United States v. Charleston Area Medical Center, Inc.; Complaint, Proposed Final Judgment and Competitive Impact Statement, 9598-9606 [06-1696]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 71, Number 37 (Friday, February 24, 2006)]
[Notices]
[Pages 9598-9606]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-1696]


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DEPARTMENT OF JUSTICE

Antitrust Division

[Civil Action No. 2:06-0091]


United States v. Charleston Area Medical Center, Inc.; Complaint, 
Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b) through (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. Charleston Area Medical Center, Inc., 
Civil Case No. 2:06-0091. On February 6, 2006, the United States filed 
a

[[Page 9599]]

Complaint alleging that, on April 17, 2002, Charleston Area Medical 
Center, Inc. (CAMC) entered into an agreement with HCA Inc. (HCA) that 
prevented HCA from developing a cardiac-surgery program in Raleigh 
County, West Virginia, in violation of Section One of the Sherman Act, 
15 U.S.C. 1. The Complaint alleges that the agreement unreasonably 
restrained competition by effectively ensuring that no hospital in 
Raleigh County, West Virginia, would compete with CAMC to provide 
cardiac-surgery services. The proposed Final Judgment filed with the 
Complaint annuls the anticompetitive agreement and prohibits CAMC from 
entering into other agreements that allocate any cardiac-surgery 
service, market, territory, or customer. In addition, the proposed 
consent decree prevents CAMC from entering into any agreement that 
prohibits or restricts a healthcare facility from developing cardiac-
surgery services unless CAMC receives the prior 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 Division, 325 7th Street, NW., Room 215, Washington, 
DC 20530 (telephone: 202/514-2481), on the Department of Justice's Web 
site at https://www.usdoj.gov/atr, and at the Office of the Clerk of the 
United States District Court for the Southern District of West 
Virginia, 300 Virginia Street E., Charleston, WV 25301.
    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.

Complaint

    The United States of America, by its attorneys and acting under the 
direction of the Attorney General of the United States, brings this 
civil antitrust action to obtain equitable relief against Defendant 
Charleston Area Medical Center, Inc. (CAMC). The United States alleges 
as follows:

I. Introduction

    1. CAMC operates the largest cardiac-surgery program in West 
Virginia, the sixth largest such program in the United States, through 
facilities located in the city of Charleston, Kanawha County, West 
Virginia. At all times relevant to the matters alleged in this 
complaint, HCA Inc. (HCA) owned and operated Raleigh General Hospital 
(Raleigh General), located in the city of Beckley, Raleigh County, West 
Virginia. Raleigh General is located about 55 miles south of CAMC's 
cardiac-surgery facilities.
    2. In an April 17, 2002 memorandum of understanding (the CAMC-HCA 
MOU), CAMC persuaded HCA to agree not to develop a competing cardiac-
surgery program at Raleigh General. The CAMC-HCA MOU unreasonably 
restrained competition to the detriment of consumers by effectively 
ensuring that one of the most significant potential competitors in 
southern West Virginia would not compete with CAMC to provide cardiac-
surgery services. The United States, through this suit, asks this court 
to enjoin the defendant from enforcing the anticompetitive provisions 
of the CAMC-HCA MOU and taking other actions that would restrain 
competition and injure consumers in violation of Section 1 of the 
Sherman Act, 15 U.S.C. 1.

II. Defendant

    3. Charleston Area Medical Center, Inc. (CAMC) is a nonprofit 
corporation, organized and existing under the laws of the state of West 
Virginia, with its headquarters in Charleston, Kanawha County, West 
Virginia. CAMC owns and operates a 913-bed, tertiary, regional 
referral, teaching medical center located in Charleston, West Virginia. 
CAMC transacts business and offers health-care services to patients 
located in the Southern District of West Virginia.

II. Jurisdiction and Venue

    4. The United States brings this action to prevent and restrain 
Defendant from continuing to violate Section 1 of the Sherman Act, 15 
U.S.C. 1. The Court has subject-matter jurisdiction over this action 
pursuant to 15 U.S.C. 4 and 28 U.S.C. 1331, 1337, and 1345.
    5. Defendant transacts business and has committed the unlawful act 
at issue in West Virginia. Consequently, this Court has jurisdiction 
over Defendants, and venue is proper in this District pursuant to 28 
U.S.C. 1391(c) and 15 U.S.C. 22.

