United States, 20419-20434 [2012-8070]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 77, Number 65 (Wednesday, April 4, 2012)]
[Notices]
[Pages 20419-20434]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-8070]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Humana Inc. and Arcadian Management Services, 
Inc.; 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)-(h), that a proposed Final Judgment, 
Stipulation, and Competitive Impact Statement have been filed with the 
United States District Court for the District of Columbia, in United 
States v. Humana Inc. and Arcadian Management Services, Inc., Civil 
Action No. 12-cv-00464. On March 27, 2012, the United States filed a 
Complaint alleging that the proposed acquisition by Humana Inc. of 
Arcadian Management Services, Inc. would violate Section 7 of the 
Clayton Act, 15 U.S.C. 18. The proposed Final Judgment filed at the 
same time as the Complaint requires the parties to divest health plans 
in 51 counties and parishes in Arizona, Arkansas, Louisiana, Oklahoma, 
and Texas.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth 
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202 514-
2481), and 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 District of Columbia. Copies of these materials 
may be obtained from the Antitrust Division upon request and payment of 
the copying fee set by Department of Justice regulations.
    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 Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, 
U.S. Department of Justice, 450 Fifth Street NW., Suite 4100, 
Washington, DC 20530 (telephone: 202-307-0827).

Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the District of Columbia

    United States of America, United States Department of Justice, 
Antitrust Division, Litigation I Section, 450 Fifth Street, NW., 
Suite 4100, Washington, DC 20530, Plaintiff, v. Humana Inc., 500 
West Main Street, Louisville, KY 40202, and Arcadian Management 
Services, Inc., 500 12th Street, Suite 340, Oakland, CA 94607, 
Defendants.

Case: 1:12-cv-00464.
Assigned to: Walton, Reggie B.
Assign. Date: 3/27/2012.
Description: Antitrust.

Complaint

    The United States of America (``United States''), acting under the 
direction of the Attorney General of the United States, brings this 
civil action to enjoin Humana Inc. (``Humana'') from acquiring Arcadian 
Management Services, Inc. (``Arcadian''). The United States alleges as 
follows:
    1. Unless enjoined, Humana's proposed acquisition of Arcadian will 
substantially lessen competition in the sale of Medicare Advantage 
health insurance plans sold to Medicare-eligible individuals (``the 
relevant product market'') in forty-five counties and parishes in 
Arizona, Arkansas, Louisiana, Oklahoma, and Texas (``the relevant 
geographic markets'').
    2. A Medicare Advantage plan is a health insurance product sold by 
a

[[Page 20420]]

private company to Medicare-eligible individuals (collectively, 
``seniors'') that replaces traditional Medicare. Congress created the 
Medicare Advantage program as a private-market alternative to 
government-provided traditional Medicare. In establishing the Medicare 
Advantage program, Congress intended that vigorous competition among 
private Medicare Advantage insurers, such as Humana and Arcadian, would 
lead those insurers to offer seniors a wider array of health insurance 
choices, and richer and more affordable benefits than traditional 
Medicare does, and be more responsive to seniors. On August 24, 2011, 
Humana agreed to acquire Arcadian in a transaction valued at 
approximately $150 million (the ``transaction'').
    3. Humana and Arcadian together account for 40 to 100 percent of 
the enrollment in individual Medicare Advantage plans in each of the 
relevant geographic markets. In these markets, individual Medicare 
Advantage plans account for more than $700 million in annual commerce.
    4. The proposed acquisition will significantly lessen competition 
among Medicare Advantage plans and eliminate substantial head-to-head 
competition between Humana and Arcadian in the provision of such plans 
in the relevant geographic markets. The competition between Humana and 
Arcadian in the relevant geographic markets has significantly benefited 
thousands of seniors. Humana's and Arcadian's plans in the relevant 
geographic markets offer seniors significantly greater benefits than 
those available under traditional Medicare, likely resulting in 
substantial healthcare cost savings for seniors selecting either of 
those companies' plans. The proposed acquisition will end that 
competition, eliminating the pressure that these close competitors 
place on each other to maintain attractive benefits, low premiums, and 
high-quality healthcare.
    5. Because the proposed acquisition likely would substantially 
reduce competition in the sale of individual Medicare Advantage plans 
in the relevant geographic markets in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18, the Court should permanently enjoin this 
transaction.

I. Jurisdiction, Venue, and Interstate Commerce

    6. The United States brings this action pursuant to Section 15 of 
the Clayton Act, 15 U.S.C. Sec.  25, to prevent and restrain Defendants 
from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
    7. Humana and Arcadian are engaged in interstate commerce and in 
activities substantially affecting interstate commerce. They sell 
insurance that covers enrollees when they travel across state lines; 
purchase health-care services from providers in various states; and 
receive payments from enrollees in various states. Defendants also 
purchase health-care products and services, such as pharmaceuticals, in 
interstate commerce.
    8. The Court has subject-matter jurisdiction over this action 
pursuant to Section 15 of the Clayton Act, 15 U.S.C. 25; and 28 U.S.C. 
1331, 1337(a), and 1345.
    9. Defendants have consented to personal jurisdiction in this 
District. The Court also has personal jurisdiction over Defendants 
under Section 12 of the Clayton Act, 15 U.S.C. 22.
    10. Defendants have consented to venue in this District. Venue is 
also proper in this District under Section 12 of the Clayton Act, 15 
U.S.C. 22, and 28 U.S.C. 1391.

