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In what some hail as one of the nation’s largest-ever antitrust verdicts, a jury in the U.S. District Court for the Western District of Texas returned a $173.6 million verdict in favor of Kinetic Concepts Inc. against competing hospital bed-maker Hillenbrand Industries Inc. and Hill-Com Co., a unit of Hillenbrand. Under federal antitrust laws, the Sept. 27 verdict in favor of KCI automatically can be tripled to $520 million. The hefty verdict came after five weeks of testimony and approximately three days of jury deliberation, says San Antonio attorney Larry Macon, a partner in Akin, Gump, Strauss, Hauer & Feld, who led KCI’s litigation team in Kinetic Concepts Inc., et al. v. Hillenbrand Industries Inc. and Hill-Rom Co. Inc. “This is one of the biggest verdicts of all times,” says Macon. “Our [Akin Gump] antitrust people thought it was like the third or fourth largest.” Needless to say, Macon is pleased with the result but attributes KCI’s favorable outcome to “strong facts and the feelings of the jurors.” San Antonio-based KCI, a maker of specialty hospital beds, alleged in its complaint that Hillenbrand, through Hill-Rom — both based in Batesville, Ind. — responded to bid requests from hospital purchasing groups and individual hospitals by submitting a “bundled” proposal for the rental and purchase of specialty beds, hospital beds and headwall units and that its bundling activities were “motivated by exclusionary and anticompetitive purposes and without legitimate business justification.” These so-called bundling activities, which Macon alleges started as far back as 1991, resulted in steep discounts on standard hospital beds for entities that committed to use only Hillenbrand/Hill-Rom specialty beds. But while KCI alleged that Hill-Rom had violated federal and Texas antitrust laws, Hill-Rom alleged that KCI violated antitrust laws and Texas common law, according to Judge Fred Biery’s summary in his written instructions to the jury. Moreover, according to Biery’s summary, Hill-Rom asserted that KCI pursued allegedly factually baseless or “sham” legal claims in court and complaints to the U.S. Department of Justice and made allegedly false and disparaging statements to customers, which Hill-Rom alleged constituted attempted monopolization under � 2 of the Sherman Antitrust Act as well as tortious interference with business relations. In reaching the $173.6 million figure, the San Antonio jury indicated on its verdict form that it found KCI had proved by a preponderance of the evidence that: Hill-Rom attempted to monopolize the specialty bed market; KCI suffered injury in its business or property as a material result of Hill-Rom’s attempted monopolization; Hill-Rom engaged in contracts, combinations or conspiracies that unreasonably restrained competition in the specialty bed market; KCI suffered injury to its business or property as a material result of Hill-Rom’s unreasonable restraint of competition; Hill-Rom entered into tying arrangements as that term is defined in the judge’s instructions; KCI suffered injury in its business or property as a material result of Hill-Rom’s tying arrangements; and Hillenbrand directed, controlled or participated in the conduct of Hill-Rom with respect to the above conclusions. However, Hill-Rom did not prove that KCI attempted to monopolize the various product sub-markets at issue through “sham litigation” and by “making disparaging comments to Hill-Rom customers,” the jury decided. PURE LEGAL ISSUE “In our view, this case presents a pure legal issue because the antitrust laws are designed to benefit consumers, and this was a lawsuit brought by a competitor about a discount we give to our customers,” says Haynes and Boone partner Robin P. Hartmann of Dallas, who serves as counsel to Hillenbrand and Hill-Rom. “In our view, it is a discount that is pro-competitive, pro-consumer and … per se legal.” Hartmann says that antitrust laws generally are skeptical about suits brought by competitors because discounts and lower prices are pro-consumer. But Macon contends that the case boiled down to people having the right to choose their treatment: “This was a case about choice — about people feeling that companies shouldn’t dictate what choice doctors, nurses and patients have as to therapy, and I think that was a lot of it,” Macon says. Doctors prescribe specialty beds as therapy, Macon says, just as a doctor would prescribe medication. They are the kind of beds patients such as paralyzed actor Christopher Reeve or the recently separated conjoined twins from Guatemala use when their medical condition dictates special treatment to prevent bedsores or pneumonia due to fluid accumulation in the lungs, he adds. “We don’t say every patient has to have our bed or wants our bed, but every patient should have the opportunity to choose our bed. These bundles keep doctors, nurses and patients from having these rights. And that’s what we put on. We put on nurses and doctors who said people want the right to choose and that because of the bundles they didn’t have the right to choose.” Ricardo G. Cedillo of San Antonio’s Davis Cedillo & Mendoza, who also represents Hillenbrand and Hill-Rom, asserts that his clients did nothing wrong. “We are disappointed with the results,” Cedillo says. “We feel that Hill-Rom has done nothing wrong. It has engaged in pro-competitive conduct that has benefited our customers and the consumer. We feel we will ultimately be vindicated and will be free to continue with our business practices,” he adds. Lawrence A. Gaydos, a partner in Haynes and Boone’s Dallas office, who is also a part of the Hillenbrand/Hill-Rom litigation team, says he believes that, to Hillenbrand’s and Hill-Rom’s detriment, the charge the judge gave to the jury was “an inaccurate portrayal of what the law actually is.” Adds Gaydos: “We feel that there are very strong appellate issues regarding the application of antitrust principles to this case.” Gaydos declines to discuss possible grounds for appeal in more detail. Although a verdict has been reached, the judge has yet to issue an opinion. First he must enter the judgment, says Macon, who adds that KCI soon will file a motion to enter judgment. Hillenbrand’s attorneys say their client plans to appeal if necessary, but they will first submit post-verdict motions to the judge, most likely a j.n.o.v. motion for judgment notwithstanding the verdict.

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