IV. Effects on Interestate Commerce

    6. CAMC provides health-care services to individuals who reside 
outside of West Virginia. In addition, it contracts with managed-care 
and health-insurance providers located outside West Virginia to be 
included in their networks. These individuals and businesses remit 
substantial payments to CAMC. CAMC is engaged in, and its activities 
substantially affect, interstate commerce.

V. West Virginia's Certificate-of-Need Standards

    7. The State of West Virginia requires that a hospital obtain a 
certificate of need (``CON'') from the West Virginia Health Care 
Authority before a hospital may provide cardiac-surgery services. The 
West Virginia Health Care Authority was formerly known as the West 
Virginia Health Care Cost Review Authoriy (collectively, ``WVHCA'').
    8. On February 22, 2002, West Virginia revised the state standards 
for qualifying for a cardiac-surgery CON. These new standards (the 
``February 2002 standards'') made it easier for hospitals to qualify 
for a cardiac-surgery CON by lowering the minimum number of medical 
procedures that a hospital needed to demonstrate that it had perfomed 
or would perform.
    9. The February 2002 standards were structured in a way such that 
the WVHCA would most likely approve only one location for a cardiac-
surgery program in a ``Southern West Virginia region'' defined to 
conist of six counties: McDowell, Mercer, Monroe, Raleigh, Summers, and 
Wyoming Counties. In February 2002, no hospital from this region 
competed against CAMC in offering cardiac-surgery services.
    10. Under the February 2002 standards, the likely location of a new 
cardiac-surgery program in the Southern West Virginia region was one of 
Raleigh General, Princeton Community Hospital Association, Inc. 
(``Princeton Community Hospital''), or Bluefield Regional Medical 
Center, Inc. (``BRMC''). Princeton Community Hospital is located in 
Princeton, Mercer County, West Virginia, about 95 miles south of CAMC. 
BRMC is located in Bluefield, Mercer County, West Virginia about 105 
miles south of CAMC.

VI. CAMC Persuades HCA Not To Compete

A. CAMC Acted To Prevent Raleigh General From Developing a Competing 
Cardiac-Surgery Program
    11. After the February 2002 standards were issued, CAMC recognized 
that the WVHCA would likely approve a new cardiac-surgery program to be 
located either in Raleigh County at Raleigh General or in Mercer County 
at BRMC or Princeton Community Hospital.
    12. CAMC wanted the new cardiac-surgery program to be located in 
Mercer County because a program in nearby Raleigh County would compete 
with

[[Page 9600]]