II. The Defendants and the Proposed Transaction

    11. Humana is a corporation organized and existing under the laws 
of Delaware and has its principal place of business in Louisville, 
Kentucky. A leading health insurer in the United States, Humana 
provides health insurance and other services to more than 17 million 
people nationwide. In 2010, Humana reported revenues of approximately 
$33.6 billion.
    12. In the relevant geographic markets, Humana sells Medicare 
Advantage Private Fee-For-Service (``PFFS''), Health Maintenance 
Organization (``HMO''), and Preferred Provider Organization (``PPO'') 
plans under the Humana Gold Choice, Humana Gold Plus, HumanaChoice, and 
Humana Reader's Digest Healthy Living Plan names. Humana is one of the 
largest Medicare Advantage providers in the United States, with almost 
1.8 million Medicare Advantage members. Approximately 35,000 seniors 
are enrolled in individual Humana Medicare Advantage plans in the 
relevant geographic markets.
    13. Arcadian is a corporation organized and existing under the laws 
of Delaware and has its principal place of business in Oakland, 
California. Arcadian sells Medicare HMO plans and focuses on secondary, 
non-urban, and underserved markets. It has approximately 62,000 
Medicare Advantage members in fifteen states. In 2010, Arcadian had 
revenues of $622 million.
    14. Arcadian sells Medicare Advantage plans through its wholly-
owned subsidiaries, Desert Canyon Community Care in Arizona; Arkansas 
Community Care and Texarkana Community Care in Arkansas; Arcadian 
Community Care in Louisiana; Arcadian Health Plan in Oklahoma; and 
Texas Community Care and Texarkana Community Care in Texas. Over 14,700 
people in the relevant geographic markets are enrolled in individual 
Arcadian Medicare Advantage plans.
    15. Humana and Arcadian each have well-established managed-care 
healthcare networks that they use to provide services to enrollees in 
the relevant geographic markets. In addition, Humana and Arcadian each 
have an established brand and positive reputation in the relevant 
geographic markets.

III. The Medicare Advantage Insurance Market

    16. The federal government provides and facilitates the provision 
of health insurance to millions of Medicare-eligible citizens through 
two types of programs: traditional Medicare and Medicare Advantage. 
Under traditional Medicare, a beneficiary receives coverage for 
inpatient healthcare services in hospitals and other facilities under 
Medicare Part A and can elect to receive coverage for physician and 
outpatient healthcare services under Part B. For Part A, the government 
generally charges no monthly premium if the beneficiary was in the 
workforce and paid Medicare taxes. For Part B, the government deducts a 
monthly premium ($99.90 for most beneficiaries) from the beneficiary's 
Social Security checks. In addition, the beneficiary must pay 
deductibles and/or coinsurance for doctor visits and hospital stays. If 
a beneficiary wants to limit traditional Medicare's out-of-pocket 
costs, the beneficiary can purchase a Medicare Supplement plan for an 
additional monthly premium. To receive prescription drug coverage, 
seniors enrolled in traditional Medicare can purchase a Medicare 
prescription drug plan (Medicare Part D) for an additional monthly 
premium.
    17. Medicare Advantage plans, unlike traditional Medicare, are 
offered by private insurance companies. Medicare Advantage plans 
provide all of the medical insurance coverage that seniors receive 
under traditional Medicare and also usually limit out-of-pocket costs 
and include drug coverage. These plans also generally provide benefits 
beyond what traditional Medicare provides, often including coverage for 
vision, hearing, dental, and wellness programs.

[[Page 20421]]

However, most Medicare Advantage plans have a more limited healthcare 
provider network than traditional Medicare. Limited networks help 
Medicare Advantage insurers lower their costs and offer richer benefits 
than traditional Medicare.
    18. An insurance company that seeks to offer a Medicare Advantage 
plan in a county or parish must submit a bid to the Centers for 
Medicare and Medicaid Services (``CMS'') for each Medicare Advantage 
plan that it intends to offer. The bid must provide the insurer's 
anticipated costs per member to cover required Medicare Part A and Part 
B benefits. CMS actuaries compare these costs, including an anticipated 
profit margin, to a Medicare benchmark that reflects, in part, the 
government's likely cost of covering the beneficiaries. Through 2011, 
if the insurer's bid for Medicare benefits was lower than the 
benchmark, the Medicare program retained 25 percent of the savings and 
required that the insurer use the other 75 percent (``the rebate'') to 
provide supplemental benefits or lower premiums. Accordingly, a plan 
with lower projected costs would offer more benefits to seniors and be 
more attractive. As of 2012, the rebate will vary based on performance 
as measured through CMS's Medicare star rating system, such that 
insurers will receive a greater fraction of the rebate the better their 
performance. Therefore, Medicare Advantage plans compete for enrollment 
by lowering costs, lowering premiums, increasing benefits, and 
improving performance.
    19. Medicare Advantage enrollees can be either group or individual 
enrollees. Group enrollees are generally retirees who enroll in a 
Medicare Advantage plan chosen by their former employer or another 
group. Individual enrollees directly choose their Medicare Advantage 
plan from among the plans that CMS has approved for the county or 
parish in which they live.

IV. Relevant Product Market

    20. Most successful Medicare Advantage plans, including those in 
the relevant geographic markets, offer substantially richer benefits at 
lower costs to enrollees than traditional Medicare does with or without 
a Medicare Supplement or Medicare Prescription Drug Plan, including 
lower copayments, lower coinsurance, caps on total yearly out-of-pocket 
costs, prescription drug coverage, and supplemental benefits that 
traditional Medicare does not cover, such as dental and vision 
coverage, and health club memberships. Seniors enrolled in Medicare 
Advantage plans also often value that they can receive all of these 
benefits through a single plan and that Medicare Advantage plans manage 
care in ways that traditional Medicare does not.
    21. Consequently, a small but significant increase in Medicare 
Advantage plan premiums or reduction in benefits is unlikely to cause a 
sufficient number of seniors to switch to traditional Medicare such 
that the price increase or reduction in benefits would be unprofitable. 
Accordingly, the relevant product market is no broader than the sale of 
individual Medicare Advantage plans, which is a line of commerce under 
Section 7 of the Clayton Act, 15 U.S.C. 18.

