United States v. UnitedHealth Group Incorporated; Response to Public Comments on the Proposed Final Judgment, 49834-49894 [E8-17366]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 73, Number 164 (Friday, August 22, 2008)]
[Notices]
[Pages 49834-49894]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-17366]



[[Page 49833]]

-----------------------------------------------------------------------

Part IV





Department of Justice





-----------------------------------------------------------------------



Antitrust Division



-----------------------------------------------------------------------



 United States v. UnitedHealth Group Incorporated; Response to Public 
Comments on the Proposed Final Judgment; Notice

Federal Register / Vol. 73, No. 164 / Friday, August 22, 2008 / 
Notices

[[Page 49834]]



DEPARTMENT OF JUSTICE

Antitrust Division


United States v. UnitedHealth Group Incorporated; Response to 
Public Comments on the Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes the public comments 
received on the proposed Final Judgment in United States v. 
UnitedHealth Group Incorporated, Civil Action No. 1:08-cv-322, and the 
response to the comments. On February 25, 2008, the United States filed 
a Complaint alleging that the merger of UnitedHealth Group Incorporated 
(``United'') and Sierra Health Services, Inc. (``Sierra'') violated 
Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed Final 
Judgment, filed on February 25, 2008, requires the combined company to 
divest United's individual Medicare Advantage line of business in the 
Las Vegas, Nevada area. Public comment was invited within the statutory 
60-day comment period. Copies of the Complaint, proposed Final 
Judgment, Competitive Impact Statement, Public Comments, the United 
States' Response to the Comments, and other papers are currently 
available for inspection in Department of Justice, Antitrust Division, 
Antitrust Documents Group, 450 5th Street, NW., Suite 1010, Washington, 
DC 20530, telephone: (202) 514-2481 and the Office of the Clerk of the 
United States District Court for the District of Columbia, 333 
Constitution Avenue, NW., Washington, DC 20001.
    Copies of any of these materials may be obtained upon request and 
payment of a copying fee.

Patricia A. Brink,
Deputy Director of Operations, Antitrust Division.

    In the matter of: United States District Court for the District 
of Columbia; United States of America, Plaintiff, v. UnitedHealth 
Group Incorporated and Sierra Health Services, Inc., Defendants.

[Case No. 1:08-cv-322-ESH]

Response of Plaintiff United States to Public Comments

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act (``APPA'' or ``Tunney Act''), 15 U.S.C. 16(b)-(h), the 
United States hereby files the four public comments that the United 
States received concerning the proposed Final Judgment in this case and 
the United States' response to those comments. The United States will 
move the Court for entry of the proposed Final Judgment after the 
comments and this Response have been published in the Federal Register, 
pursuant to 15 U.S.C. 16(d).
    On February 25, 2008, the United States filed the Complaint in this 
matter alleging that the proposed merger of UnitedHealth Group 
Incorporated (``United'') and Sierra Health Services, Inc. (``Sierra'') 
would violate Section 7 of the Clayton Act, 15 U.S.C. 18. 
Simultaneously with the filing of the Complaint, the United States 
filed a proposed Final Judgment and a Hold Separate and Asset 
Preservation Stipulation and Order (``Stipulation'') signed by the 
United States and Defendants consenting to the entry of the proposed 
Final Judgment after compliance with the requirements of the Tunney 
Act.\1\ Pursuant to those requirements, the United States filed a 
Competitive Impact Statement (``CIS'') in this Court on February 25, 
2008; published the proposed Final Judgment and CIS in the Federal 
Register on March 10, 2008, see 73 FR 12762 (2008); and published 
summaries of the terms of the proposed Final Judgment and CIS, together 
with directions for the submission of written comments relating to the 
proposed Final Judgment, in the Washington Post for seven days 
beginning on March 16, 2008 and ending on March 22, 2008, and in the 
Las Vegas Review-Journal for seven days beginning on March 8, 2008 and 
ending on March 14, 2008. The 60-day period for public comments ended 
on May 15, 2008, and the United States received the four comments 
described below and attached hereto.
---------------------------------------------------------------------------

    \1\ The merger closed on February 25, 2008. In keeping with the 
United States' standard practice, neither the Stipulation nor the 
proposed Final Judgment prohibited closing the merger. See ABA 
Section of Antitrust Law, Antitrust Law Developments 406 (6th ed. 
2007) (noting that ``[t]he Federal Trade Commission (as well as the 
Department of Justice) generally will permit the underlying 
transaction to close during the notice and comment period''). Such a 
prohibition could interfere with many time-sensitive deals and 
prevent or delay the realization of substantial efficiencies.
---------------------------------------------------------------------------

I. The United States' Investigation and the Proposed Final Judgment

    On March 11, 2007, United and Sierra entered into an agreement, 
whereby United agreed to acquire all outstanding shares of Sierra. Over 
the next eleven months, the United States Department of Justice (the 
``Department'') conducted an extensive, detailed investigation into the 
competitive effects of the proposed transaction. As part of this 
investigation, the Department obtained substantial documents and 
information from the merging parties and issued numerous Civil 
Investigative Demands to third parties. In response, the Department 
received and considered more than 2.5 million pages of material. The 
Department conducted approximately 150 interviews with customers, 
hospitals and physician groups, insurance companies, and other 
individuals with knowledge of the industry.
    After conducting a detailed analysis of the acquisition, the 
Department concluded that the combination of United and Sierra likely 
would substantially lessen competition in the Las Vegas, Nevada area 
(consisting of Clark and Nye Counties, Nevada) in a product market no 
broader than the sale of Medicare Advantage health-insurance plans to 
senior citizens and other Medicare-eligible individuals. As defined by 
federal law, Medicare Advantage plans consist of Medicare Advantage 
health maintenance organization plans (``MA-HMO''), Medicare Advantage 
preferred provider organization plans (``MA-PPO''), and Medicare 
Advantage private fee-for-service plans (``MA-PFFS''). See 42 U.S.C. 
1395w-21(a)(2). United and Sierra together would have accounted for 
approximately 94 percent of the total enrollment in Medicare Advantage 
plans in the Las Vegas area, which accounts for approximately $840 
million in annual commerce. United markets and sells its Medicare 
Advantage products under the Secure Horizons and AARP brands. Sierra 
markets and sells its Medicare Advantage products under the Senior 
Dimensions, Sierra Spectrum, Sierra Nevada Spectrum, and Sierra Optima 
Select brands.
    As more fully explained in the CIS, the Stipulation and proposed 
Final Judgment in this case are designed to preserve competition in the 
sale of Medicare Advantage health-insurance plans in the Las Vegas area 
by requiring United to divest its individual Medicare Advantage line of 
business in the Las Vegas area. The Stipulation and proposed Final 
Judgment also require United to take several steps to assist the 
acquirer in providing prompt and effective competition in the Medicare 
Advantage market, including assisting the acquirer to enter into 
agreements that will allow members of United's Medicare Advantage plans 
to have continued access to substantially all of United's provider 
network of physicians, hospitals, ancillary service providers, and 
other health care providers on terms no less favorable than United's 
existing agreements. United must also provide transition support 
services for medical-claims

