contract, according to the suit.
She sued to be freed from the agreement and sought not to have to repay an incentive loan.
The complaint, brought in U.S. District Court for the Central District of California, alleged that Antech, by pressing veterinarians into exclusive contracts, engages in monopolistic behavior in violation of federal antitrust law and state law governing business practices. Antech denied the allegations and countersued Patt and Little Critters for contract breach.
Antech, based in Southern California, is one of two companies that dominate the private veterinary diagnostic reference lab sector in the United States and beyond; the other is Idexx. Both pitch long-term exclusive contracts to veterinary practices.
Patt had sought certification of her suit as a class action, owing to the widespread use by veterinarians of exclusive multiyear contracts. Judging from the court record, certification did not occur before the case was settled.
In Judge Josephine Staton's order dismissing the case, Patt's claim and Antech's counterclaim were dismissed with prejudice, meaning neither party may refile their complaint. However, the class claims were dismissed without prejudice, meaning another plaintiff with a similar complaint could bring a class action against Antech in the future.
The VIN News Service was unable to reach Patt for comment. The attorney representing Antech in the case, Hyongsoon Kim, acknowledged a VIN News request for comment but said he was unable to contact Antech by publication time.
Raphael Moore, general counsel for the Veterinary Information Network, an online community for the profession and parent of the VIN News Service, is very familiar with the legal risks incurred by veterinarians signing long-term exclusive contracts for lab services, having observed a number of VIN members struggle with them over the years. His advice to veterinarians is to avoid such agreements.
Moore said he's disappointed that the questions raised by the Patt suit won't be fully aired and decided in court.
"It leaves the veterinarian exposed to risk, and it doesn't tell the industry what the limits are on their business practices, if any," he said in an interview.
While a settlement "may meet the needs of both immediate parties," Moore said, "... it doesn't resolve for everybody else [questions such as]: Should I sign this contract? Is it fair? Does it violate the law? Is it proper business practice? It also doesn't, long-term, help the defendant. They don't know if they're allowed to do this. They're going to have to wait for the next one."
He explained: "Anybody in the same shoes as Patt can bring another case against them for themselves or for anybody else similarly situated in a class action."
For now, Moore speculated, Antech is likely pleased to put the case to rest and continue locking veterinarians into exclusive contracts. "I'm sure they're happy they can continue doing it, but no one blessed their business activities. No one gave a stamp of approval," he said. "At the same time, no one said it was wrong."