and take revenue away from CAMC to a much greater extent than a program 
in more distant Mercer County. CAMC's cardiac program was its most 
profitable program, contributing about $20 million in net profits per 
year, and the counties south of Charleston accounted for a large 
percentage of CAMC's cardiac-surgery business. In an April 2002 
strategic plan, CAMC estimated that a cardiac-surgery program in 
Raleigh County would lower CAMC's net profits from $7 million to $12 
million more per year than would a similar program in Mercer County. 
The same strategic plan estimated that a cardiac-surgery program in 
Raleigh County would draw 935 to 1780 patient procedures per year away 
from CAMC. Due to this potential loss in patients and profits, a 2001 
CAMC strategic plan concluded that CAMC should ``fight aggressively'' 
to prevent a cardiac-surgery program in Raleigh County.
    13. Preventing a competing cardiac-surgery program at Raleigh 
General was one of CAMC's key objectives. A June 7, 2001 presentation 
entitled ``Cardiovascular Network Project Executive Steering Group 
Meeting 1'' said that a possible CAMC market strategy for the 
Beckley area was to ``[f]ocus efforts on obtaining [an] open-heart CON 
for Bluefield/Princeton, and averting [a] CON for Raleigh General 
Hospital.'' A June 22, 2001 document entitled ``Open Heart Strategy 
Meeting'' said that one of CAMC's goals was to ``[p]revent open heart 
programs as our first priority; delay (except for Mercer County); 
maintain; then have the configuration we want for open heart services. 
If Parkersburg becomes inevitable, support Bluefield; absolutely not 
Beckley.'' (emphasis in original). Similarly, an August 2001 document 
entitled ``Cardiovascular Network Project Draft Report'' said that a 
possible market strategy for the ``Close-in South'' area was to ``fight 
[a] Beckley CON * * * [and] support [a] Princeton/Bluefield CON as a 
blocking strategy.''
    14. If Raleigh General did obtain a cardiac-surgery CON, CAMC 
planned to compete more aggressively for cardiac-surgery patients in 
the Raleigh County area. One CAMC document says that CAMC planned to 
respond with ``aggressive strategies'' to compete with a Raleigh 
General cardiac-surgery program including placing CAMC cardiologists in 
Berkley. A CAMC executive has said that if Raleigh General ``were 
granted a certificate of need, we would be down there--it's only an 
hour away--we would be down there advertising and facilitating and 
probably even putting physicians down there to ensure that those 
patients came to Charleston instead of going to Raleigh General.'' CAMC 
did not plan to take similar measures in response to a new cardiac-
surgery program in Mercer County.
    15. In February 2002, CAMC initiated talks with HCA about a 
possible agreement relating to cardiac-surgery services in West 
Virginia. CAMC pursued an agreement with HCA to ensure that HCA would 
not develop a cardiac-surgery program at Raleigh General.
    16. During these talks, HCA told CAMC that it desired CAMC's help 
to develop a cardiac-surgery program at HCA's St. Joseph's Hospital in 
Parkersburg, West Virginia and a therapeutic cardiac-catherization 
program at HCA's St. Francis Hospital in Charleston, West Virginia.
    17. HCA's desire to obtain CAMC's support for the St. Joseph's and 
St. Francis programs presented CAMC with a strategic opportunity. CAMC 
realized that its support for the HCA St. Joseph's and St.Francis 
programs would make it significantly more likely that HCA would be able 
to attain the necessary CONs for those programs from the WVHCA. In 
negotiating the MOU, CAMC was able to induce HCA to agree not to 
develop a cardiac-surgery program at Raleigh General by making that 
non-competition agreement a condition for its support of HCA's St. 
Joseph's and St. Francis programs.
    18. During the MOU negotiations, CAMC also rejected proposed 
language that would have reduced the time period during which Raleigh 
General could not develop a cardiac-surgery program.
    19. CAMC's and HCA's talks resulted in the CAMC-HCA MOU, section 3 
of which prevented HCA from developing a cardiac-surgery program at 
Raleigh General by committing HCA to develop a single cardiac surgery 
program in the Southern West Virginia region at either Princeton 
Community Hospital or BRMC for a period of three years. In exchange for 
HCA's agreement not to compete in Raleigh County, CAMC agreed to 
provide valuable support for HCA's efforts to provide cardiac-surgery 
services at HCA's St. Joseph's Hospital in Parkersburg and therapeutic 
cardiac-catheterization services at HCA's St. Francis Hospital in 
Charleston. CAMC did not need HCA's agreement not to compete in Raleigh 
County in order to agree to support HCA's programs at St. Joseph's and 
St. Francis.
    20. CAMC wanted a program at Bluefield rather than Raleigh General 
because, as one CAMC executive stated, ``Raleigh General would pull 
more patients from Charleston Area Medical Center than a program in 
Bluefield.'' Another CAMC executive testified that the basic reason why 
CAMC obtained HCA's agreement not to apply for a CON at Raleigh General 
was because of the threat to CAMC of losing open-heart surgery patients 
coming from southern West Virginia.
B. Raleigh General Has Been a Significant Potential Competitor in 
Cardiac-Surgery Services
    21. As discussed below, until Raleigh General signed the CAMC-HCA 
MOU, Raleigh General had been a significant potential competitor to 
CAMC in the market for cardiac-surgery services. Raleigh General has 
maintained a consistent and active interest in pursuing, and taken 
steps to secure, a cardiac-surgery program.
    22. Hospitals often provide diagnostic cardiac-catherization 
services as a precursor to providing cardiac-surgery services. Raleigh 
General received a CON to provide diagnostic cardiac-catheterization 
services in January 1987 and has provided those services at all times 
relevant to the anticompetitive conduct alleged in this Complaint.
    23. Raleigh General sought to offer cardiac-surgery services as 
early as July 1992, when it applied for a cardiac-surgery CON with the 
WVHCA. The WVHCA denied that application in July 1995 because Raleigh 
General was unable to show that it would perform the minimum number of 
procedures required by the then-existing state standards for granting 
cardiac-surgery CONs.
    24. In 1999, representatives from Raleigh General continued their 
pursuit of a cardiac-surgery program by exploring the possibility of a 
joint venture with Princeton Community Hospital to provide cardiac-
surgery services.
    25. Raleigh General and Princeton Community Hospital engaged a 
consultant to determine whether Raleigh General or Princeton Community 
Hospital was a better location for a cardiac-surgery program. In a 
January 2000 report, the consultant concluded that ``[based upon the 
market, geographical location, physician support and referral patterns 
and clinical infrastructure and culture, Raleigh General Hospital is 
the recommended location for the cardiovascular surgical program.'' The 
two hospitals were ultimately unable to finalize a strategy for jointly 
pursuing a cardiac-surgery CON.
    26. In the period leading up to the February 2002 changes to the 
state cardiac-surgery standards, Raleigh General remained interested in 
pursuing