[[Page 49835]]

processing, appeals and grievances, call-center support, enrollment and 
eligibility services, access to form templates, pharmacy services, 
disease management, Medicare risk-adjustment services, quality-
assurance services, and such other services as are reasonably necessary 
for the acquirer to operate the Divestiture Assets.
    On February 25, 2008, United and Humana Health Plan Inc. 
(``Humana'') signed an agreement providing for Humana to purchase 
United's Las Vegas Medicare Advantage line of business for 
approximately $185 million. After receiving approval from the Centers 
for Medicare and Medicaid Services (``CMS'') and the Nevada Division of 
Insurance, Humana completed the acquisition of United's Las Vegas 
Medicare Advantage line of business on May 1, 2008. In the Department's 
judgment, the divestiture of United's Las Vegas Medicare Advantage line 
of business to Humana, along with the other requirements contained in 
the Stipulation and proposed Final Judgment, are sufficient to 
eliminate the anticompetitive effects identified in the Complaint.

II. Standard of Judicial Review

    Upon the publication of the Comment and this Response, the United 
States will have fully complied with the Tunney Act and will move for 
entry of the proposed Final Judgment as being ``in the public 
interest'' 15 U.S.C. 16(e)(l), as amended.
    The Tunney Act states that, 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)-(B); see generally United States v. AT&T Inc., 
541 F. Supp. 2d 2, 6 n.3 (D.D.C. 2008) (listing factors that the Court 
must consider when making the public-interest determination); United 
States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1, 11 (D.D.C. 2007) 
(concluding that the 2004 amendments to the Tunney Act ``effected 
minimal changes'' to scope of review under the Tunney Act, leaving 
review ``sharply proscribed by precedent and the nature of Tunney Act 
proceedings'').\2\
---------------------------------------------------------------------------

    \2\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for courts to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
Sec.  16(e) (2004), with 15 U.S.C. Sec.  16(e)(1) (2006).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA, a court considers, 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). 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). 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''); United States v. Gillette Co., 406 F. Supp. 713, 716 (D. 
Mass. 1975) (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 government is entitled to broad discretion to settle with 
defendants within the reaches of the public interest. AT&T Inc., 541 F. 
Supp. 2d at 6. In making its public-interest determination, a district 
court ``must accord deference to the government's predictions about the 
efficacy of its remedies, and may not require that the remedies 
perfectly match the alleged violations.'' SBC Commc'ns, 489 F. Supp. 2d 
at 17; see also Microsoft, 56 F.3d at 1461 (noting the need for courts 
to be ``deferential to the government's predictions as to the effect of 
the proposed remedies''); United States v. Archer-Daniels-Midland Co., 
272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court should grant 
due respect to the United States' prediction as to the effect of 
proposed remedies, its perception of the market structure, and its 
views of the nature of the case).
    Court approval of a consent decree requires a standard more 
flexible and less strict than that appropriate to court adoption of a 
litigated decree following 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. Am. Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982) 
(citations omitted) (quoting United States v. Gillette Co., 406 F. 
Supp. 713, 716 (D. Mass. 1975)), 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). To 
meet this standard, the United States ``need only provide a factual 
basis for concluding that the settlements are reasonably adequate 
remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17.
    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, rather than 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. As this Court recently confirmed in SBC Communications,

[[Page 49836]]

courts ``cannot look beyond the complaint in making the public interest 
determination unless the complaint is drafted so narrowly as to make a 
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments to the Tunney Act, Congress made clear its 
intent to preserve the practical benefits of utilizing consent decrees 
in antitrust enforcement, adding the unambiguous instruction that 
``[n]othing 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). The amendments codified what 
Congress intended when it passed the Tunney Act in 1974, as Senator 
Tunney then explained: ``[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). Rather, the procedure for the public-interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\3\
---------------------------------------------------------------------------

    \3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977) (``Absent 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.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6 
(1973) (``Where the public interest can be meaningfully evaluated 
simply on the basis of briefs and oral arguments, that is the 
approach that should be utilized.'').
---------------------------------------------------------------------------

III. Summary of Public Comments and the United States' Response

    During the 60-day comment period, the United States received 
comments from the Service Employees International Union Local 1107 (the 
``SEIU comment''), the American Medical Association, Nevada State 
Medical Association, and the Clark County Medical Society 
(collectively, the ``AMA comment''), the Honorable Nydia M. Velazquez, 
Chairwoman, United States House of Representatives Committee on Small 
Business (the ``Velazquez comment''), and the Honorable Chris 
Giunchigliani, Commissioner, Board of Commissioners--Clark County, 
Nevada (the ``Giunchigliani comment''). Those comments are attached to 
this Response.
    After reviewing the comments, the United States has determined that 
the proposed Final Judgment remains in the public interest. The 
commenters raise two main concerns: (A) that the United States should 
have alleged and remedied harm to competition in additional product 
markets other than the Medicare Advantage market alleged in the United 
States' Complaint and (B) that the proposed Final Judgment does not 
adequately remedy the harms to competition alleged in the Complaint. 
The United States addresses these concerns below.

