Proposed Final Judgment and Competitive Impact Statement; United States v. Bluefield Regional Medical Center, Inc. and Princeton Community Hospital Associations, Inc., 17117-17123 [05-6536]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 70, Number 63 (Monday, April 4, 2005)]
[Notices]
[Pages 17117-17123]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-6536]



[[Page 17117]]

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DEPARTMENT OF JUSTICE

Antitrust Division


Proposed Final Judgment and Competitive Impact Statement; United 
States v. Bluefield Regional Medical Center, Inc. and Princeton 
Community Hospital Associations, Inc.

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. section 16(b)-(h), that a proposed Final 
Judgment, Stipulation, and Competitive Impact Statement have been filed 
with the United States District Court for the Southern District of West 
Virginia in United States v. Bluefield Regional Medical Center, Inc. 
and Princeton Community Hospital Association, Inc., Civil Case No. 
1:05-0234. On March 21, 2005, the United States filed a Complaint 
alleging that, on January 30, 2003, Bluefield Regional Medical Center, 
Inc. (BRMC) and Princeton Community Hospital Association, Inc. (PCH) 
entered into two agreements in which BRMC agreed not to offer many 
cancer services and PCH agreed not to offer cardiac-surgery services. 
The BRMC-PCH agreements effectively allocated markets for cancer and 
cardiac-surgery services and restrained competition to the detriment of 
consumers in violation of section 1 of the Sherman Act.
    The proposed Final Judgment filed with the Complaint will enjoin 
BRMC and PCH from enforcing the BRMC-PCH agreements. BRMC and PCH also 
will be enjoined from entering into, continuing, maintaining, or 
enforcing any agreement to allocate markets, territories, or customers 
concerning cancer services or cardiac surgery. In addition, BRMC and 
PCH will be enjoined from entering into, continuing, maintaining, or 
enforcing any other agreement that (1) prohibits or restricts a health-
care facility from obtaining a certificate of need relating to cancer 
services or cardiac surgery or (2) otherwise prohibits or restricts a 
health-care facility from taking actions related to providing cancer 
services or cardiac surgery without prior notice to and prior written 
approval of the United States. Finally, BRMC and PCH are enjoined from 
entering into, continuing, maintaining, or enforcing any agreement with 
each other concerning cancer services or cardiac surgery without prior 
notice to and prior written approval of the United States.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Documents Group, 325 Seventh Street, NW., Room 215 
North, Washington, DC 20530 and at the Office of the Clerk of the 
United States District Court for the Southern District of West 
Virginia, 601 Federal Street, Room 2303, Bluefield, West Virgina 24701.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Mark J. Botti, Chief, Litigation I Section, Antitrust Division, U.S. 
Department of Justice, 1401 H Street, NW., Suite 4000, Washington, DC 
20530 (Telephone (202) 307-0001).

Dorothy B. Fountain,
Deputy Director of Operations, Antitrust Division.

Final Judgment

    Whereas, Plaintiff, the United States of America, filed its 
Complaint on March 21, 2005 alleging that Defendants, Bluefield 
Regional Medical Center, Inc. and Princeton Community Hospital 
Association, Inc., entered into agreements in violation of section 1 of 
the Sherman Act, 15 U.S.C. 1, and Plaintiff and Defendants, by their 
respective attorneys, have consented to the entry of this Final 
Judgment without trial or adjudication of any issue of fact or law, and 
without this Final Judgment constituting any evidence against, or any 
admission by, any party regarding any such issue of fact or law;
    And whereas, Defendants agree to be bound by the provisions of the 
Final Judgment pending its approval by this Court;
    And whereas, the essence of this Final Judgment is to enjoin the 
Defendants from allocating markets for the provision of certain medical 
services and to restore lost competition as alleged in the Complaint;
    And whereas, the United States requires Defendants to agree to 
certain procedures and prohibitions for the purpose of restoring the 
loss of competition alleged in the Complaint;
    Now therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ordered, adjudged and decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against Defendants under section 1 of the Sherman 
Act, as amended (15 U.S.C. 1).