V. Relevant Geographic Markets and Market Concentration

    22. Seniors may only enroll in Medicare Advantage plans that CMS 
has approved for the county or parish in which they live. Consequently, 
they could not turn to Medicare Advantage plans offered outside the 
county or parish in which they live in response to a small but 
significant increase in price in Medicare Advantage plans.
    23. The following forty-five counties and parishes are relevant 
geographic markets within which to assess the likely effects of the 
transaction, and all are ``sections of the country'' within the meaning 
of Section 7 of the Clayton Act: Mohave and Yavapai Counties in 
Arizona; Columbia, Conway, Crawford, Franklin, Hempstead, Howard, 
Lafayette, Little River, Logan, Miller, Nevada, Pope, Scott, Sebastian, 
Sevier, and Yell Counties in Arkansas; Allen, Beauregard, Bienville, 
Bossier, Caddo, Calcasieu, Claiborne, De Soto, Jefferson Davis, Red 
River, and Webster Parishes in Louisiana; Adair, Delaware, Haskell, Le 
Flore, McCurtain, Ottawa, and Sequoyah Counties in Oklahoma; and Bowie, 
Cass, Deaf Smith, Gregg, Harrison, Henderson, Potter, Randall, and 
Titus Counties in Texas.
    24. If consummated, the merger would give Humana market shares 
ranging from 40 to 100 percent in the forty-five relevant geographic 
markets. See Appendix B.
    25. According to the Herfindahl[hyphen]Hirschman Index (``HHI''), a 
measure of concentration commonly relied on by the courts and antitrust 
agencies to measure market concentration (defined and explained in 
Appendix A), the transaction would significantly increase the market 
concentration for the relevant product in each of the relevant 
geographic markets, almost all of which are already highly 
concentrated. The increases in concentration would range from 312 
points in Pope County, Arkansas, to 4928 points in Sequoyah County, 
Oklahoma, with all of the increases substantially higher than the 200 
points (see Appendix B) presumed likely to enhance market power in 
highly concentrated markets under the antitrust agencies' Horizontal 
Merger Guidelines. See U.S. Dep't of Justice & FTC, Horizontal Merger 
Guidelines Sec.  5.3 (2010).
    26. Defendants' market shares in the relevant geographic markets 
have generally increased in recent years, as some competitors have 
exited these markets or stopped offering certain competing products.

VI. Anticompetitive Effects

    27. The proposed transaction likely would substantially lessen 
competition in the sale of individual Medicare Advantage plans in the 
relevant geographic markets. The transaction would end the substantial 
head-to-head competition between Humana and Arcadian to convince 
seniors to enroll in each company's Medicare Advantage plans in the 
relevant geographic markets. In each market, Humana and Arcadian 
compete against each other by offering plans with frequently low or no 
premiums, reducing copayments, eliminating deductibles, lowering annual 
out-of-pocket maximum costs, managing care, improving drug coverage, 
offering desirable benefits, and making their provider networks more 
attractive to potential members.

VII. Absence of Countervailing Factors

    28. If Defendants complete the proposed transaction, the loss of 
this competition would likely result in higher premiums and reduced 
benefits for seniors enrolled in Medicare Advantage plans in the 
relevant geographic markets.
    29. Competition from existing Medicare Advantage plans and new 
entrants is unlikely to prevent anticompetitive effects in each 
relevant geographic market. Entrants face substantial cost, reputation, 
and distribution disadvantages that will likely make them unable to 
prevent Humana from profitably raising premiums or reducing benefits in 
the relevant geographic markets.

VIII. Violations Alleged

    30. The proposed transaction likely would substantially lessen 
competition in the sale of Medicare Advantage health insurance in each 
of the relevant geographic markets, in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18.

[[Page 20422]]

    31. The proposed transaction would likely have the following 
effects in each relevant geographic market:
    a. Substantially lessening competition in the sale of Medicare 
Advantage insurance;
    b. eliminating competition between Humana and Arcadian in the sale 
of Medicare Advantage insurance; and
    c. increasing premiums or reducing benefits for Medicare Advantage 
insurance to less competitive levels than would prevail absent the 
acquisition.

IX. Prayer for Relief

    32. The United States requests that this Court:
    a. Adjudge the proposed acquisition to violate Section 7 of the 
Clayton Act, 15 U.S.C. 18;
    b. preliminarily and permanently enjoin the defendants from 
carrying out the proposed transaction or from entering into or carrying 
out any other agreement, understanding, or plan, the effect of which 
would be to bring the Medicare Advantage businesses of Humana and 
Arcadian under common ownership or control;
    c. award the United States its costs in this action; and
    d. award the United States such other relief as the Court may deem 
just and proper.
    Dated this 27th day of March 2012.

Respectfully submitted,

FOR PLAINTIFF UNITED STATES:

/s/Sharis A. Pozen
Sharis A. Pozen (DC Bar 446732),
Acting Assistant Attorney General for Antitrust

/s/Leslie C. Overton
Leslie C. Overton (DC Bar 454493)
Deputy Assistant Attorney General

/s/Patricia A. Brink
Patricia A. Brink
Director of Civil Enforcement

/s/Joshua H. Soven
Joshua H. Soven (DC Bar 436633)
Chief, Litigation I Section

/s/Peter J. Mucchetti
Peter J. Mucchetti (DC Bar 463202)
Assistant Chief, Litigation I Section

/s/Adam Gitlin
Adam Gitlin *
Attorney, Litigation I Section, Antitrust Division, U.S. Department 
of Justice, 450 Fifth Street NW., Suite 4100, Washington, DC 20530, 
Telephone: (202) 307-6456, Facsimile: (202) 305-1190, Email: 
adam.gitlin@usdoj.gov.

Barry Creech (DC Bar 421070),
Barry Joyce,
Edward D. Eliasberg, Jr. (DC Bar 199182),
Katrina Rouse,
Attorneys for the United States.
* Attorney of Record.

Herfindahl[hyphen]Hirschman Index

    The term ``HHI'' means the Herfindahl[hyphen]Hirschman Index, a 
commonly accepted measure of market concentration. The HHI is 
calculated by squaring the market share of each firm competing in the 
market and then summing the resulting numbers. For example, for a 
market consisting of four firms with shares of 30, 30, 20, and 20 
percent, the HHI is 2,600 (30\2\ + 30\2\ + 20\2\ + 20\2\ = 2,600). The 
HHI takes into account the relative size distribution of the firms in a 
market. It approaches zero when a market is occupied by a large number 
of firms of relatively equal size and reaches its maximum of 10,000 
points when a market is controlled by a single firm. The HHI increases 
both as the number of firms in the market decreases and as the 
disparity in size between those firms increases.
    The agencies generally consider markets in which the HHI is between 
1,500 and 2,500 points to be moderately concentrated, and consider 
markets in which the HHI is in excess of 2,500 points to be highly 
concentrated. See U.S. Department of Justice & FTC, Horizontal Merger 
Guidelines Sec.  5.3 (2010). Transactions that increase the HHI by more 
than 200 points in highly concentrated markets are presumed likely to 
enhance market power under the Horizontal Merger Guidelines issued by 
the Department of Justice and the Federal Trade Commission. See id.