A. Comments That the United States Should Have Alleged and Remedied 
Additional Competitive Concerns

1. Summary of Comments
    Each of the commenters argue that the United States should have 
alleged and remedied competitive concerns that are not addressed in the 
Complaint in this matter. They argue that the United States should have 
pursued a case of harm to competition in a commercial health-insurance 
market in Clark County, Nevada. (AMA comment at 12; SEIU comment at 4; 
Velazquez comment at 3; Giunchigliani comment at 1-2). The commenters 
also express concern that the United-Sierra merger will harm 
competition in the sale of various types of commercial health 
insurance, such as the provision of HMO policies, HMO and PPO policies, 
and the provision of commercial insurance to employers with 50 or fewer 
employees. (AMA comment at 12; SEIU comment at 4; Velazquez comment at 
4; Giunchigliani comment at 1).
    The AMA and Velazquez also argue that the United States should have 
alleged that the transaction would harm physicians and sought an 
appropriate remedy. They maintain that the merged company will control 
a sufficient share of the purchases for physicians services in Clark 
County such that the merged company will be able to reduce payments to 
physicians below competitive levels. (AMA comment at 5; Velazquez 
comment at 4). Similarly, the SEIU argues that the merged company will 
control a sufficient share of purchases of hospital services such that 
the merged company will be able unilaterally to reduce reimbursement 
rates to hospitals. (SEIU comment at 4). The SEIU argues that such 
lower reimbursement rates to hospitals will result in higher patient-
to-nurse ratios and place patient safety and quality of care in 
jeopardy. (SEIU comment at 3-4).
2. The United States' Response
    The comments that the United States should have alleged harm to 
competition for the sale of various types of health insurance or for 
the purchase of physician or hospital services, which are not addressed 
in the Complaint, are outside the scope of this APPA proceeding. The 
Department's decision to allege a harm in a specific market is based on 
a case-by-case analysis that varies depending on the particular 
circumstances of each product and geographic market The Department 
investigated the transaction's potential competitive effects on each of 
the types of health insurance identified by the commentators, and on 
the purchase of physician and hospital services, and concluded that it 
should not allege harm in these markets. As explained by this Court, in 
a Tunney Act proceeding, the district court should not second-guess the 
prosecutorial decisions of the Department regarding the nature of the 
claims brought in the first instance; ``rather, the court is to compare 
the complaint filed by the United States with the proposed consent 
decree and determine whether the proposed decree clearly and 
effectively addresses the [anticompetitive harms initially 
identified.'' United States v. Thomson Corp., 949 F. Supp 907, 913 
(D.D.C. 1996); accord, Microsoft, 56 F.3d at 1459 (in APPA proceeding, 
``district court is not empowered to review the actions or behavior of 
the Department of Justice; the court is only authorized to review the 
decree itself''); BNS, 858 F.2d at 462-63 (``the APPA does not 
authorize a district court to base its public interest determination on 
antitrust concerns in markets other than those alleged in the 
government's complaint''). This court has held that ``a district court 
is not permitted to ``reach beyond the complaint to evaluate claims 
that the government did not make and to inquire as to why they were not 
made.' '' SBC Commc'ns, 489 F. Supp. 2d at 14 (quoting Microsoft, 56 
F.3d at 1459) (emphasis in original). Nor does the fact that the State 
of Nevada obtained terms of settlement different from those obtained by 
the United States alter the ordinary Tunney Act standard of review.
    The AMA's contention that the 2004 Amendments to the Tunney Act 
overruled precedent in this court and require a more extensive review 
of the United States' exercise of its prosecutorial judgment conflicts 
with this Court's holding in SBC Communications, supra. (AMA

[[Page 49837]]

comment at 4). In SBC Communications, this Court held that ``a close 
reading of the law demonstrates that the 2004 amendments effected 
minimal changes, and that this Court's scope of review remains sharply 
proscribed by precedent and the nature of [APPA] proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11. This Court continued that because 
``review [under the 2004 amendments] is focused on the `judgment,' it 
again appears that the Court cannot go beyond the scope of the 
complaint.'' Id. The 2004 amendments to the APPA, as interpreted and 
applied by this Court in SBC Communications, require the Court to 
evaluate the effect of the ``judgment upon competition'' in a Medicare 
Advantage market in the Las Vegas area. 15 U.S.C.16(e)(1)(b). Because 
the United States did not allege that the United's acquisition of 
Sierra would cause harm in additional markets, it is not appropriate 
for the Court to seek to determine whether the acquisition will cause 
anticompetitive harm in such markets.

B. Comment That the Proposed Final Judgment Does Not Adequately Address 
the Harms to Competition Alleged in the Complaint