[[Page 9601]]

a cardiac-surgery program and actively lobbied state officials to 
change the standards in such a way as to enable it to qualify for a 
cardiac-surgery CON.
    27. After the February 2002 standards were revised to make it 
easier to obtain a cardiac-surgery CON, Raleigh General did not apply 
for a cardiac-surgery CON--despite its earlier active pursuit of such a 
CON--but instead entered into the CAMC-HCA MOU, which precluded Raleigh 
General from applying for a CON for three years.
    28. In January 2003, BRMC and Princeton Community Hospital entered 
into two agreements that allocated cardiac surgery and cancer programs 
between themselves in violation of Section 1 of the Sherman Act, 15 
U.S.C. 1. Also in January 2003, BRMC applied for a cardiac-surgery CON 
with CAMC and Princeton Community Hospital as joint applicants. The 
WVHCA approved BRMC's application in August 2003. Despite receiving a 
CON to offer cardiac-surgery services, BRMC has yet to begin offering 
cardiac-surgery services.
    29. The United States challenged the BRMC and Princeton Community 
Hospital agreements in United States v. Bluefield Regional Medical 
Center, Inc., Civil Action No. 1:05-0234 (S.D.W.V.) (Chief Judge 
Faber). The Final Judgment in that matter, entered on September 12, 
2005, annulled BRMC's and Princeton Community Hospital's market-
allocation agreements and enjoined the hospitals from agreeing to 
allocate any cancer or cardiac-surgery service, market, territory, or 
customer.
C. Future Anticompetitive Effects
    30. The incentives that led CAMC to seek HCA's agreement not to 
compete at Raleigh General continue to exist today and may motivate 
CAMC to pursue similar anticompetitive agreements that would restrict 
or prevent potential or actual competition from area hospitals. CAMC 
remains the dominant provider of cardiac-surgery services for Kanawha, 
Raleigh, and other nearby counties and stands to lose significant 
patient revenue if area hospitals develop cardiac-surgery programs or 
expand existing programs. To protect this revenue, CAMC will likely 
oppose any future efforts of nearby hospitals to develop competing 
cardiac-surgery programs.
    31. In particular, CAMC could again seek an agreement with HCA not 
to pursue a CON for cardiac surgery at Raleigh General. Raleigh General 
has retained an active interest in developing cardiac-surgery services 
in Beckley and continues to believe that Beckley is a better location 
for a cardiac-surgery center than Mercer County because Beckley is more 
accessible for the greatest number of patients. In the event that BRMC 
does not pursue its cardiac-surgery program or the State of West 
Virginia again amends its CON standards to permit another cardiac-
surgery program in southern West Virginia, Raleigh General would again 
be a significant potential competitor for such a program. Fearing the 
loss of revenue from such a competing program, CAMC could again seek to 
prevent HCA from establishing a cardiac-surgery program at Raleigh 
General.
    32. CAMC's use of the CAMC-HAC MOU to eliminate Raleigh General as 
a potential competitor prevented benefits that would have resulted from 
a cardiac-surgery program at Raleigh General. Those potential benefits 
to patients, managed-care plans, and employers include increased price 
competition resulting in lower prices, improved quality of cardiac-
surgery services, the ability to choose Raleigh General as a provider 
of cardiac-surgery services, and increased innovation in cardiac-
surgery services.