II. Definitions

    As used in this Final Judgment:
    A. ``Agreement'' means any kind of formal or informal agreement, 
arrangement, contract, understanding, memorandum of understanding, 
interim contract, contract appendix, addendum, attachment, amendment, 
waiver, or modification. Agreements that solely concern patient-
treatment protocols or the transfer of patients necessary to render 
patient care that is unavailable at BRMC or PCH shall not be deemed an 
agreement within the scope of this Final Judgment. An agreement solely 
for the merger of BRMC and PCH, the acquisition by one of the other, or 
bringing all or substantially all of the operations or assets of BRMC 
and PCH under common control shall not be deemed an agreement within 
the scope of this Final Judgment if BRMC and PCH give at least thirty 
days advance notice of such merger, acquisition, or transaction to the 
United States.
    B. ``BRMC'' means Defendant Bluefield Regional Medical Center, Inc. 
a non-profit corporation organized and existing under the laws of the 
State of West Virginia with its headquarters in Bluefield, West 
Virginia, its successors and assigns, and its subsidiaries, divisions, 
groups, affiliates, partnerships and joint ventures, and their 
directors, officers, managers, agents, and employees.
    C. ``Cancer and Open-Heart Agreements'' means (1) the contract 
dated January 30, 2003 between BRMC and PCH concerning cancer services 
and all amendments and other agreements ancillary to that contract and 
(2) the contract dated January 30, 2003 among BRMC, PCH, and Charleston 
Area Medical Center, Inc. concerning cardiac surgery and all amendments 
and other agreements ancillary to that contract.
    D. ``Cancer Services'' means any health or other service relating 
to any service performed by cancer specialists such as radiation 
oncologists, medical oncologists, surgical oncologists, gynecological 
oncologists, and other oncologic physician specialists. This term 
includes any equipment, technology, or modality used in providing such 
services.
    E. ``Cardiac Surgery'' means any health or other services relating 
to surgery on the heart or major blood vessels of the heart (including 
both open and closed heart surgery) and therapeutic cardiac 
catherization. This term includes any service, equipment, technology, 
or modality relating to the services of an open-heart surgeon, 
cardiovascular surgeon, cardiovascular anesthesiologist, interventional 
cardiologist, or perfusionist.
    F. ``Certificate of Need'' means certificate of need as recognized 
by the

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State of West Virginia (W. Va. Code Sec.  16-2D-1 et seq.) and a 
certificate of public need as recognized in the Commonwealth of 
Virginia (Va. Code Ann. Sec.  32.1-102.1 et seq.).
    G. ``Health-Care Facility'' means any facility providing health-
care services, including hospitals, hospital-owned or managed physician 
practices, ambulatory-care centers, clinics, urgent-care centers, free-
standing emergency-care centers, and ambulatory-surgery centers.
    H. ``PCH'' means Defendant Princeton Community Hospital 
Association, Inc., a non-profit corporation organized and existing 
under the laws of the State of West Virginia with its headquarters in 
Princeton, West Virginia, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    I. The terms ``and'' and ``or'' have both conjunctive and 
disjunctive meanings.

III. Applicability

    This Final Judgment applies to BRMC and PCH, as defined above, and 
all other persons in active concert or participation with any of them 
who receive actual notice of this Final Judgment by personal service or 
otherwise.

IV. Prohibited Conduct

    A. BRMC and PCH are enjoined from enforcing all or any part of the 
Cancer and Open-Heart Agreements. BRMC's and PCH's obligations under 
this Final Judgment supersede their obligations under either of these 
agreements, and BRMC and PCH shall not object to the performance of 
their obligations under this Final Judgment on the grounds that those 
obligations would cause them to breach either agreement.
    B. BRMC and PCH are enjoined from, in any manner, directly or 
indirectly, entering into, continuing, maintaining, or enforcing any 
agreement to allocate any cancer or cardiac-surgery service, market, 
territory, or customer.
    C. BRMC and PCH are enjoined from, in any manner, directly or 
indirectly, entering into, continuing, maintaining, or enforcing any 
other agreement that (1) prohibits or restricts a health-care facility 
from obtaining a certificate of need relating to cancer services or 
cardiac surgery or (2) otherwise prohibits or restricts a health-care 
facility from taking actions related to providing cancer services or 
cardiac surgery without prior notice to and prior written approval of 
the United States, which will not be withheld unreasonably.
    D. BRMC and PCH are enjoined from, in any manner, directly or 
indirectly, entering into, continuing, maintaining, or enforcing any 
agreement with each other concerning cancer services or cardiac surgery 
without prior notice to and prior written approval of the United 
States, which will not be withheld unreasonably.

V. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time duly authorized representatives of the United States 
Department of Justice, including consultants and other persons retained 
or designated thereby, shall, upon written request of a duly authorized 
representative of the Assistant Attorney General in charge of the 
Antitrust Division and on reasonable notice to Defendants, be 
permitted:
    1. Access during Defendants' office hours to inspect and copy, or 
at the United States' option, to require that Defendants provide copies 
of, all books, ledgers, accounts, records and documents in their 
possession, custody, or control relating to any matters contained in 
this Final Judgment; and
    2. To interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of a duly authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, 
Defendants shall submit written reports, under oath if requested, 
relating to any of the matters contained in this Final Judgment as may 
be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by Plaintiff to any person other than an 
authorized representative of the executive branch of the United States 
except in the course of legal proceedings to which the United States is 
a party (including grand jury proceedings), or for the purpose of 
securing compliance with this Final Judgment, or as otherwise required 
by law.
    D. If at the time Defendants furnish information or documents to 
the United States, they represent and identify in writing the material 
in any such information or documents to which a claim of protection may 
be asserted under Rule 26(c)(7) of the Federal Rules of Civil 
Procedure, and mark each pertinent page of such material, ``Subject to 
claim of protection under Rule 26(c)(7) of the Federal Rules of Civil 
Procedure,'' then the United States shall give Defendants ten calendar 
days notice prior to divulging such material in any legal proceeding 
(other than a grand jury proceeding).