                                           Relevant Geographic Markets
                                               [As of March 2012]
----------------------------------------------------------------------------------------------------------------
                                                               Post-merger
                          County                             share (percent)   HHI Post-merger   Increase in HHI
----------------------------------------------------------------------------------------------------------------
Mohave, AZ................................................              82.3              6980              3386
Yavapai, AZ...............................................              40.8              5091               407
Columbia, AR..............................................              56.0              4732              1421
Conway, AR................................................              55.0              3906               376
Crawford, AR..............................................              63.8              4514              1563
Franklin, AR..............................................              47.8              3539               549
Hempstead, AR.............................................              55.7              5064              1218
Howard, AR................................................              58.1              4576              1681
Lafayette, AR.............................................              68.3              5668              1993
Little River, AR..........................................              82.1              7066              3292
Logan, AR.................................................              59.7              4263              1080
Miller, AR................................................              73.8              5836              1931
Nevada, AR................................................              58.9              5158              1139
Pope, AR..................................................              44.1              4055               312
Scott, AR.................................................              52.1              3545               984
Sebastian, AR.............................................              57.9              3882              1133
Sevier, AR................................................              84.1              7326              3474
Yell, AR..................................................              40.3              3075               610
Allen, LA.................................................              78.5              6622              1310
Beauregard, LA............................................             100.0             10000              4789
Bienville, LA.............................................              49.3              3721              1189
Bossier, LA...............................................              93.3              8748               848
Caddo, LA.................................................              92.7              8642              1626
Calcasieu, LA.............................................             100.0             10000              3217
Claiborne, LA.............................................              42.0              3523               535
De Soto, LA...............................................             100.0             10000              3648
Jefferson Davis, LA.......................................              88.7              8000              1746
Red River, LA.............................................              45.0              3803               926
Webster, LA...............................................              84.1              7323              1385
Adair, OK.................................................              60.1              5204              1799

[[Page 20423]]

 
Delaware, OK..............................................             100.0             10000              3887
Haskell, OK...............................................              58.6              4666              1688
Le Flore, OK..............................................             100.0             10000              4632
McCurtain, OK.............................................              80.6              6691              2325
Ottawa, OK................................................             100.0             10000              1512
Sequoyah, OK..............................................             100.0             10000              4928
Bowie, TX.................................................              82.5              7019              3305
Cass, TX..................................................              81.3              6962              3285
Deaf Smith, TX............................................              66.7              5556              1636
Gregg, TX.................................................              73.7              5783              2668
Harrison, TX..............................................              86.4              7652              3590
Henderson, TX.............................................              68.0              5197              2224
Potter, TX................................................              72.6              5776              2197
Randall, TX...............................................              75.0              5928              1421
Titus, TX.................................................              75.8              6331              2198
----------------------------------------------------------------------------------------------------------------

 United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Humana Inc. and Arcadian 
Management Services, Inc., Defendants.

Case: 1:12-cv-00464.
Assigned To: Walton, Reggie B.
Assign. Date: 3/27/2012.
Description: Antitrust.


Competitive Impact Statement

    Plaintiff United States of America (``United States''), pursuant to 
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or 
``Tunney Act''), 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

    The United States filed a civil antitrust Complaint on March 27, 
2012, seeking to enjoin Humana Inc. (``Humana'') from acquiring 
Arcadian Management Services, Inc. (``Arcadian''), alleging that the 
acquisition likely would substantially lessen competition in the sale 
of individual Medicare Advantage plans in forty-five counties and 
parishes in Arizona, Arkansas, Louisiana, Oklahoma, and Texas (``the 
relevant geographic markets''), in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18. The loss of competition from the acquisition 
likely would result in higher premiums and reduced benefits and 
services in these markets.
    At the same time that the United States filed the Complaint, the 
United States also filed an Asset Preservation Stipulation and Order 
(``Stipulation'') and proposed Final Judgment, which will eliminate the 
anticompetitive effects that likely would result from the transaction 
by requiring the Defendants to divest Medicare Advantage business in 
each relevant geographic market. Under the Stipulation, the Defendants 
must ensure that the assets to be divested continue to be operated as 
ongoing, economically viable, and competitive Medicare Advantage 
offerings until accomplishment of the divestitures that the proposed 
Final Judgment requires.
    The United States and the Defendants have stipulated that the Court 
may enter the proposed Final Judgment after compliance with the APPA. 
Entry of the proposed Final Judgment would terminate this action, 
except that the Court would retain jurisdiction to construe, modify, or 
enforce the provisions of the Final Judgment and to punish violations 
thereof.

II. Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction

    Defendant Humana is a leading health insurer in the United States, 
providing health insurance and other services to more than 17 million 
people nationwide. In 2010 Humana reported revenues of approximately 
$33.6 billion.
    Humana is one of the largest Medicare Advantage providers in the 
United States, with almost 1.8 million Medicare Advantage members. 
Humana provides health insurance to approximately 35,000 Medicare 
Advantage enrollees in the relevant geographic markets alleged in the 
Complaint. In the relevant geographic markets, Humana sells Medicare 
Advantage plans under the Humana Gold Choice, Humana Gold Plus, 
HumanaChoice, and Humana Reader's Digest Healthy Living Plan names.
    Arcadian sells Medicare Advantage HMO plans and focuses on 
secondary, non-urban, and underserved markets. It has approximately 
62,000 Medicare Advantage members in fifteen states. In 2010 it had 
revenues of $622 million.
    Arcadian provides health insurance to over 14,700 Medicare 
Advantage enrollees in the relevant geographic markets. Humana and 
Arcadian each have well-established managed-care networks that they use 
to provide services to enrollees in these markets. In addition, each 
has an established brand and positive reputation in the relevant 
geographic markets.
    On August 24, 2011, Humana and Arcadian entered into a merger 
agreement whereby Humana agreed to acquire all of the outstanding 
shares of Arcadian. Humana and Arcadian valued the transaction at 
approximately $150 million.