VII. Violation Alleged

    33. The United States incorporates paragraphs 1 through 32.
    34. The agreement between CAMC and HCA, embodied in the CAMC-HCA-
MOU, constituted an agreement not to compete between an existing 
competitor and the most significant potential competitor after the 
February 2002 revisions to West Virginia's CON laws. The agreement 
unreasonably and unlawfully restrained trade and commerce in violation 
of Section 1 of the Sherman, Act 15 U.S.C. Sec.  1.

VIII. Request for Relief

    35. The United States requests that:
    (a) The Court declare that section 3 of the CAMC-HCA-MOU violates 
Section 1 of the Sherman Act, 15 U.S.C. 1;
    (b) The Court enter an order enjoining the Defendant from
    (1) Enforcing section 3 of the CAMC-HCA-MOU;
    (2) Entering into, continuing, maintaining, or enforcing any 
agreement to allocate any cardiac-surgery service, market, territory, 
or customer; and
    (3) Entering into, continuing, maintaining, or enforcing any 
agreement that
    (i) Prohibits or restricts a health-care facility from obtaining a 
certificate of need relating to cardiac surgery or
    (ii) Otherwise prohibits or restricts a health-care facility from 
taking actions related to providing cardiac surgery;
    (c) The United States recover the cost of this action; and
    (d) The United States have such other relief as the Court may deem 
just and proper to redress, and prevent recurrence of, the alleged 
violation and to dissipate the anticompetitive effects of the 
Defendant's actions.

Dated: February 6, 2006.

    For the Plaintiff United States of America

Thomas O. Barnett,
Acting Assistant Attorney General.

J. Bruce McDonald,
Deputy Assistant Attorney General.

Dorothy B. Fountain,
Deputy Director of Operations.

Mark J. Botti,
Chief, Litigation I Section.

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

Charles T. Miller,
Acting United States Attorney.

By: Kelly R. Curry,
Assistant United States Attorney.

Certificate of Service

    I hereby certify that I served a copy of the foregoing Complaint, 
Competitive Impact Statement, Explanation of Consent Decree Procedures, 
Stipulation, and Proposed Final Judgment via first class, United States 
mail on February 6, 2006.

For Defendant Charleston Area Medical center, Inc.,

Robert McCann, Esq.
Gardner Carton & Douglas, LLP, 1301 K Street, NW., Suite 900, East 
Tower, Washington, DC 20005.

Kelly R. Curry,
Assistant United States Attorney.

Final Judgment

    Whereas, Plaintiff, the United States of America, filed its 
Complaint on February 6, 2006 alleging that Defendant, Charleston Area 
Medical Center, Inc. entered into an agreement with HCA Inc. in 
violation of Section I of the Sherman Act, 15 U.S.C. 1, and Plaintiff 
and Defendant, 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, Defendant agrees to be bound by this Final Judgment 
pending its approval by this Court;
    And Whereas, the essence of this Final Judgment is to enjoin the 
Defendant from entering into

[[Page 9602]]

agreements that prevent actual or potential competitors from providing 
certain medical services;
    And Whereas, the United States requires Defendant to agree to 
certain procedures and prohibitions for the purpose of preventing 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 Defendant and subject matter 
of this action. The Complaint states a claim upon which relief may be 
granted against Defendant under Section 1 of the Sherman Act, as 
amended (15 U.S.C. 1).