1. Summary of Comment
    The AMA states that the remedies in the proposed Final Judgment are 
inadequate to maintain competition in the sale of Medicare Advantage 
health-insurance plans in the Las Vegas area. (AMA comment at 13). The 
AMA argues in its comment that the proposed Final Judgment should 
include five additional remedies: (1) A permanent injunction on 
United's use of ``most-favored-nations'' clauses in healthcare-provider 
contracts; (2) a permanent injunction on United's use of ``all-
products'' clauses in healthcare-provider contracts; (3) a divestiture 
of United's commercial health-insurance business in Clark County; (4) a 
requirement that United convey the use of certain trademarks to the 
acquirer of the Medicare Advantage line of business for at least five 
years; and (5) the immediate use of a monitoring trustee to ensure 
compliance with the proposed Final Judgment. (AMA comment at 13-15).
2. The United States' Response
    The additional remedies proposed by the AMA are not necessary to 
ensure that competition will remain in the market alleged in the 
Complaint. Rather, the proposed Final Judgment is in the public 
interest because it is properly designed to eliminate the 
anticompetitive effects alleged in the Complaint. First, the proposed 
Final Judgment requires United to divest its entire individual Medicare 
Advantage line of business in the Las Vegas area to an acquirer 
approved by the United States and on terms acceptable to the United 
States. This line of business covers approximately 25,800 individual 
Medicare Advantage beneficiaries. As described in Section IV of the 
proposed Final Judgment, United is required to divest all tangible and 
intangible assets dedicated to the administration, operation, selling, 
and marketing of its Medicare Advantage plans to individuals in the Las 
Vegas area (``the Divestiture Assets''), including all of United's 
rights and obligations under the relevant United contracts with CMS. 
Thus, the acquirer will have the benefit of entering the Medicare 
Advantage market with United's entire individual Medicare Advantage 
line of business.
    Second, the Stipulation and Sections IV(A) and (B) of the proposed 
Final Judgment required United to divest the Divestiture Assets within 
the shortest time period reasonable under the circumstances. A quick 
divestiture has the benefits of maintaining competition that would 
otherwise be lost in the acquisition and reducing the possibility of 
dissipation of the value of the assets while the sale is pending. Per 
these requirements, United divested the Divestiture Assets to Humana on 
May 1, 2008.
    Third, the divestiture eliminates the anticompetitive effects of 
the merger by requiring United to divest the Divestiture Assets to an 
acquirer that can compete vigorously with the merged United-Sierra. The 
United States approved Humana as the acquirer of the Divestiture Assets 
because Humana is well positioned to be a strong competitor in the 
Medicare Advantage market in the Las Vegas area. Humana is an 
established health-insurance competitor with total annual revenue of 
$26 billion and a market capitalization of $8.3 billion. Humana is the 
second largest provider of Medicare Advantage plans in the nation after 
United. The company has 1.27 million Medicare Advantage enrollees 
nationwide. In the United States' judgment, Humana has the intent and 
capability (including the necessary managerial, operational, technical, 
and financial capability) to compete effectively in the sale of 
Medicare Advantage products, and the asset purchase agreements between 
United and Humana do not give United the ability to interfere with 
Humana's ability to compete effectively.
    Fourth, the proposed Final Judgment requires Defendants to assist 
the acquirer in providing prompt and effective competition in the 
Medicare Advantage market and uninterrupted care to subscribers of 
United's Medicare Advantage plans by mandating that the Defendants 
adhere to the following requirements:
     Section IV(F) requires the Defendants to assist the 
acquirer to enter into an agreement with HealthCare Partners, LLC 
(``HealthCare Partners'') that will allow members of United's Medicare 
Advantage plans to have continued access to substantially all of 
United's provider network of physicians, hospitals, ancillary service 
providers, and other health care providers on terms no less favorable 
than United's pre-existing agreement with HealthCare Partners.
     Section IV(J) requires that, at the acquirer's option, and 
subject to approval by the United States, Defendants provide transition 
support services for medical claims processing, appeals and grievances, 
call-center support, enrollment and eligibility services, access to 
form templates, pharmacy services, disease management, Medicare risk-
adjustment services, quality-assurance services, and such other 
transition services that are reasonably necessary for the acquirer to 
operate the Divestiture Assets.
     Section IV(G) of the proposed Final Judgment prohibits 
United, until March 31, 2010, from entering into agreements with 
healthcare providers who, prior to the transaction, participated in 
United's Medicare Advantage network, but did not participate in 
Sierra's.
     Sections IV(F) and (G) collectively ensure that Humana, 
but not the Defendants, will have access to these healthcare providers, 
which places Humana in the same competitive position with respect to 
the merged company as United was in with respect to Sierra prior to the 
merger of United and Sierra.
     Section IV(H) prohibits United from using the AARP brand 
for any of its individual Medicare Advantage plans in the Las Vegas 
area until March 31, 2009, and from using the SecureHorizons brands for 
any individual Medicare Advantage plans in the Las Vegas area until 
March 31, 2010. The Department has determined that Section IV(H) will 
give Humana sufficient time to establish its own brand in the Las Vegas 
area so that it can effectively compete for the provision of Medicare 
Advantage plans and reduce beneficiary confusion as to which company 
operates the Medicare Advantage plan in which the beneficiary is 
enrolled.
    In short, the United States has determined that the remedies in the 
proposed Final Judgment are sufficient to allow Humana to be an 
effective

[[Page 49838]]

competitor and maintain competition in the Las Vegas Medicare Advantage 
market. As the United States now explains, the additional remedies that 
the AMA suggests are not needed to preserve the public interest.
a. Most-Favored-Nations Clauses
    The AMA states that the proposed Final Judgment should permanently 
enjoin United from using ``most-favored-nations'' (``MFN'') clauses in 
its contracts with healthcare-providers. (AMA comment at 13). As 
explained in the affidavit of Professor David Dranove, submitted by the 
AMA, an MFN clause would require a healthcare provider to offer United 
rates no less favorable than those offered to other insurers. (AMA 
comment, Attachment A at 8.) MFNs may be anticompetitive or 
procompetitive, depending on the circumstances. Federal Trade Comm'n & 
U.S. Dept. of Justice, Improving Health Care: A Dose of Competition 
(Jul. 2004), ch. 6, p. 20, available at https://www.usdoj.gov/atr/
public/health_care/204694.htm. MFN clauses may harm competition by, 
for example, discouraging healthcare providers from aggressively 
discounting to competing insurers who might be seeking to enter or 
expand in a market. Id.
    It is not necessary to prohibit United from using MFN clauses to 
ensure that Humana can compete and maintain the premerger level of 
competition in Medicare Advantage plans. Pursuant to Section IV(F) of 
the proposed Final Judgment, on February 29, 2008, Humana entered into 
an agreement that gives Humana access to United's existing provider 
network of physicians, hospitals, ancillary service providers, and 
other healthcare providers on comparable terms to those enjoyed by 
United at the time of the acquisition. Accordingly, United could not 
use MFN clauses to attempt to prevent Humana from competing in the 
Medicare Advantage market. Of course, the United States remains free to 
challenge arty anticompetitive conduct of United, including MFN 
clauses, that the United States determines harm competition.
b. All-products Clauses
    The AMA states that the proposed Final Judgment should permanently 
enjoin United's use of ``all-products'' clauses in healthcare-provider 
contracts. (AMA comment at 13.) An all products clause is a contractual 
provision that requires a physician or other healthcare provider to 
agree to participate in the networks for every one of a health-
insurance company's products (e.g., commercial health insurance and 
Medicare Advantage) as a condition for participating in the network of 
any one of that health-insurance company's products.
    The AMA does not make clear how a prohibition on United's use of 
all-products clauses would help maintain competition in a Medicare 
Advantage market. (AMA comment at 13.) The AMA comment refers to the 
affidavit of Professor David Dranove, submitted by the AMA, for an 
explanation of how all-products clauses can be anticompetitive. (AMA 
comment, Attachment A at 8.) Although Professor Dranove states in his 
affidavit that the proposed Final Judgment should prohibit all-products 
clauses to remedy harm in a market for the purchase of physician 
services, the Complaint did not allege or identify competitive harm in 
such a market. (Attachment A at 8.) To the extent that the AMA 
advocates a prohibition on all-products clauses to remedy harm in a 
market for the purchase of physician services, such remedies are 
outside the scope of this APPA proceeding as discussed in Section 
III.A. of this Response.
c. United's Commercial Health-insurance Business in Clark County
    The AMA argues that the proposed Final Judgment should require 
United to divest its commercial health-insurance business in the Las 
Vegas area in addition to United's Medicare Advantage line of business 
because a Medicare Advantage business operating without a commercial 
component ``faces a significant risk of failure.'' (AMA comment at 13.) 
The AMA asserts that ``[t]here are significant economies of scope and 
scale that exist when both commercial and Medicare Advantage businesses 
are combined'' Id. The AMA, however, does not identify what these 
economies of scope and scale are nor why their absence creates a risk 
of failure.
    The United States has considered this issue and concluded that 
Humana has the resources needed to effectively compete for the 
provision of Medicare Advantage plans in the Las Vegas area. Further, 
even assuming that there are benefits to providing both commercial and 
Medicare Advantage products, Section IV(F) of the proposed Final 
Judgment addresses this concern by ensuring that Humana has access to 
United's existing healthcare provider network on terms no less 
favorable than United's premerger terms. That provision and the other 
provisions of the proposed Final Judgment ensure that Humana will have 
a cost structure similar to United's premerger cost structure and be an 
effective competitor that maintains competition in the Las Vegas 
Medicare Advantage market.
d. Use of Certain Trademarks
    The AMA argues that the acquirer of the Divestiture Assets should 
have use of certain United trademarks (AMA comment at 13-14). Section 
IV(H) of the proposed Final Judgment prohibits United from using the 
AARP brand for any of its individual Medicare Advantage plans in the 
Las Vegas area until March 31, 2009, and from using the SecureHorizons 
brands for any individual Medicare Advantage plans in the Las Vegas 
area until March 31, 2010. The AMA argues that the United States should 
extend these provisions to last at least five years because 
``trademarks are of particular importance to continue to secure 
customer loyalty.'' (AMA comment at 13-14.)
    The AMA, however, does not provide any facts to support its 
assertion that a longer prohibition period on United's use of the AARP 
and SecurdHorizons brands is necessary to allow Humana to be an 
effective competitor and maintain competition in the Las Vegas Medicare 
Advantage market. In the United States' judgment based on a review of 
the terms for the sale of the Divestiture Assets, its assessment of 
Humana's capabilities, and its investigation of the Las Vegas Medicare 
Advantage market, the brand prohibitions in the proposed Final Judgment 
are reasonable in light of their intended purpose--to give Humana time 
to establish its own brand in the Las Vegas area and reduce beneficiary 
confusion as to which company operates the plan in which the 
beneficiary is enrolled. See SBC Commc'ns, 489 F Supp. 2d at 17 (a 
district court ``must accord deference to the government's predictions 
about the efficacy of its remedies'').
e. Use of a Monitoring Trustee
    The AMA argues that the proposed Final Judgment should require the 
immediate use of a monitoring trustee to ensure United's compliance 
with the proposed Final Judgment (AMA comment at 15). Section V of the 
proposed Final Judgment allows the United States, in its sole 
discretion and subject to approval by the Court, to appoint a 
monitoring trustee that would have the power to monitor Defendants' 
compliance with the terms of the proposed Final Judgment. Section V(H) 
of the proposed Final Judgment provides that, if a monitoring trustee 
is appointed, it shall serve until United has divested the Divestiture 
Assets and any agreements for transition support services have expired.