VI. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

VII. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten years from the date of its entry.

VIII. Correspondence

    BRMC and PCH shall provide notice and seek prior written approval 
as contemplated by this Final Judgment by sending correspondence to 
Chief, Litigation I, Antitrust Division, United States Department of 
Justice, 1401 H Street, NW., Suite 4000, Washington, DC 20530, or such 
other address as the United States shall designate.

IX. Public Interest Determination

    Entry of this Final Judgment is in the public interest.

Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16.

United States District Judge.

Stipulation

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, that:
    1. The Court has jurisdiction over the subject matter of this 
action and each of the parties hereto, and venue of this action is 
proper in this District.
    2. The parties stipulate that a proposed Final Judgment in the form 
attached as Exhibit A may be entered by the Court, upon the motion of 
any party or upon the Court's own motion, at any time after compliance 
with the requirements of the antitrust Procedures and Penalties Act, 15 
U.S.C. 16, and without further notice to any party or other 
proceedings, provided that the United States has not withdrawn its 
consent, which it may do at any time before the entry of the proposed 
final

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Judgment by serving notice thereof on defendants and by filing that 
notice with the Court.
    3. Defendants shall abide by and comply with the provisions of the 
proposed Final Judgment, pending the Judgment's entry by the Court, or 
until expiration of time for all appeals of any Court ruling declining 
entry of the proposed Final Judgment, and shall, from the date of the 
signing of this Stipulation by the parties, comply with all the terms 
and provisions of the proposed Final Judgment as though the same were 
in full force and effect as an order of the Court.
    4. This Stipulation shall apply with equal force and effect to any 
amended proposed Final Judgment agreed upon in writing by the parties 
and submitted to the Court.
    5. In the event (a) the United States has withdrawn its consent, as 
provided in section 2 above, or (b) the proposed Final Judgment is not 
entered pursuant to this Stipulation, the time has expired for all 
appeals of any Court ruling declining entry of the proposed Final 
Judgment, and the Court has not otherwise ordered continued compliance 
with the terms and provisions of the proposed Final Judgment, then the 
parties are released from all further obligations under this 
Stipulation, and the making of this Stipulation shall be without 
prejudice to any party in this or any other proceeding.

For Plaintiff United States of America:

Dated: March 21, 2005.

Peter J. Mucchetti, Esq.,
Litigation I Section, Antitrust Division, United States Department 
of Justice.

For Defendant Bluefield Regional Medical Center, Inc.:

Dated: March 18, 2005.

Arthur N. Lerner, Esq.,
Crowell & Moring LLP, Counsel for Defendant Bluefield Regional 
Medical Center, Inc.

For Defendant Princeton Community Hospital Association, Inc.

March 14, 2005.

Kevin E. Grady, Esq.,
Alston & Bird LLP, Counsel for Defendant Princeton Community 
Hospital Association, Inc.

Competitive Impact Statement

    The United States of America, pursuant to section 2(b) of the 
Antitrust Procedures and Penalties Act, (``APPA''), 15 U.S.C. 16(b)-
(h), files this Competitive Impact Statement relating to the proposed 
Final Judgment submitted for entry in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On March 21, 2005, the United States filed a civil antitrust 
Complaint alleging that Bluefield Regional Medical Center, Inc. (BRMC) 
and Princeton Community Hospital Association, Inc. (PCH) had violated 
Section 1 of the Sherman Act, 15 U.S.C. 1. BRMC owns and operates a 
265-bed, general acute-care hospital in Bluefield, West Virginia. PCH 
owns and operates a 211-bed general acute-care hospital in Princeton, 
West Virginia. PCH also owns and operates St. Luke's Hospital, LLC (St. 
Luke's), a 79-bed, general acute-care hospital in Bluefield, West 
Virginia.
    The Complaint alleges that, on January 30, 2003, BRMC and PCH 
entered into two agreements (the ``cancer and open-heart agreements'') 
in which BRMC agreed not to offer certain cancer services and PCH 
agreed not to offer certain cardiac-surgery services. The cancer and 
open-heart agreements effectively allocated markets for cancer and 
cardiac-surgery services and restrained competition to the detriment of 
consumers. With the Complaint, the United States, BRMC, and PCH filed 
an agreed-upon proposed Final Judgment that annuls the cancer and open-
heart agreements and prohibits BRMC and PCH from taking actions that 
would reduce competition between the two hospitals for patients needing 
cancer and cardiac-surgery services.
    The United States, BRMC, and PCH have agreed that the proposed 
Final Judgment may be entered after compliance with the APPA, provided 
that the United States has not withdrawn its consent. Entry of the 
Final Judgment would terminate the action, except that the Court would 
retain jurisdiction to construe, modify, or enforce the Final 
Judgment's provisions and to punish violations thereof.