II. Definitions

    As used in this Final Judgment (whether or not such terms are 
capitalized herein):
    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 as necessary to obtain 
patient care that is unavailable at the transferring health-care 
facility shall not be deemed an agreement within the scope of this 
Final Judgment.
    B. ``CAMC'' means Defendant, Charleston Area Medical Center, Inc., 
a non-profit corporation organized and existing under the laws of the 
State of West Virginia with its headquarters in Charleston, Virginia, 
its successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships and joint ventures, and their directors, 
officers, managers, agents, and employees.
    C. ``CAMC-HCA MOU'' means the document dated April 17, 2002 between 
CAMC and HCA entitled ``Memorandum of Understanding.''
    D. ``Cardiac Surgery'' means surgery on the heart or major blood 
vessels of the heart (including both open and closed heart surgery ) 
and therapeutic cardiac catheterization. This term includes any 
service, equipment, technology, or modality relating to the provision 
of cardiac surgery, but does not include any diagnostic cardiac service 
(including diagnostic cardiac catheterization). This term does not 
include any service, equipment, technology, or modality generally 
provided to hospital patients, such as laboratory, nursing, or social 
services.
    E. ``Certificate of Need'' means certificate of need as recognized 
by the State of West Virginia (W. Va. Code Sec.  16-2D-1 et seq.).
    F. ``HCA'' means HCA Inc., a for-profit corporation organized and 
existing under the laws of the State of Delaware with its headquarters 
in Nashville, Tennessee, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    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. ``Right of First Offer'' means an agreement in which a health-
care facility grants CAMC the exclusive right, for a period not 
exceeding ninety days in duration, to make and negotiate an offer to 
provide cardiac-surgery services under a joint venture or other 
cooperative arrangement with such facility, provided that the health-
care facility is not (a) obligated to accept any offer from CAMC and 
(b) prohibited from providing cardiac-surgery services in the event it 
declines an offer from CAMC.
    I. The terms ``and'' and ``or'' have both conjunctive and 
disjunctive meanings.

III. Applicability

    This Final Judgment applies to CAMC, 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. CAMC is enjoined from enforcing all or any part of section 3 of 
the CAMC-HCA MOU, which section is entitled ``Cooperative Development 
of Cardiac Surgery in the Southern West Virginia Region.'' CAMC's 
obligations under this Final Judgment supersede its obligations under 
section 3 of the CAMC-HCA MOU, and CAMC shall not object to the 
performance of its obligations under this Final Judgment on the grounds 
that those obligations would cause it to breach section 3 of the MOU.
    B. Without prior notice to and prior written approval of the United 
States, which approval will not be withheld or delayed unreasonably, 
CAMC is enjoined from, in any manner, directly or indirectly, entering 
into, continuing, maintaining, or enforcing any agreement with a 
health-care facility that (1) Allocates any cardiac-surgery service, 
market, territory, or customer; (2) prohibits or restricts such health-
care facility from applying for a certificate of need to offer, 
maintain, or expand cardiac-surgery services; or (3) otherwise 
prohibits or restricts such health-care facility from providing cardiac 
surgery. Nothing in this Final Judgment, however, shall require CAMC to 
provide separate notice with respect to any agreement for which notice 
is given to the United States pursuant to the Hart-Scott-Rodino 
Antitrust Improvements Act of 1976, as amended, 15 U.S.C. 18a.

V. Permitted Conduct

    Nothing in this Final Judgment shall prohibit CAMC from:
    A. Entering into, continuing, maintaining, or enforcing an 
agreement for a right of first offer;
    B. Agreeing to collaborate with a health-care facility to enable 
such facility to provide therapeutic cardiac catherization services 
pursuant to a Demonstration Pilot Project, as authorized by and 
approved under the certificate of need standards of the State of West 
Virginia;
    C. Lobbying petitioning, or otherwise seeking to influence the 
decisions or actions of any member or agency of the legislative or 
executive branches of the government of the State of West Virginia or 
the United States;
    D. Opposing the certificate of need application or rate filing of 
another health-care facility relating to the provision of cardiac-
surgery services or formally challenging the decision to approve such a 
certificate of need or rate filing; or
    E. Making public or private statements about the provision of 
cardiac-surgery services.

VI. 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 Defendant, be permitted:
    1. Access during Defendant's office hours to inspect and copy, or 
at the United States' option, to require that

[[Page 9603]]

Defendant 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, Defendant's 
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 Defendant.
    B. Upon the written request of a duly authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, 
Defendant shall submit written reports and interrogatory responses, 
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 Defendant furnishes information or documents to 
the United States, Defendant represents and identifies 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 marks 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 Defendant 
ten calendar days notice prior to divulging such material in any legal 
proceeding (other than a grand jury proceeding).

VII. 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.

VIII. Expiration of Final Judgment

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

IX. Correspondence

    CAMC 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.