[[Page 49839]]

    In the United States' judgment, the immediate use of a monitoring 
trustee is not necessary to ensure United's compliance with the 
proposed Final Judgment for at least three reasons. First, United has 
already complied with many of the provisions of the proposed Final 
Judgment. United has completed the divestiture of the Divestiture 
Assets and assisted Humana in entering into an agreement with 
HealthCare Partners that gives Humana access to healthcare providers on 
terms no less favorable than United's pre-existing agreement with 
HealthCare Partners. In addition, Humana and United have entered into a 
transition services agreement as contemplated by Section IV(J) of the 
Final Judgment. Second, the United States has reviewed the Humana-
United transition services agreement and concluded that the agreement 
provides Humana with contractual rights such that a monitoring trustee 
is not currently necessary to ensure United's compliance with the terms 
of that agreement. Third, should United fail to comply with the terms 
of the transition support agreement, the United States remains free to 
appoint a monitoring trustee, subject to the Court's approval.

IV. Conclusion

    The issues raised in the four public comments were among the many 
considered during the United States' extensive and thorough 
investigation. The United States has determined that the proposed Final 
Judgment as drafted provides an effective and appropriate remedy for 
the antitrust violations alleged in the Complaint, and is therefore in 
the public interest. The United States will move this Court to enter 
the proposed Final Judgment after the comments and this response are 
published in the Federal Register.

    Dated: July 7, 2008.

    Respectfully Submitted,
Peter J. Mucchetti (D.C. Bar  463202), Mitchell H. Glende,
Natalie A. Rosenfelt,

Trial Attorneys, Litigation I Section--Antitrust Division, United 
States Department of Justice; 1401 H Street NW, Suite 4000, Washington, 
DC 20530,(202) 353-4211, (202) 307-5802 (facsimile).
    In the matter of: In the United States District Court for the 
District of Columbia; United States of America, Plaintiff, v. 
Unitedhealth Group Incorporated and Sierra Health Services, Inc., 
Defendants.
    Judge: Ellen S. Huvelle.
    Filed: 2/25/2008
    [Civil No. I:08-cv-00322]

Tunney Act Comments of SEIU Local 1107 on the Proposed Remedy in United 
Health Group Inc.'s Acquisition of Sierra Health Services Inc.

    The Service Employees International Union (``SEIU'') Local 1107 
provides these comments on the proposed final judgment in United Health 
Group Inc.'s (``United Health'') acquisition of Sierra Health Services 
Inc. (``Sierra''). As described herein the SEIU believes the proposed 
remedy in this matter is inadequate and unlikely to prevent the 
substantial anticompetitive effects raised by the merger. As we explain 
below, the proposed merger is likely to reduce competition 
substantially in numerous markets, including the delivery of healthcare 
at hospitals. By creating a dominant health insurer in Clark County. 
Nevada, the merger will enable UnitedHealthcare to substantially lower 
reimbursements to hospitals. which, as demonstrated below, will 
ultimately harm patient care. We believe this provided a substantial 
basis for the Antitrust Division, Department of Justice (``DOJ'') to 
challenge the merger under Section 7 of the Clayton Act, and contend 
that DOJ's decision to enter into the consent decree was in error. We 
respectfully request that the proposed consent decree is rejected and 
the Department of Justice sue to enjoin the merger.
    The SEIU is an organization of more than 1.9 million members united 
by the belief in the dignity and worth of workers and the services they 
provide. SEIU is the nation's largest union of health care workers 
representing over 900,000 caregivers and hospital employees, including 
110,000 nurses and 40,000 doctors in public, private, and non-profit 
medical institutions. SEIU is dedicated to improving the lives of all 
workers and their families. In Nevada, SEIU Local 1107 represents more 
than 17,000 registered nurses, health care workers and public employees 
dedicated to improving the lives of workers, their families and their 
communities. Our members have chosen to dedicate their lives to serving 
the public, and provide the first line of health care service to 
thousands of patients in hospitals in Nevada. In that role we 
experience first hand how health insurance consolidation can harm 
consumers by restricting the ability of all health care providers to 
provide high quality health care. Ultimately, when health insurers 
acquire and exploit their power patients and health care workers 
suffer.
    The SEIU submits these comments on the Proposed Final Judgment 
(``PFJ'') pursuant to the Antitrust Procedures and Penalties Act. 15 
U.S.C. 16(b-e) (known as the ``Tunney Act''). The Tunney Act requires 
that ``[b]efore entering any consent judgment proposed by the United 
States * * *, the court shall determine that the entry of such judgment 
is in the public interest., 16 U.S.C. 15(e)(1). In applying this 
``public interest'' standard the burden is on the government to 
``provide a factual basis for concluding that the settlements are 
reasonably adequate remedies for the alleged harms.'' United States v. 
SBC, 489 F.Supp.2d 1, 16 (D.D.C. 2007), citing United States v. 
Microsoft Corp., 56 F.3rd 1448, 1460-61 D.C.Cir, 1995).
    The Court plays a vital role in determining the proposed decree 
fulfills the public interest. As Judge Greene observed in approving the 
AT&T settlement:

    [i]t does not follow * * * that courts must unquestionably 
accept a proffered decree as long as it somehow, and however 
inadequately, deals with the antitrust and other public policy 
problems implicated in the lawsuit. To do so would be to revert to 
the ``rubber stamp'' role which was at the crux of the congressional 
concerns when the Tunney Act became law.

    U.S. v American Telephone and Telegraph, 552 F.Supp. 131, 151 
(D.D.C. 1982), aff'd sub nom., Maryland v. U.S., 460 U.S. 1001 (1983).
    As detailed below, SE1U believes that the PFJ fails to meet the 
public interest standard. This merger will lead to an unprecedented 
level of consolidation and will create a dominant health insurer in 
Clark County. which is the largest county in Nevada and where Las Vegas 
is located. Allowing one health insurance company this kind of market 
control will harm the quality of care patients will receive in 
hospitals and further weaken the fragile health care system in Clark 
County. In particular, the merger will
     jeopardize patient safety and quality of care by reducing 
payments to hospitals;
     jeopardize the health care safety net;
     have a particularly adverse effect on rural hospitals;
     and, increase the number of uninsured and harm the 
delivery of care to the elderly.

I. The Merger Will Result in Dangerously High Nurse to Patient Staffing 
Ratios, Placing Patient Safety and Quality of Care in Jeopardy

    The impact of the acquisition of Sierra by UnitedHealth on the 
quality of care in hospitals will be severe. This merger will lead to 
an unprecedented level of concentration, In the Clark County HMO

[[Page 49840]]

market UnitedHealth's market share will increase from 14% to 94%. If 
PPOs are included, UnitedHealth's market share increases from 9% to 
60%. Even with the divestiture of the United Medicare Advarnage 
business as included in the PFJ. UnitedHealth's market share is over 
50%. With such a dominant position UnitedHealth will be able to reduce 
reimbursement rates to hospitals unilaterally. Simply, hospitals will 
be unable to reject a ``take it or leave it'' offer from UnitedHealth.
    When hospitals are forced to reduce reimbursement rates, the 
delivery of health care suffers. Reduced reimbursement leads to cut 
backs in services, less investment in equipment, and lower staffing 
levels. While these Comments will focus on the impact on nurses and, in 
turn, the impacts on patient care, these concerns are illustrative of 
the type of competitive problems that will arise overall from the 
reduction of compensation of reimbursement to hospitals.
    Reductions in reimbursement force hospitals to reduce their 
expenses. Staff is the largest expense for hospitals, and Registered 
Nurses (``RNs'') represent hospitals' single largest labor expense. In 
Southern Nevada in particular, salaries and benefits represent 48.0% of 
total operating expenses,\1\ and RNs comprise 76.9% of the hospital 
workforce.\2\ Therefore, if hospitals are forced to accept low 
reimbursement rates, they will look to recoup their losses by cutting 
costs in the most logical place--their RN staff.\3\ The result can be 
dangerously high patient-to-nurse staffing ratios.
---------------------------------------------------------------------------

    \1\ Hospital Quarterly Reports. Calendar Year 2006 Summary 
Financial Report. Table A07 ``Operating Expenses'' and Table A08 
``Other Operating Expenses.'' Utilization and Financial Reports. 
Center for Health Information Analysis. University of Nevada Las 
Vegas. https://www.unlv.edu/Research_Centers/chia/NHQR/Financial/
NHQR_Financial_OutputCY2006%200822.xls (Retrieved on October 15. 
2007).
    \2\ Hospital Quarterly Reports. Calendar Year 2006 Summary 
Utilization Reports. Table F02 ``FTE Hospital Hours'' Utilization 
and Financial Reports. Center for Health Information Analysis. 
University of Nevada Las Vegas. https://www.unlv.edu/Research_
Centers/chia/NHQR/Utilization/NHQR_Utilization_Output_
CY2006%200702.xls (Retrieved on October 15. 2007).
    \3\ Kosel, Keith and Tom Olivo. ``The Business Case for Work 
Force Stability.'' VHA Research Series, 2002.
---------------------------------------------------------------------------

    The detrimental impact of a high patient-to-nurse ratio on patient 
safety and quality of care has been amply demonstrated in several 
markets by a recent set of academic studies, A comprehensive study 
conducted in 2002 and published in the Journal of the American Medical 
Association found that the risk of death increases by 7% for every 
patient in a nurse's care above a 4:1 patient to nurse ration, and 
increases by 16% when that ratio increases to 6:1; the study also 
concluded, most significantly, that there is 31% greater risk of dying 
in hospitals that force a single nurse to care for eight or more 
patients.\4\ Moreover, according to a report by the Joint Commission, 
Health Care at the Crossroads: Strategies for Addressing the Evolving 
Nurse Crisis, understaffing is a contributing factor in 24% of sentinel 
events (unexpected occurrences that result in death or serious 
injury).\5\ Indeed, patients in hospitals with fewer intensive care 
unit (``ICU'') nurses are more likely to suffer from complications 
after surgery and to have a longer length of stay in the hospital than 
patients in hospitals with a greater number of ICU nurses. It is also 
worth noting that patients are not the only ones who suffer harm to 
their health as a result of short-staffing: nurses are two to three 
times more likely to have a needle-stick injury in hospitals with low 
nurse staffing levels.\6\
---------------------------------------------------------------------------