II. Description of Practices and Events Giving Rise to the Alleged 
Violations of the Antitrust Laws

A. Services Provided by the Defendants and Events Preceding the 
Parties' Cancer and Open-Heart Agreements

    At all times relevant to the matters alleged in the Complaint, BRMC 
and PCH have been significant competitors in general acute-care 
hospital services and in cancer services. PCH is located about fifteen 
miles from BRMC. PCH's St. Luke's Hospital is located about two miles 
from BRMC. BRMC, PCH, and St. Luke's are the only general acute-care 
hospitals in Mercer County, West Virginia.
    BRMC and PCH also have been potential competitors in cardiac-
surgery services. BRMC sought to develop cardiac-surgery services since 
at least 1999. Similarly, from at least 1999 until PCH agreed not to 
compete with BRMC in cardiac-surgery services, PCH sought to develop 
cardiac-surgery services by working with other hospitals in southern 
West Virginia.
    The State of West Virginia and the Commonwealth of Virginia require 
that a hospital obtain a certificate of need or a certificate of public 
need (collectively, ``CON'') from a state agency before a hospital may 
provide either cardiac-surgery services or radiation-therapy services 
(using a linear accelerator) for treating patients with cancer. The 
West Virginia Health Care Authority (WVHCA) administers the CON program 
in West Virginia. The Virginia Department of Health's Certificate of 
Public Need Division and regional health planning agencies administer 
the CON program in Virginia.
    In January 1999, BRMC submitted a CON application to the WVHCA to 
develop a cardiac-surgery program in Mercer County, West Virginia. At 
that time, neither BRMC, PCH, nor St. Luke's had a CON to operate a 
cardiac-surgery program. PCH, St. Luke's, and other hospitals opposed 
BRMC's application. PCH and St. Luke's argued, in part, that BRMC's 
application should be denied because it did not provide a role for PCH 
and St. Luke's in the provision of cardiac-surgery services in southern 
West Virginia.
    In February 2000, the WVHCA issued a written decision that denied 
BRMC's application for a CON to develop a cardiac-surgery program 
because BRMC was unable to show that, without working with other 
hospitals, it would be able to attract a sufficient number of patients. 
In its decision, the WVHCA wrote that PCH, St. Luke's and other 
hospitals had:

failed to successfully negotiate with [BRMC] to reach a shared goal. 
The goal being to provide advanced cardiology services to the 
citizens of southern West Virginia and southwestern Virginia * * *. 
[The WVHCA] would have preferred that the parties work together to 
present a project that could have been approved under the existing 
law. Instead, the parties fought among themselves, failed to resolve 
their differences, and in return, the citizens of southern West 
Virginia will be inconvenienced and suffer by not having a regional 
open-heart service provider.

    On one or more occasions during 2002, BRMC and PCH representatives 
met with WVHCA officials. The WVHCA officials encouraged BRMC and PCH 
to reach an understanding that would enable the parties to submit an 
application for an open-heart surgery

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CON that the WVHCA would be able to approve. The WVHCA officials, 
however, neither instructed nor encouraged BRMC and PCH to allocate 
markets.