B. Medicare Advantage Insurance

    The federal government provides and facilitates the provision of 
health insurance to millions of Medicare-eligible citizens through two 
types of programs: traditional Medicare and Medicare Advantage. Under 
traditional Medicare, a beneficiary receives coverage for inpatient 
healthcare services in hospitals and other facilities under Medicare 
Part A and can elect to receive coverage for physician and outpatient 
healthcare services under Part B. For Part A, the government generally 
charges no monthly premium if the beneficiary was in the workforce and 
paid Medicare taxes. For Part B, the government deducts a monthly 
premium ($99.90 for most beneficiaries) from the beneficiary's Social 
Security checks. In addition, for doctor visits and hospital stays, the 
beneficiary must pay deductibles, coinsurance, or both. If a

[[Page 20424]]

beneficiary wants to limit these potentially high out-of-pocket costs, 
the beneficiary can purchase a separate Medicare Supplement plan for an 
additional monthly premium. To receive prescription drug coverage, 
seniors enrolled in traditional Medicare can purchase a Medicare 
prescription drug plan (Medicare Part D) for an additional monthly 
premium.
    Medicare Advantage plans, unlike traditional Medicare, are offered 
by private insurance companies. Medicare Advantage plans provide all of 
the medical insurance coverage that seniors receive under traditional 
Medicare and also usually limit out-of-pocket costs and include drug 
coverage. These plans also generally provide benefits beyond what 
traditional Medicare provides, often including coverage for vision, 
hearing, dental, and wellness programs. However, most Medicare 
Advantage plans have a more limited healthcare provider network than 
traditional Medicare, and limited networks help Medicare Advantage 
insurers lower their costs and offer richer benefits than traditional 
Medicare.
    An insurance company that seeks to offer a Medicare Advantage plan 
in a county must submit a bid to the Centers for Medicare and Medicaid 
Services (``CMS'') for each Medicare Advantage plan that it intends to 
offer. The bid must provide the insurer's anticipated costs to cover 
the required Medicare Part A and Part B benefits for a member. CMS 
actuaries compare these costs, including an anticipated profit margin, 
to a Medicare benchmark that reflects, in part, the government's likely 
cost of covering the beneficiaries. Through 2011, if the insurer's bid 
for Medicare benefits was lower than the benchmark, the Medicare 
program retained 25 percent of the savings and the insurer was required 
to use the other 75 percent (``the rebate'') to provide supplemental 
benefits or lower premiums. Accordingly, a plan with lower projected 
costs would offer more benefits to seniors and be more attractive. As 
of 2012, the rebate will vary based on performance as measured through 
CMS's Medicare star rating system, such that insurers will receive a 
greater fraction of the rebate the better their performance. Therefore, 
Medicare Advantage plans compete for enrollment by lowering costs, 
lowering premiums, increasing benefits, and improving performance.
    Medicare Advantage enrollees can be either group or individual 
enrollees. Group enrollees are generally retirees who enroll in a 
Medicare Advantage plan chosen by their former employer or another 
group. Individual enrollees directly choose their Medicare Advantage 
plan from among the plans that CMS has approved for the county or 
parish in which they live.

C. Relevant Markets

1. The Relevant Product Market Is No Broader Than the Sale of 
Individual Medicare Advantage Health Insurance
    The Complaint alleges that the relevant product market is no 
broader than the sale of Medicare Advantage health insurance to 
individuals. Most successful Medicare Advantage plans, including those 
in the relevant geographic markets, offer substantially richer benefits 
at lower costs to enrollees than traditional Medicare does with or 
without a Medicare Supplement or Medicare prescription drug plan, 
including lower copayments, lower coinsurance, caps on total yearly 
out-of-pocket costs, prescription drug coverage, and supplemental 
benefits that traditional Medicare does not cover, such as dental and 
vision coverage, and health club memberships. Seniors enrolled in 
Medicare Advantage plans also often value that they can receive all of 
these benefits through a single plan and that Medicare Advantage plans 
manage care in ways that traditional Medicare does not.
    Consequently, a small but significant increase in Medicare 
Advantage plan premiums or reduction in benefits is unlikely to cause a 
sufficient number of seniors in the relevant geographic markets to 
switch to traditional Medicare such that the price increase or 
reduction in benefits would be unprofitable. Accordingly, the relevant 
product market is no broader than the sale of individual Medicare 
Advantage plans and is a line of commerce under Section 7 of the 
Clayton Act, 15 U.S.C. 18.
2. The Relevant Geographic Markets Are County or Parish Markets
    Seniors may enroll only in Medicare Advantage plans that CMS 
approves for the county or parish in which they live. Consequently, 
they could not turn to Medicare Advantage plans offered outside the 
county or parish in which they live in response to a small but 
significant increase in premiums or a reduction in benefits. 
Accordingly, each of following forty-five counties and parishes is a 
relevant geographic market and a section of the country within the 
meaning of Section 7 of the Clayton Act: Mohave and Yavapai Counties in 
Arizona; Columbia, Conway, Crawford, Franklin, Hempstead, Howard, 
Lafayette, Little River, Logan, Miller, Nevada, Pope, Scott, Sebastian, 
Sevier, and Yell Counties in Arkansas; Allen, Beauregard, Bienville, 
Bossier, Caddo, Calcasieu, Claiborne, De Soto, Jefferson Davis, Red 
River, and Webster Parishes in Louisiana; Adair, Delaware, Haskell, Le 
Flore, McCurtain, Ottawa, and Sequoyah Counties in Oklahoma; and Bowie, 
Cass, Deaf Smith, Gregg, Harrison, Henderson, Potter, Randall, and 
Titus Counties in Texas.
3. The Defendants' Shares in Medicare Advantage Are High in the 
Relevant Geographic Markets
    The market for Medicare Advantage plans is already highly 
concentrated in almost all of the relevant geographic markets and would 
become significantly more concentrated as a result of the proposed 
acquisition. If consummated, the merger would give Humana market shares 
ranging from 40 to 100 percent in the relevant geographic markets, 
resulting in highly concentrated markets, as shown below.\1\ 
Collectively, the individual Medicare Advantage plans in these areas 
account for over $700 million in annual commerce.
---------------------------------------------------------------------------

    \1\ The term ``HHI'' means the Herfindahl[hyphen]Hirschman 
Index, a commonly accepted measure of market concentration. The HHI 
is calculated by squaring the market share of each firm competing in 
the market and then summing the resulting numbers. The agencies 
generally consider markets in which the HHI is in excess of 2,500 
points to be highly concentrated. See U.S. Department of Justice & 
FTC, Horizontal Merger Guidelines Sec.  5.3 (2010). Transactions 
that increase the HHI by more than 200 points in highly concentrated 
markets are presumed likely to enhance market power under the 
Horizontal Merger Guidelines issued by the Department of Justice and 
the Federal Trade Commission. See id.