    \4\ Aiken. Linda H.; Clarke, Sean P.; Sloane, Douglas M.; 
Sochalski, Julie; Silber, Jeffrey H. ``Hospital Nurse Staffing and 
Patient Mortality, Nurse Burnout, and Job Dissatisfaction.'' Journal 
of the American Medical Association, 10/23/2002, Vol. 288 Issue 16.
    \5\ Joint Commission on Accreditation of Health Care 
Organizations. ``Health Care at the Crossroads: Strategies for 
Addressing the Evolving Nurse Crisis.'' 2003. https://
www.jointcommission.org/NR/rdonlyres/5C138711-ED76-4D6F-909F-
B06E0309F36D/0/health_care_at_the_crossroads.pdf (Retrieved on 
3/6/07.)
    \6\ Id.
---------------------------------------------------------------------------

    Studies have also demonstrated that there can be better health care 
outcomes with adequate staffing levels. A recent study estimated that 
6,700 in-hospital patient deaths could he avoided by increasing nurse 
staffing levels. The study further concluded that simply increasing 
nurse staffing levels would result in approximately 70,000 fewer 
adverse outcomes, including decreases in urinary tract infections, 
pneumonia and shock or cardiac arrest.\7\
---------------------------------------------------------------------------

    \7\ Needleman, Jack, Peter I. Buerhaus, Maureen Stewart, Katya 
Zelevinsky and Soeren Mattke. ``Nurse Stafling in Hospitals: Is 
there a Business Case for Quality?'' Health Affairs, Vol. 25. No. 1. 
January/February 2006.
---------------------------------------------------------------------------

    Nurses in Nevada are already forced to work with dangerously high 
nurse-to-patient ratios. In 2000. Nevada ranked last among the states 
in RNs per capita and in per capita health services employment.\8\ In 
2005 Nevada ranked 49th among the states in per capita registered 
nurses, with only 579 RNs for every 100,000 residents, which is far 
below the national average of 799 RNs per 100,000 residents.\9\ The RN-
to-population ratios are higher in the northern part of the state and 
lower in Clark County. Although the number of registered nurses in 
Nevada has grown steadily, it has not kept pace with the state's 
population growth.\10\ The average number of newly-minted RNs over the 
last five years has only been 1,264.\11\ However, over the last three 
years, Nevada's population increased by 11.4%.\12\
---------------------------------------------------------------------------

    \8\ U.S. Department of Health and Human Services, Health 
Resources and Services Administration, Bureau of Health Professions. 
``State Health Workforce Profiles Highlights: Nevada. https://
bhpr.hrsa.gov/healthworkforce/reports/statesummaries/nevada.htm 
(Last viewed 12/7/07).
    \9\ Kaiser State Health Facts. Nevada. Providers & Service 
Users. ``Nevada: Total Registered Nurses as of May 2005.'' https://
www.statehealthfacts.org/profileind.jsp?ind=438&cat=8&rgn=30 (last 
viewed 12/7/07).
    \10\ Packham, John, Tabor Griswold, Jake Burkey, Chris Lake. 
2005 Survey of Licensed Registered Nurses in Nevada. November 2005. 
https://www.nvha.net/papers/nursesurvey.pdf Last viewed on 12/8/07.
    \11\ Nevada State Board of Nursing Annual Reports for years 
ending June 30, 2001--June 30, 2005. Includes new licenses created 
by examination and by endorsement.
    \12\ U.S. Census Bureau. American Fact Finder. Population 
Finder. ``Population for all Counties in Nevada, 2000 to 2006.'' 
https://factfinder.census.gov/servlet/GCTTable?_bm=y&-geo&--
id=0400US32&---box--head--nbr=GCT-T1&-ds--name-PEP--2006--EST&---
lang=en&-format=ST-2&-sse=on (Last viewed 12/7/07).
---------------------------------------------------------------------------

    Academic studies have shown that, much like the rest of the 
country, the epidemic of nurse understaffing in Nevada is due not to a 
shortage of registered nurses, but rather a shortage of registered 
nurses willing to work under the current conditions in Nevada 
hospitals. In 2000, active licenses were held by 12,900 registered 
nurses in Nevada but only 10,400 were employed in nursing.\13\ In 2004 
and 2005, Valley Hospital in Las Vegas reported that 206 registered 
nurses left employment at the hospital (Valley Hospital has 
approximately only 540 RNs employed at any given time).\14\ At Desert 
Springs Hospital in Las Vegas, 137 registered nurses left employment in 
2004 and 2005 (Desert Springs employs approximately only 290 RNs at any 
given time).\15\ A case study of RNs in Nevada found that the number 
one reason that RN graduates leave their first job is due to patient 
care concerns such as unsafe patient ratios, not having

[[Page 49841]]

enough time to spend with patients, and working conditions that are not 
conducive to safe patient care.\16\ Job dissatisfaction among hospital 
nurses is four times greater than the average for all U.S. workers. 
Forty percent of hospital nurses report burnout levels that exceed the 
norm for health care workers and 1 in 5 hospital nurses intend to leave 
their current jobs within a year. Job stress and dissatisfaction 
increase when nurses are taking care of more patients. Each additional 
patient over four per nurse is associated with a 23% chance of job 
burnout and a 15% chance increase in odds of job dissatisfaction.\17\
---------------------------------------------------------------------------

    \13\ U.S. Department of Health and Human Services, Health 
Resources and Services Administration, Bureau of Health Professions. 
``State Health Workforce Profiles Highlights: Nevada.'' https://
bhpr.hrsa.gov/healthworkforce/reports/statesummaries/nevada.htm 
(Last viewed 12/7/07).
    \14\ Data provided pursuant to collective bargaining information 
request.
    \15\ Data provided pursuant to collective bargaining information 
request.
    \16\ Bowles, Cheryl and Lori Candela. ``First Job Experiences of 
Recent R.N. Graduates.'' Journal of Nursing Administration. 2005.
    \17\ Aiken, Linda H., Sean P. Clarke, Douglas M. Stone, Julie 
Sochalski and Jeffrey H. Silber. ``Hospital Nurse Staffing and 
Patient Mortality, Nurse Burnout and Job Dissatisfaction.'' Journal 
of the American Medical Association, Vol. 288. No. 16, 10/23/2002.
---------------------------------------------------------------------------