B. The Cancer and Open-Heart Agreements

    On January 30, 2003, BRMC and PCH entered into the cancer and open-
heart agreements. The cancer agreement concerned PCH's provision of 
certain cancer services, including radiation-therapy services, and the 
open-heart agreement concerned BRMC's plan to develop cardiac-surgery 
services (open-heart surgery and therapeutic cardiac-catheterization 
services). The agreements applied to McDowell, Mercer, Monroe, Raleigh, 
Summers, and Wyoming counties in southern West Virginia and Bland, 
Giles, and Tazewell counties in western Virginia. In the agreements, 
BRMC agreed to submit a joint CON application with PCH to transfer 
BRMC's CON to operate radiation-therapy equipment to PCH. PCH agreed to 
submit a joint CON application with BRMC for BRMC to receive a cardiac-
surgery CON.
    As part of the cancer and open-heart agreements, BRMC agreed to 
refrain from competing with PCH in various ways, none of which was 
related to a procompetitive purpose. BRMC agreed, among other things:
     Not to apply for, finance, encourage, or participate in a 
CON to provide cancer services by itself or with any entity other than 
PCH;
     That, in the event that the State of West Virginia or the 
Commonwealth of Virginia no longer requires a CON to provide cancer 
services, BRMC would not develop, finance, encourage, participants in, 
or support the development or provision of cancer services by BRMC or 
any entity other than PCH;
     Not to engage in, support, finance, encourage, or 
participate in the recruitment of any physician cancer specialists to 
BRMC's medical staff or for any other entity or individual, other than 
PCH;
     To provide to PCH information relating to cancer services 
provided by BRMC;
     Not to market or advertise that BRMC has a cancer center;
     Not to provide outpatient chemotherapy services (except 
for those services ordered or performed by either of two physicians 
currently practicing at BRMC);
     Not to lease space in its existing or future medical 
office buildings to any cancer specialists, except for those cancer 
specialists leasing space as of the date of the agreement; and
     That, in the event that any new technology or modality for 
the diagnosis or treatment of cancer becomes available that is not 
offered generally at hospitals similar to PCH and BRMC, BRMC would not 
acquire, develop, offer or provide such technology or modality, and 
BRMC would not finance, encourage, participate in, or support the 
development or offering of such technology or modality by any entity 
other than PCH.
    As part of the cancer and open-heart agreements, PCH also agreed to 
refrain from competing with BRMC is various ways, none of which was 
related to a procompetitive purpose. PCH agreed, among other things:
     Not to apply for, finance, encourage, or participate in a 
CON to provide cardiac-surgery services by itself or with any entity 
other than BRMC;
     That, in the event that the State of West Virginia or the 
Commonwealth of Virginia no longer requires a CON to provide cardiac-
surgery services, PCH would not develop, finance, encourage, 
participate in, or support the development or provision of cardiac-
surgery services by PCH or any entity other than BRMC;
     Not to engage in, support, finance, encourage, or 
participate in the recruitment of any cardiac-surgery specialists to 
PCH's medical staff or for any other entity or individual, other than 
BRMC;
     To provide to BRMC information relating services provided 
by PCH;
     Not to solicit, entertain, finance, aid, support, or 
participate in any competing proposal from any entity or physician to 
develop cardiac-surgery services;
     Not to lease space in its existing or future medical 
office buildings to any open-heart surgery specialist; and
     That, in the event that any new technology or modality for 
the diagnosis or treatment or cardiovascular disease becomes available 
that is not offered generally at hospitals similar to PCH and BRMC, PCH 
would not acquire, develop, offer or provide such technology or 
modality, and PCH would not finance, encourage, participate in, or 
support the development or offering of such technology or modality by 
any entity other than BRMC.
    The term of the cancer and open-heart agreements commend on January 
30, 2003 and terminates five years after the first open-heart surgery 
is performed at BRMC or the first cancer patient is treated at a PCH 
comprehensive cancer center, whichever is later. Neither agreement can 
last longer than eight years. Each agreement automatically terminates 
if, within three years from commencement, either party has not received 
all government approvals needed to provide its services.
    PCH and BRMC structured the agreements such that PCH would 
independently own its cancer-treatment facilities and provide its 
cancer services independently of BRMC, BRMC would independently own its 
cardiac-surgery facilities and provide its cardiac-surgery services 
independently of PCH, and BRMC and PCH would not provide these services 
as part of a joint venture.
    On January 23, 2003, BRMC submitted to the WVHCA a CON application, 
with PCH as a joint applicant, to develop a cardiac-surgery program at 
BRMC. On July 30, 2003, PCH submitted to the WVHCA an application, with 
BRMC as a joint applicant, to transfer BRMC's CON to operate radiation-
therapy equipment to PCH. The WVHCA approved BRMC's cardiac-surgery CON 
application on August 1, 2003. PCH's application to transfer BRMC's 
radiation-therapy equipment CON to PCH remains pending with the WVHCA.
    Because of the cancer and open-heart agreements, BRMC and PCH have 
refrained and, if not enjoined, likely would continue to refrain from 
competing to serve patients that need cancer and cardiac-surgery 
services. The cancer and open-heart agreements have had and, unless 
enjoined, likely would have the following harmful effects:
     Managed-care purchasers, their enrollees and employees, 
and other patients in southern West Virginia and western Virginia have 
been denied and would be denied the benefits of price competition 
between PCH and BRMC;
     The quality of services has decreased and likely would 
decrease in the absence of competition between PCH and BRMC to provide 
cancer and cardiac-surgery services;
     Patients have lost and would lose the ability to choose 
between PCH and BRMC when selecting a hospital to provide cancer 
services;
     Patients have lost and would lose the benefit of potential 
competition between PCH and BRMC in cardiac-surgery services; and
     PCH's and BRMC's incentives to innovate or offer new 
cancer and cardiac-surgery services have been and would be decreased.

[[Page 17121]]