[[Page 20425]]



                                           Relevant Geographic Markets
                                               [As of March 2012]
----------------------------------------------------------------------------------------------------------------
                                                               Post-merger
                          County                             share (percent)   HHI Post-merger   Increase in HHI
----------------------------------------------------------------------------------------------------------------
Mohave, AZ................................................              82.3              6980              3386
Yavapai, AZ...............................................              40.8              5091               407
Columbia, AR..............................................              56.0              4732              1421
Conway, AR................................................              55.0              3906               376
Crawford, AR..............................................              63.8              4514              1563
Franklin, AR..............................................              47.8              3539               549
Hempstead, AR.............................................              55.7              5064              1218
Howard, AR................................................              58.1              4576              1681
Lafayette, AR.............................................              68.3              5668              1993
Little River, AR..........................................              82.1              7066              3292
Logan, AR.................................................              59.7              4263              1080
Miller, AR................................................              73.8              5836              1931
Nevada, AR................................................              58.9              5158              1139
Pope, AR..................................................              44.1              4055               312
Scott, AR.................................................              52.1              3545               984
Sebastian, AR.............................................              57.9              3882              1133
Sevier, AR................................................              84.1              7326              3474
Yell, AR..................................................              40.3              3075               610
Allen, LA.................................................              78.5              6622              1310
Beauregard, LA............................................             100.0             10000              4789
Bienville, LA.............................................              49.3              3721              1189
Bossier, LA...............................................              93.3              8748               848
Caddo, LA.................................................              92.7              8642              1626
Calcasieu, LA.............................................             100.0             10000              3217
Claiborne, LA.............................................              42.0              3523               535
De Soto, LA...............................................             100.0             10000              3648
Jefferson Davis, LA.......................................              88.7              8000              1746
Red River, LA.............................................              45.0              3803               926
Webster, LA...............................................              84.1              7323              1385
Adair, OK.................................................              60.1              5204              1799
Delaware, OK..............................................             100.0             10000              3887
Haskell, OK...............................................              58.6              4666              1688
Le Flore, OK..............................................             100.0             10000              4632
McCurtain, OK.............................................              80.6              6691              2325
Ottawa, OK................................................             100.0             10000              1512
Sequoyah, OK..............................................             100.0             10000              4928
Bowie, TX.................................................              82.5              7019              3305
Cass, TX..................................................              81.3              6962              3285
Deaf Smith, TX............................................              66.7              5556              1636
Gregg, TX.................................................              73.7              5783              2668
Harrison, TX..............................................              86.4              7652              3590
Henderson, TX.............................................              68.0              5197              2224
Potter, TX................................................              72.6              5776              2197
Randall, TX...............................................              75.0              5928              1421
Titus, TX.................................................              75.8              6331              2198
----------------------------------------------------------------------------------------------------------------

D. The Acquisition Likely Would Substantially Lessen Competition in the 
Sale of Individual Medicare Advantage Plans in Each Relevant Geographic 
Market

    The proposed transaction likely would substantially lessen 
competition in the sale of individual Medicare Advantage plans and end 
the substantial head-to-head competition between Humana and Arcadian to 
convince seniors to enroll in each company's Medicare Advantage plans 
in the relevant geographic markets. That competition has benefited 
thousands of seniors.
    In each market, Humana and Arcadian compete against each other by 
offering plans with frequently low or no premiums, reducing copayments, 
eliminating deductibles, lowering annual out-of-pocket maximum costs, 
managing care, improving drug coverage, offering desirable benefits, 
and making their provider networks more attractive to potential 
members. If Defendants complete the proposed transaction, the loss of 
this competition likely would result in higher premiums and reduced 
benefits for seniors enrolled in Medicare Advantage plans in the 
relevant geographic markets.
    Competition from existing Medicare Advantage plans and new entrants 
is unlikely to prevent anticompetitive effects in each relevant 
geographic market. Entrants face substantial cost, reputation, and 
distribution disadvantages that will likely make them unable to prevent 
Humana from profitably raising premiums or reducing benefits in the 
relevant geographic markets.

III. Explanation of the Proposed Final Judgment

A. The Divestiture Assets

    The proposed Final Judgment is designed to eliminate the 
anticompetitive effects identified in the Complaint by requiring the 
Defendants to divest Arcadian's individual Medicare Advantage business 
in 34 of the 45 relevant geographic markets, and Humana's individual 
Medicare

[[Page 20426]]

Advantage business in 11 of them (collectively ``the Divestiture 
Assets'') to one or more acquirers approved by, and on terms acceptable 
to, the United States. Specifically, the divestitures will eliminate 
the anticompetitive effects alleged in the Complaint by requiring the 
Defendants to divest one or more Medicare Advantage plans in each 
relevant geographic market to an acquirer that will compete vigorously 
with the merged Humana-Arcadian. The divestitures are designed to allow 
the acquirer, or acquirers, of the assets to offer uninterrupted care 
to members of Arcadian's and Humana's divested Medicare Advantage 
plans.
    The Divestiture Assets include all of Arcadian's and Humana's 
rights and obligations under the relevant Arcadian or Humana contracts 
with CMS. The lines of business to be divested cover approximately 
12,700 individual Medicare Advantage beneficiaries. In addition to the 
plans in the forty-five relevant geographic markets, the Divestiture 
Assets include Arcadian plans in five counties and one parish where 
Arcadian has either one percent or no enrollment and where the 
Complaint does not allege likely anticompetitive effects: Johnson 
County in Arkansas; Cameron Parish in Louisiana; Pushmataha County in 
Oklahoma; and Armstrong, Carson, and Oldham Counties in Texas. These 
plans are in areas contiguous to and under the same CMS contract and 
plan ID as plans in the relevant geographic markets. The Divestiture 
Assets include these additional plans because doing so makes them more 
administrable and will facilitate the divestiture of the plans in the 
relevant geographic markets.
    The Divestiture Assets exclude enrollment in Medicare Advantage 
Special Needs Plans. Enrollment in Special Needs Plans is limited to 
seniors who are institutionalized, dually eligible for Medicare and 
Medicaid benefits, or afflicted by severe or disabling chronic 
conditions. The divestiture of these plans is unnecessary to eliminate 
the transaction's likely anticompetitive effects because the 
Defendants' enrollment in Special Needs Plans accounts for only 1.4% of 
their combined individual Medicare Advantage membership in the markets 
where divestitures are required.
    The Defendants must satisfy the United States that a viable 
competitor will replace Arcadian's competitive presence in the sale of 
individual Medicare Advantage plans in each of the forty-five relevant 
geographic markets identified in the Complaint. The divestitures must 
be (1) made to an acquirer that has the intent and capability--
including the necessary managerial, operational, technical, and 
financial capability--to compete effectively in the sale of Medicare 
Advantage products in the market, or markets, in question, and (2) 
accomplished so as to satisfy the United States that none of the terms 
of any agreement between Humana and any acquirer gives Humana the 
ability to interfere with the acquirer's ability to compete 
effectively. The proposed Final Judgment also provides that the 
divestiture of the Divestiture Assets may be made to one or more 
acquirers, provided that in each instance the United States is 
satisfied that the Divestiture Assets will remain viable and the 
divestitures will remedy the anticompetitive harm alleged in the 
Complaint.