    Nurses also bear the brunt of the predictable results of short-
staffing: every time a nurse goes to work when there are too few nurses 
working that shift, she puts her nursing license in jeopardy. Pursuant 
to Nevada statute (NAG Sec.  632.895), a registered nurse can be 
subject to disciplinary action from the Nevada State Nursing Board if a 
patient suffers harm as a consequence of an act or an omission that 
could have been reasonably foreseen, up to and including suspending or 
revoking a nurse's license.\18\ We have already explained the link 
between low nurse staffing levels and adverse patient outcomes 
including an increased risk of mortality. Yet another comprehensive 
study has found that rates of ``failure to rescue'' deaths increased 
when registered nurses were responsible for too many patients. 
(``Failure to rescue,'' is the death of a patient from complications 
including pneumonia, shock or cardiac arrest, upper gastrointestinal 
bleeding, sepsis or deep venous thrombosis.) Given that early 
identification of medical problems can decrease the risk of death in 
``failure to rescue'' mortalities, inadequate staffing levels further 
increases the risk of harm to patients, thereby increasing the risk of 
a registered nurse being held responsible and losing his or her 
professional license.\19\ In the context of this crisis, further 
staffing cuts as a result of this merger will drive even more Nevada 
nurses out of the profession.
---------------------------------------------------------------------------

    \18\ Nevada Administrative Code. Chapter 632. https://
www.leg.state.nv.us/NAC/NAC-632.html.
    \19\ Needleman, Jack and Peter Buerhaus, Soeren Mattke, Maureen 
Stewart and Katya Zelevinsky, ``Nurse Staffing Levels and the 
Quality of Care in Hospitals.'' New England Journal of Medicine, 
Vol. 346, No. 22. 5/30/2002.
---------------------------------------------------------------------------

    These problems will be even more severe in Southern Nevada, where 
71.1% \20\ of the hospital market is controlled by for-profit 
companies. This concentrated for profit environment is almost unique in 
the U.S. A comprehensive review of clinical data from more than 4,000 
hospitals in the United States found that for-profit hospitals 
consistently have worse outcomes than non-profit hospitals on three 
common medical conditions: congestive heart failure, heart attack and 
pneumonia.\21\ The difference in quality may be attributed to the 
difference in accountability, while publicly-owned and non-profit 
hospitals are accountable to the community. for-profit hospitals are 
only accountable to their shareholders and, as a result, focus on 
strategies that increase profitability rather than strategies to 
benefit the community.\22\
---------------------------------------------------------------------------

    \20\ Quality Care Nevada. ``Hospitals and Health Systems.'' 
https://www.qualitycarenevada.org/index.asp?Type=B_
BASIC&SEC={7707D6CB-3079-4EF0-A9D6-B81FB8D31E7F{time} .
    \21\ Landon, Bruce E.. Sharon-Lise T. Normand, Adam Lessler, A. 
James O'Malley, Stephen Schmaltz, Jerod M. Loeb and Barbara McNeil. 
``Quality of Care for the Treatment of Acute Medical Conditions in 
U.S. Hospitals.'' Arch Intern Med, Vol. 166, Dec 11/25, 2006.
    \22\ Physicians for a National Healthcare Program. ``New England 
Journal of Medicine Article Says Evidence Against For-Profit 
Hospitals Now Conclusive.'' August 1999. https://www.pnhp.org/news/
1999/august/new_england_journal_.php (Last viewed on 12/7/07).
---------------------------------------------------------------------------

    The result of this concentration of for-profit hospital ownership 
is a relatively poor level of healiheare quality in Clark County. A 
Medicare Quality Improvement Organization, dedicated to tracking 
quality measures in medical settings, routinely ranks Clark County 
hospitals in the bottom half of our nation's hospitals in a wide-range 
of quality measures. In fact. some Clark County hospitals scored as low 
as the 6th and 7th percentile of all U.S. hospitals.\23\
---------------------------------------------------------------------------

    \23\ Health Insight. https://www.healthinsight.org (Last viewed 
on 10/31/07).
---------------------------------------------------------------------------

    The PFJ approving the United/Sierra merger will exacerbate these 
problems and diminish the level of health care quality. The ability of 
patients and doctors to determine the appropriate level of care will be 
weakened. Nurses that are working with inadequately low staffing levels 
will be faced with an additional risk to staffing levels and safe, 
quality patient care will be needlessly jeopardized.

II. Sierra Health Services & HCA: A Case Study of Anticompetitive 
Impact on Qualily & Access in Nevada

    History demonstrates how the dominance of one health insurer in 
this market can harm the health care of children and families in our 
community. In Las Vegas we have already experienced the impacts of a 
health insurance company using its market dominance to increase their 
profits. In January 2007, after a contentious and public contract fight 
between Sierra Health Services and HCA hospitals in Clark County, 
Sierra Health Services terminated its contract with HCA hospitals 
because HCA refused to agree to the low reimbursement rates Sierra was 
demanding. When the contract was terminated, Sierra's 620,000 members 
were no longer able to access services at the three HCA hospitals in 
Clark County.
    Children have been harmed the most by Sierra's decision. Sunrise 
Hospital, which is owned by HCA, specializes in pediatric care. 
Children are no longer able to access pediatric neurologists or 
pediatric radiologists in Clark County and may have to travel as far as 
Los Angeles to receive this level of specialized care. Children with 
cancer are no longer eligible to participate in protocol treatments at 
Sunrise Hospital. Patients who come to the Emergency Room at Sunrise 
Hospital who are covered by Sierra Health Services' products have to be 
transferred to a different hospital as soon as they are stabilized, 
including women in labor. Patients are sometimes forced to move from 
hospital to hospital to access all the care they need. We know of one 
patient, for example, who had to go to Sunrise Hospital to have a 
pacemaker removed and was then transferred to another hospital to have 
a new one inserted due to insurance demands.
    After Sierra Health Services dropped HCA, Sierra Health Services 
required their enrollees to be directed to other hospitals in Clark 
County. Our nurses who work at the other hospitals saw first hand the 
impact of having 620,000 consumers suddenly redirected to their 
hospitals. A nurse at Valley Hospital reported that their Intensive 
Care Units, Emergency Room and Operating Room became overwhelmed with 
heart patients and other critically ill patients. Universal Health 
Services, the for-profit corporation that owns Valley Hospital, is 
already known for short staffing its Registered Nurses, so when 
Sierra's decision took effect, Operating Room and Recovery Room RNs and 
techs were on call at the hospital for 16-20 hours

[[Page 49842]]

every day. Emergency Room RNs had to take 4 to 8 patients each, and 
patients were forced to stay in the Emergency Room for