C. The Cancer and Open-Heart Agreements Are Not Entitled to Federal 
Antitrust Immunity Under the State-Action Doctrine

    The state-action doctrine provides immunity from Federal antitrust 
liability where a party can satisfy a two-part test. First, the party 
must show that the challenged restraint is one clearly articulated and 
affirmatively expressed as state policy. California Retail Liquor 
Dealers Association v. Midcal Aluminum, 445 U.S. 97, 105 (1980). To 
satisfy the clear-articulation requirement, a defendant must show only 
that ``the legislature contemplated the kind of action complained of.'' 
Town of Hallie v. City of Eau Claire, 471 U.S. 34, 44 (1985). Second, 
the state must actively supervise the challenged conduct. Midcal, 445 
U.S. at 105.
    As discussed below, no state action in either West Virginia or 
Virginia shields the cancer and open-heart agreements from federal 
antitrust review. The West Virginia legislature has not enpowered the 
WVHCA to authorize hospitals to enter into market-allocation 
agreements. Furthermore, the WVHCA is not empowered to exercise, and 
has not exercised, active supervision over the cancer and open-heart 
agreements. Indeed, the WVHCA did not purport to authorize the parties 
to enter into the agreements. Similarly, in Virginia, no state agency 
or official encouraged or authorized BRMC and PCH to reach an 
understanding or agreement concerning cardiac-surgery or cancer 
services.
1. The West Virginia Legislature Did Not Empower the WVHCA To Authorize 
Private Market-allocation Agreements
    The West Virginia legislature empowered the WVHCA to administer 
West Virginia's CON program according to legislatively established 
criteria. W. Va. Code Sec.  16-2D-1 et seq., W. Va. Code St. R. Sec.  
65-7-1 et seq., W. Va. Code Sec.  16-29B-1 et seq. Although the West 
Virginia legislature granted the WVHCA significant regulatory powers 
over competition in West Virginia health-care markets, it limited the 
means by which the WCHCA can regulate competition among health-care 
providers principally to granting or denying CONs to firms wishing to 
compete. W. Va. Code Sec.  16-2D-1 et seq., W. Va. Code St. R. Sec.  
65-7-1 et seq., W. Va. Code Sec.  16-29B-1 et seq.
    In administering the CON program, the WVHCA is called upon to 
review and, if appropriate, to grant or deny CON applications for 
certain medical services. W. Va. Code Sec.  16-29-11. The statutory 
framework grants third parties the right to intervene to protect their 
interests; affords adversely affected parties the right of judicial 
review; requires written findings as to whether approval of a CON would 
further legislatively established criteria; and establishes other 
procedural safeguards. W. Va. Code Sec. Sec.  16-29B-12(f), 16-29B-13, 
and 16-2D-9. When reviewing CON applications, the WVHCA must follow 
established procedures and act within the CON process. See W. Va. Code 
Sec.  16-2D-1 et seq., W. Va. Code St. R. Sec.  65-7-1 et seq., W. Va. 
Code Sec.  16-29B-1 et seq. The statutes and regulations delineating 
the responsibilities of the WVHCA do not explicitly empower it to 
consider, or to issue opinions concerning, private market-allocation 
agreements. See, e.g., W. Va. Code Sec.  16-2D-1 et seq., W. Va. Code 
St. R. Sec.  65-7-1 et seq., W. Va. Code Sec.  16-29B-1 et seq., W. Va. 
Code St. R. Sec.  65-5-1 et seq., W. Va. Code St. R. Sec.  65-26-1 et 
seq.
    Nor does the WVHCA have implicit authority to approve private 
agreements as a means of regulating competition. In light of the rights 
and procedural safeguards afforded in the statutory framework to 
affected parties, to conclude that WVHCA has implied authority to 
authorize private market-allocation agreements would be inconsistent 
with that framework and effectively would give to the WVHCA 
unreviewable discretion to regulate health-care markets. To the 
contrary, the legislature generally has left West Virginia health-care 
providers free to make market decisions on how to compete as long as 
they are not (1) adding or expanding health-care services; (2) 
incurring a capital expenditure of $2 million or more; (3) obtaining 
major medical equipment valued at $2 million or more; or (4) developing 
or acquiring new health-care facilities. W. Va. Code Sec.  16-2D-3.
    Because the West Virginia legislature has not granted to the WVHCA 
the explicit authority to approve private market-allocation agreements 
such as the cancer and open-heart agreements, because any implicit 
authority of the WVHCA to approve such agreements would be inconsistent 
with the statutory framework that the legislature did create, and 
because the legislature clearly contemplated that West Virginia 
hospitals would compete in the free market for many of the activities 
covered by the cancer and open-heart agreements, these agreements 
cannot be considered part of a ``clearly articulated and affirmatively 
expressed state policy.'' Midcal, 445 U.S. at 105.
2. The WVHCA Is Not Empowered To Exercise, and Has Not Exercised, 
Active Supervision Over the Cancer and Open-Heart Agreements
    The active-supervision requirement of the state-action doctrine 
requires that the State actively supervise and exercise ultimate 
control over the challenged anticompetitive conduct. Midcal, 445 U.S. 
at 105, Patrick v. Burget, 486 U.S. 94, 100-101 (1988). ``The 
requirement is designed to ensure that the state-action doctrine will 
shelter only the particular anticompetitive acts of private parties 
that, in the judgment of the State, actually further state regulatory 
policies.'' Patrick, 486 U.S. at 100-101.
    The West Virginia legislature, however, has not empowered the WVHCA 
to require parties to private agreements to maintain, alter, or abandon 
their agreements. Thus, the WVHCA has no power to exercise active 
supervision or control over private agreements such as the cancer and 
open-heart agreements. Moreover, the WVHCA has not purported to 
actively supervise the cancer and open-heart agreements, as it did not 
(1) develop a factual record concerning the initial or ongoing nature 
and effect of the agreements; (2) issue a written decision approving 
the agreements; or (3) assess whether the agreements further criteria 
established by the West Virginia legislature. See FTC v. Ticor Title 
Ins. Co., 504 U.S. 621, 637-639 (1992).
    The WVHCA, in its February 2000 decision and in the actions of its 
officials during 2002, did not purport to authorize BRMC and PCH to 
enter into market-allocation agreements. In its February 2000 decision 
denying BRMC's cardiac-surgery CON application, the WVHCA simply stated 
a preference that BRMC and PCH work together to develop a cardiac-
surgery project and encouraged the parties to submit a cardiac-surgery 
CON application that could be approved under the law. The decision did 
not encourage or instruct BRMC and PCH to allocate cardiac-surgery or 
cancer services. Similarly, during meetings in 2002 with 
representatives of BRMC and PCH, WVHCA officials neither instructed nor 
encouraged BRMC and PCH to allocate markets or to agree to 
anticompetitive conduct such as that later contained in the cancer and 
open-heart agreements.
    Regulation by the WVHCA of the rates charged by BRMC and PCH, see, 
e.g., W. Va. Code Sec.  16-29B-1 et seq., W. Va. Code St. Sec.  65-5-1 
et seq., W. Va. Code St. R. Sec.  65-26-1 et seq., also does not 
satisfy the active-supervision requirement. In this case, the