B. Selected Provisions of the Proposed Final Judgment

    In addition to the requirements discussed above, the following 
specific provisions of the proposed Final Judgment will enable the 
acquirer to compete promptly and effectively in the relevant geographic 
markets for individual Medicare Advantage plans.
1. Provider-Network Contracts
    Sections IV.G through IV.K ensure that the acquirer of the assets 
divested in each relevant geographic market (and the five additional 
counties and one additional parish discussed above) will have a 
healthcare provider network sufficient to compete vigorously and 
minimize any network disruption from the divestiture. To compete 
effectively in the sale of Medicare Advantage plans, an insurer needs a 
network of healthcare providers contracted at competitive rates because 
hospital and physician expenses constitute the large majority of an 
insurer's costs. By requiring Humana to assist the acquirer in 
establishing a cost[hyphen]competitive provider network, Sections IV.G 
through IV.K will enable the acquirer to compete as effectively as 
Humana and Arcadia before the proposed transaction.
    In particular, Section IV.G requires, at the acquirer's option, 
that the Defendants assign the acquirer all Arcadian contracts with 
healthcare providers in all of the relevant geographic markets where 
those contracts are freely assignable, except Columbia, Hempstead, 
Howard, Lafayette, Little River, Miller, Nevada, and Sevier Counties in 
Arkansas, and Bowie, Cass, and Titus Counties in Texas (collectively, 
``the Texarkana Area,'' discussed further below). Where those contracts 
are not freely assignable, the Defendants must use their best efforts 
to obtain any necessary provider consents to assignment of the Arcadian 
contracts and assign those contracts to the Acquirer after obtaining 
the necessary consents. To further ensure that the Acquirer has an 
adequate network, Section IV.H imposes the same obligation with respect 
to providers that provide health-care services in a county or parish 
contiguous to a divestiture county or parish, but that receive the bulk 
of their Arcadian contract payments from Arcadian members in the 
divestiture area, also at the acquirer's option.
    In addition, to ensure that the acquirer of the assets related to 
the Texarkana Area has the same providers in its network as Humana 
currently does and on terms that are equal to Humana's terms, Section 
IV.K of the Final Judgment requires Humana to lease access to two of 
its wholly-owned provider networks, ChoiceCare and LifeSynch, to the 
acquirer of the divestiture assets in the Texarkana Area's relevant 
geographic markets. Humana's Medicare Advantage plans in the Texarkana 
Area currently use these networks to access providers. Section IV.K 
requires Humana to lease to the acquirer access to these networks on 
non-discriminatory terms until December 31, 2014. This time period and 
the enrollment that comes with the divestiture should enable the 
acquirer to develop its own provider network.
2. Quick Divestiture
    Section IV of the proposed Final Judgment is designed to ensure 
that the divestitures occur quickly, and in a manner consistent with 
applicable regulatory requirements. Section IV.A requires that the 
Defendants complete the divestitures within sixty days of the filing of 
the Complaint, with the granting of possible extensions in the sole 
discretion of the United States and not to exceed ninety days total. If 
(1) the Defendants have filed all necessary applications or requests 
for government approval within five days after the date that the United 
States informs the Defendants that it does not object to a proposed 
divestiture, and (2) an order or other dispositive action on such 
applications has not issued or become effective before the end of the 
period permitted for divestiture, Section IV.B extends the divestiture 
period until five business days after the approval is received.
3. Branding
    The Final Judgment also recognizes the importance of branding to a 
company's ability to compete effectively

[[Page 20427]]