X. 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. 16

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United States District Judge

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 February 6, 2006, the United States field a civil antitrust 
Complaint alleging that Charleston Area Medical Center, Inc. (CAMC) had 
violated Section 1 of the Sherman Act, 15 U.S.C. 1. CAMC operates the 
largest cardiac-surgery program in West Virginia, and the sixth largest 
such program in the United States, through facilities located in 
Charleston, West Virginia. HCA Inc. (HCA) owns and operates Raleigh 
General Hospital (Raleigh General), located in the city of Beckley, 
Raleigh County, West Virginia. Raleigh General is located about 55 
miles south of CAMC's cardiac-surgery facilities.
    The Complaint alleges that, in an April 17, 2002 memorandum of 
understanding (the CAMC-HCA MOU), CAMC persuaded HCa to agree not to 
develop a competing cardiac-surgery program at Raleigh General. The 
CAMC-HCA MOU unreasonably restrained competition to the detriment of 
consumers by effectively ensuring that no hospital in Raleigh County, 
West Virginia would compete with CAMC to provide cardiac-surgery 
services. With the Complaint, the United States and CAMC filed an 
agreed-upon proposed Final Judgment that prohibits CAMC from enforcing 
the anticompetitive portion of the CAMC-HCA MOU and forming new 
agreements that would reduce competition in cardiac-surgery services.
    The United States and CAMC 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. West Virginia's Certificate-of-Need Standards
    The State of West Virginia requires that a hospital obtain a 
certificate of need (``CON'') from the West Virginia Health Care 
Authority before a hospital may provide cardiac-surgery services. The 
West Virginia Health Care Authority was formerly known as the West 
Virginia Health Care Cost Review Authority (collectively, ``WVHCA)''.
    On February 22, 2002, West Virginia revised the state standards for 
qualifying for a cardiac-surgery CON. The4se new standards (the 
February 2002 standards) made it easier for hospitals to qualify for a 
cardiac-surgery CON by lowering the minimum number of medical 
procedures that a hospital needed to demonstrate that it had performed 
or would perform.
    The February 2002 standards were structured in a way such that the 
WVHCA would most likely approve one and only one location for a 
cardiac-surgery program in a ``''Southern Western Virginia region'' 
defined to consist of six counties. At this time, no hospital from this 
region competed against CAMC in offering cardiac surgery services.
    Under the February 202 standards, the only likely location of a new 
cardiac-surgery program in the Southern West Virginia region was at 
eigther Raleigh General, Princeton Community Hospital Association, Inc. 
(Princeton Community Hospital), or Bluefield Regional Medical Center, 
Inc. (BRMC). Princeton Community Hospital is located in Princeton, 
Mercer County, West Virginia, about 40 miles south of Raleigh General. 
BRMC is located in Bluefield, Mercer County, West Virginia, abuot 50 
miles south of Raleigh General.
B. CAMC Acted To Prevent Raleigh Genearl From Developing a Competing 
Cardiac-Surgery Program
    After the February 2002 standards were issued, CAMC recognized that 
the WVHCA would likely approve a new

[[Page 9604]]