[[Page 17122]]

anticompetitive conduct is not the prices charged by the hospitals; 
rather, it is the terms of the cancer and open-heart agreements. The 
WVHCA's regulation of rates does not directly address market-allocation 
issues or the potential anticompetitive effects of such allocations, as 
rate regulation may fail to ensure that the hospitals charge rates 
equal to those rates that would have prevailed in a competitive market 
and it fails to address decreases in quality of service, innovation, 
and consumer choice that result from an agreement not to compete.
3. No Virginia Official or Agency Encouraged or Authorized BRMC and PCH 
To Reach an Agreement Concerning Cardiac-Surgery or Cancer Services
    Although the cancer and open-heart agreements allocate markets for 
cancer and cardiac surgery in three Virginia counties, no Virginia 
state action immunizes the agreements from federal antitrust review. An 
extensive discussion of why the state-action doctrine does not apply in 
Virginia is not necessary as BRMC and PCH has no contacts with any 
Virginia agency or official that might suggest a state-action defense. 
No Virginia agency or official encouraged or authorized BRMC and PCH to 
enter into the agreements or reach any understanding concerning 
cardiac-surgery or cancer services. BRMC and PCH also never sought or 
received approval for the agreements from any Virginia agency or 
official.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment would enjoin BRMC and PCH from 
enforcing any part of the cancer and open-heart agreements. BRMC and 
PCH also would be enjoined from entering into, continuing, maintaining, 
or enforcing any agreement to allocate any cancer or cardiac-surgery 
service, market, territory, or customer. In addition, BRMC and PCH 
would be enjoined from entering into, continuing, maintaining, or 
enforcing any other agreement that (1) prohibits or restricts a health-
care facility from obtaining a certificate of need relating to cancer 
services or cardiac surgery or (2) otherwise prohibits or restricts a 
health-care facility from taking actions related to providing cancer 
services or cardiac surgery without prior notice to and prior written 
approval of the United States. Finally, BRMC and PCH would be enjoined 
from entering into, continuing, maintaining, or enforcing any agreement 
with each other concerning cancer services or cardiac surgery without 
prior notice to and prior written approval of the United States. The 
effect of the proposed Final Judgment would be to restore competition 
between BRMC and PCH that the cancer and open-heart agreements 
eliminated, and would prevent BRMC and PCH from engaging in similar 
conduct in the future.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages suffered, as well as costs and reasonable attorneys' fees. 
Entry of the proposed Final Judgment will neither impair nor assist the 
bringing of such actions. Under the provisions of section 5(a) of the 
Clayton Act, 15 U.S.C. 16(a) the Final Judgment has no prima facie 
effect in any subsequent lawsuits that may be brought against the 
Defendant.

V. Procedures Available for Modifications of the Proposed Final 
Judgment

    The United States and the Defendant have stipulated that the 
proposed Final Judgment may be entered by the Court after compliance 
with the provisions of the APPA, provided that the United States has 
not withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty days preceding the 
effective date of the proposed Final Judgment within which any person 
may submit to the United States written comments regarding the proposed 
Final Judgment. Any person who wishes to comment should do so within 
sixty days of the date of publication of this Competitive Impact 
Statement in the Federal Register. All comments received during this 
period will be considered by the Department of Justice, which remains 
free to withdraw its consent to the proposed Final Judgment at any time 
prior to the Court's entry of judgment. The comments and the response 
of the United States will be filed with the Court and published in the 
Federal Register.
    Written comments should be submitted to: Mark J. Botti, Chief, 
Litigation I Section, Antitrust Division, United States Department of 
Justice, 1401 H Street, NW., Suite 4000, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against defendants BRMC and 
PCH. The United States is satisfied, however, that the Final Judgment, 
with its prohibition on anticompetitive conduct, will more quickly 
achieve the primary objectives of a trial on the merits--reestablishing 
competition in the relevant markets.

VII. Standard of Review Under the APPA for the Proposed Final Judgment

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States be subject to a sixty-day comment 
period, after which the Court shall determine whether entry of the 
proposed Final Judgment ``is in the public interest.'' 15 U.S.C. 
16(e)(1). In making that determination, the Court shall consider:

(A) the competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration or relief sought, anticipated effects of alternative 
remedies actually considered, whether its terms are ambiguous, and 
any other competitive considerations bearing upon the adequacy of 
such judgment that the court deems necessary to a determination of 
whether the consent judgment is in the public interest; and

(B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

15 U.S.C. Sec.  16(e)(1)(A) and (B). As the United States Court of 
Appeals for the District of Columbia Circuit has held, the APPA permits 
a court to consider, among other things, the relationship between the 
remedy secured and the specific allegations set forth in the 
government's complaint, whether the decree is sufficiently clear, 
whether enforcement mechanisms are sufficient, and whether the decree 
may positively harm third parties. See United States v. Microsoft 
Corp., 56 F.3d 1448, 1458-62 (D.C. Cir. 1995).
    ``Nothing in this section shall be construed to require the court 
to conduct an evidentiary hearing or to require the court to permit 
anyone to intervene.'' 15 U.S.C. 16(e)(2). Thus, in conducting this 
inquiry, ``[t]he court is nowhere compelled to go to trial or to engage 
in extended proceedings which might have the effect of vitiating the

[[Page 17123]]

benefits of prompt and less costly settlement through the consent 
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Senator 
Tunney).\1\ Rather:
---------------------------------------------------------------------------

    \1\ See United States v. Gillette Co., 406 F. Supp. 713, 716 (D. 
Mass. 1975) (recognizing it was not the court's duty to settle; 
rather, the court must only answer ``whether the settlement achieved 
[was] within the reaches of the public interest''). A ``public 
interest'' determination can be made properly on the basis of the 
Competitive Impact Statement and Response to Comments filed by the 
Department of Justice pursuant to the APPA. Although the APPA 
authorizes the use of additional procedures, 15 U.S.C. 16(f), those 
procedures are discretionary. A court need not invoke any of them 
unless it believes that the comments have raised significant issues 
and that further proceedings would aid the court in resolving those 
issues. See H.R. Rep. No. 93-1463, 93rd Cong 2d Sess. 8-9 (1974), 
reprinted in 1974 U.S.C.C.A.N. 6535, 6538.

[a]bsent a showing of corrupt failure of the government to discharge 
its duty, the Court, in making its public interest finding, should * 
* * carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
---------------------------------------------------------------------------
circumstances.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977).
    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d 
at 1460-62. Courts have held that:

[t]he balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
---------------------------------------------------------------------------

    \2\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); Gillette, 406 F. Supp. at 716 
(noting that, in this way, the court is constrained to ``look at the 
overall picture not hypercritically, nor with a microscope, but with 
an artist's reducing glass''). See generally Microsoft, 56 F3.d at 
1461 (discussing whether ``the remedies [obtained in the decree are] 
so inconsonant with the allegations charged as to fall outside of 
the `reaches of the public interest'''
---------------------------------------------------------------------------

    The proposed Final Judgment, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitive effect of a particular practice or whether it mandates 
certainty of free competition in the future. Court approval of a final 
judgment requires a standard more flexible and less strict than the 
standard required for a finding of liability. ``[A] proposed decree 
must be approved even if it falls short of the remedy the court would 
impose on its own, as long as it falls within the range of 
acceptability or is `within the reaches of public interest.''' United 
States v. AT&T, 552 F. Supp. 131, (D.D.C. 1982) (citations omitted) 
(quoting Gillette, 406 F. Supp. at 716), aff'd sub nom. Maryland v. 
United States, 460 U.S. 1001 (1983); see also United States v. Alcan 
Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving the 
consent decree even though the court would have imposed a greater 
remedy).
    Moreover, the Court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint; the APPA does not authorize the Court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459. Because the ``court's 
authority to review the decree depends entirely on the government's 
exercising its prosecurtorial discretion by bringing a case in the 
first place,'' it follows that ``the court is only authorized to review 
the decree itself,'' and not to ``effectively redraft the complaint'' 
to inquire into other matters that the United States did not pursue. 
Id. at 1459-60.

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

Dated: March 21, 2005.

Respectfully submitted,

Mark J. Botti,
Chief, Litigation I.

Kasey Warner,
United States Attorney.

Peter J. Mucchetti,
Joan S. Huggler,
Mitchell H. Glende,
Attorneys for the United States, United States Department of 
Justice, 1401 H Street, NW., Suite 4000, Washington, DC 20530. 
Telephone: (202) 353-4211. Facsimile: (202) 307-5802.

Stephen M. Horn,
Assistant United States Attorney.
[FR Doc. 05-6536 Filed 4-1-05; 8:45 am]
BILLING CODE 4410-11-M