cardiac-surgery program to be located either in Raleigh County at 
Raleigh General or in Mercer Cuonty at BRMC or Princeton Community 
Hospital. CAMC wated the new cardiac-surgery program to be located in 
Mercer County and not at Raleigh General because a program in Raleigh 
County wuold compete with and take revenue away from CAMC to a much 
greater extent than a program in Mercer County.
    In February 2002, CAMC initiated talks with HCA about a possible 
agreement relating to cardiac-surgery services in West Virginia. A 
significant reason why CAMC pursued an agreement with HCA was to ensure 
that HCA would not develop a Cardiac-surgery program at Raleigh 
General. During the MOU negotiations with HCA, CAMC insisted on 
including language in the CAMC-HCA MOU that was designed to prevent 
Raleigh General from developing a cardiac-surgery program. CAMC also 
rejected proposed language that would have reduced the time period 
during which Raleigh General could not develop a cardiac-surgery 
program.
    CAMC's and HCA's discussions resulted in the CAMC-HCA MOU, which 
prevented HCA from developing a cardiac-surgery program at Raleigh 
General by committing HCA to develop a single cardiac-surgery program 
in the Southern West Virginia region at either Princeton Community 
Hospital or BRMC for a period of three years. In exchange for HCA's 
agreement not to compete in Raleigh County, CAMC agreed to provide 
valuable support for HCA's efforts to provide cardiac-surgery services 
at HCA's St. Joseph's Hospital in Parkersburg, West Virginia and 
therapeutic cardiac-catheterization services at HCA's St. Francis 
Hospital in Charleston, West Virginia. CAMC did not need HCA's 
agreement not to compete in Raleigh County in order to agree to support 
HCA's programs at St. Joseph's and St. Francis.
    CAMC wanted a program at BRMC rather than Raleigh General because, 
as one CAMC executive stated, ``Raleigh General would pull more 
patients from Charleston Area Medical Center than a program in 
Bluefield.'' Another CAMC executive testified that the basic reason why 
CAMC obtained HCA's agreement not to apply for a CON at Raleigh General 
was because of the threat to CAMC of losing open-heart surgery patients 
coming from southern West Virginia.
C. Raleigh General Had Been a Significant Potential Competitor in 
Cardiac-Surgery Services
    Until Raleigh General signed the CAMC-HCA MOU, Raleigh General had 
been a significant potential competitor to CAMC in the market for 
cardiac-surgery services. Raleigh General had maintained a consistent 
and active interest in pursuing, and had taken steps to pursue, a 
cardiac-surgery program.
    Raleigh General sought to offer cardiac-surgery services as early 
as July 1992, when it applied for a cardiac-surgery CON with the WVHCA. 
The WVHCA denied that application in July 1995 because Raleigh General 
was unable to show that it would perform the minimum number of 
procedures required by the then-existing state standards for granting 
cardiac-surgery CONs.
    Despite the WVHCA's denial of Raleigh General's CON application, 
representatives from Raleigh General continued their pursuit of a 
cardiac-surgery program by exploring the possibility of a joint venture 
with Princeton Community Hospital to provide cardiac-surgery services. 
Raleigh General and Princeton Community Hospital engaged a consultant 
to determine whether Raleigh General or Princeton Community Hospital 
was a better location for a cardiac-surgery program. In a January 2000 
report, the consultant concluded that ``[b]ased upon the market, 
geographical location, physician support and referral patterns and 
clinical infrastructure and culture, Raleigh General Hospital is the 
recommended location for the cardiovascular surgical program.'' The two 
hospitals were ultimately unable to finalize a strategy for jointly 
pursuing a cardiac-surgery CON.
    In the period leading up to the February 2002 changes to the state 
cardiac-surgery standards, Raleigh General remained interested in 
pursuing a cardiac-surgery program and actively lobbied state officials 
to change the standards in such a way as to enable it to qualify for a 
cardiac-surgery CON. After the February 2002 standards were revised to 
make it easier to obtain a cardiac-surgery CON, Raleigh General did not 
apply for a cardiac-surgery CON--despite its earlier active pursuit of 
such a CON--but instead entered into the CAMC-HCA MOU, which precluded 
Raleigh General from applying for a cardiac-surgery CON for three 
years.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment would enjoin CAMC from enforcing the 
portion of the CAMC-HCA MOU that prevents HCA from developing a 
cardiac-surgery program in Raleigh County. Unless CAMC gives prior 
notice to and receives the prior written approval of the United States, 
CAMC also would be enjoined from entering into, continuing, 
maintaining, or enforcing any agreement with a health-care facility 
that (1) Allocates any cardiac-surgery service, market, territory, or 
customer; (2) prohibits or restricts such health-care facility from 
applying for a certificate of need to offer, maintain, or expand 
cardiac-surgery services; or (3) otherwise prohibits or restricts such 
health-care facility from providing cardiac surgery. The effect of the 
proposed Final Judgment would be to restore competition between CAMC 
and Raleigh General that the CAMC-HCA MOU eliminated, and to prevent 
CAMC from engaging in similar anticompetitive 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 attorney's 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

[[Page 9605]]

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 defendant CAMC. 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 
between CAMC and HCA.

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 of 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. 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 
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 balance 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 F.3d 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, 151 (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 prosecutorial 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

[[Page 9606]]

APPA that were considered by the United States in formulating the 
proposed Final Judgment.

Dated: February 6, 2006.

Respectfully submitted,

Peter J. Mucchetti,
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.

Charles T. Miller,
Acting United States Attorney.

Kelly R. Curry,
Assistant United States Attorney.
[FR Doc. 06-1696 Filed 2-23-06; 8:45am]
BILLING CODE 4410-11-M