in the sale of Medicare Advantage plans. Section IV.M provides that 
upon completing the divestiture and through December 31, 2014, the 
Defendants may not use the Arcadian brand for any type of Medicare 
Advantage plan, other than a Special Needs Plan, in any of the fifty-
one counties and parishes (including the five additional counties and 
one additional parish discussed above) except those in the Texarkana 
Area. In addition, Section IV.N allows the acquirer to use the Arcadian 
brand in any of the fifty-one counties and parishes except those in the 
Texarkana Area for up to twelve months after divestiture with the 
United States' approval. Section IV.O allows the acquirer to make 
reasonable transitional use of the Humana brand in the Texarkana Area.
4. CMS Regulatory Process
    Section IV also requires that the Defendants transfer the 
Divestiture Assets in a manner consistent with CMS rules and 
regulations, and that the Defendants maintain the viability of those 
assets in the interim through the CMS bidding process. Specifically, 
Section IV.S requires Defendants to work with CMS to ensure that the 
divestiture process satisfies any CMS concerns about network disruption 
and adheres to rules and regulations regarding novations. Section IV.X 
provides that if Defendants fail to divest the Divestiture Assets by 
May 15, 2012, Humana will prepare and submit to CMS, in the ordinary 
course of business and consistent with past practice, subject to 
actuarially reasonable adjustment, all necessary filings for the 
Divestiture Assets including Medicare Advantage Plan bids for 2013, so 
that the Divestiture Assets remain viable, ongoing Medicare Advantage 
offerings. CMS's annual Medicare Advantage bid cycle necessitates this 
provision because plan proposals for the upcoming year must be 
submitted by no later than June of the current year.
5. Divestiture Trustee and Monitoring Trustee
    Section V provides for the appointment, if necessary, of a trustee 
to sell the Divesture Assets and thereby also encourages a quick, 
effective divestiture in this matter. Section V.A provides that, if the 
Defendants have not divested the Divestiture Assets within the time 
period specified in Section IV, the Court will appoint a trustee 
selected by the United States to carry out any divestitures the 
Defendants have not completed. Defendants must pay the trustee's costs 
and expenses, and the trustee's commission will provide an incentive 
based on the price, terms, and speed of the divestiture. Once the 
trustee is appointed, the trustee will file monthly reports with the 
Court and the United States explaining his or her efforts to accomplish 
the divestiture. Section V.G provides that if the trustee has not 
accomplished the divestiture by November 21, 2012, the trustee and the 
United States will make recommendations to the Court, which will enter 
such orders as it deems appropriate in order to carry out the purpose 
of the trust. This may include extending the trust or the term of the 
trustee's appointment by a period requested by the United States.
    As soon as the filing of the Complaint, the United States may also 
appoint a monitoring trustee, subject to the approval by the Court, 
which will insure against deterioration of the Divestiture Assets until 
their divestiture. The monitoring trustee will have the power and 
authority to monitor Defendants' compliance with the Final Judgment and 
Stipulation and such powers as the Court may deem appropriate, and 
Defendants can object to that trustee's actions only for malfeasance. 
This trustee will serve at Humana's expense and on such terms and 
conditions as the United States approves, and the Defendants must 
assist the trustee in fulfilling its obligations. The monitoring 
trustee will file monthly reports and will serve until the divestiture 
is complete and any agreements for transitional support services have 
expired.

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 the person has suffered, as well as costs and reasonable 
attorneys fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States, Humana, and Arcadian have stipulated that the 
proposed Final Judgment may be entered by the Court after compliance 
with the provisions of the APPA, provided that the United States has 
not withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty days preceding the 
effective date of the proposed Final Judgment within which any person 
may submit to the United States written comments regarding the proposed 
Final Judgment. Any person who wishes to comment should do so within 
sixty days of the date of publication of this Competitive Impact 
Statement in the Federal Register, or the last date of publication in a 
newspaper of the summary of this Competitive Impact Statement, 
whichever is later. All comments received during this period will be 
considered by the United States Department of Justice, which remains 
free to withdraw its consent to the proposed Final Judgment at any time 
before 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: Joshua H. Soven, Chief, 
Litigation I Section, Antitrust Division, United States Department of 
Justice, 450 Fifth Street NW., Suite 4100, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against Defendants. The 
United States could have continued the litigation and sought a judicial 
order enjoining Humana's acquisition of Arcadian. The United States is 
satisfied, however, that divestiture of the assets described in the 
proposed Final Judgment will preserve competition for the sale of 
individual Medicare Advantage plans in the relevant geographic markets. 
Thus, the proposed Final Judgment would achieve all or substantially 
all of the relief the United States would have obtained through 
litigation, but avoids the time, expense, and uncertainty of a full 
trial on the merits.

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

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by

[[Page 20428]]

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, in accordance with the statute as amended in 
2004, is required to 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).

    In considering these statutory factors, the court's inquiry is 
necessarily a limited one as the government is entitled to ``broad 
discretion to settle with the defendant within the reaches of the 
public interest.'' United States v. Microsoft Corp., 56 F.3d 1448, 1461 
(D.C. Cir. 1995); see also United States v. SBC Commc'ns, Inc., 489 F. 
Supp. 2d 1 (D.D.C. 2007) (assessing public-interest standard under the 
Tunney Act); United States v. InBev N.V./S.A., 2009-2 Trade Cas. (CCH) 
] 76,736, 2009 U.S. Dist. LEXIS 84787, No. 08-1965 (JR), at *3 (D.D.C. 
Aug. 11, 2009) (noting that the court's review of a consent judgment is 
limited and only inquires ``into whether the government's determination 
that the proposed remedies will cure the antitrust violations alleged 
in the complaint was reasonable, and whether the mechanisms to enforce 
the final judgment are clear and manageable.'').\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. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    Under the APPA, a court considers, among other things, the 
relationship between the remedy secured and the specific allegations 
set forth in the United States' complaint, whether the decree is 
sufficiently clear, whether enforcement mechanisms are sufficient, and 
whether the decree may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. 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; InBev, 2009 U.S. Dist. LEXIS 84787, at *3; United States v. 
Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001). 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).\3\ In 
determining whether a proposed settlement is in the public interest, 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'').
---------------------------------------------------------------------------

    \3\ 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''').

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[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, and 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; see also InBev, 2009 
U.S. Dist. LEXIS 84787, at *20 (``the `public interest' is not to be 
measured by comparing the violations alleged in the complaint against 
those the court believes could have, or even should have, been 
alleged''). 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. Microsoft, 56 F.3d at 1459-60. 
As the United States District Court for the District of Columbia 
confirmed in SBC Communications, 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, Congress made clear its intent to preserve 
the practical benefits of using 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). This language effectuates what 
Congress intended when it enacted the Tunney Act in 1974. As Senator 
Tunney

[[Page 20429]]

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.\4\
---------------------------------------------------------------------------

    \4\ 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 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.'').
---------------------------------------------------------------------------

VIII. Determinative Documents

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

Dated this 27th day of March 2012.

Respectfully submitted,

/s/Adam Gitlin---------------------------------------------------------

Adam Gitlin,
Barry Creech (DC Bar 421070),
Barry Joyce,
Edward D. Eliasberg, Jr. (DC Bar 199182),
Katrina Rouse,

Attorneys for the United States, Litigation I Section, Antitrust 
Division, U.S. Department of Justice, 450 Fifth Street NW., Suite 
4100, Washington, DC 20530.

Telephone: (202) 307-6456.
Facsimile: (202) 305-1190.
Email: adam.gitlin@usdoj.gov.

United States District Court for the District of Columbia

    United States of America, Plaintiff v. Humana Inc. and Arcadian 
Management Services, Inc., Defendants.
    Case: 1:12-cv-00464.
    Assigned To: Walton, Reggie B.
    Assign. Date: 3/27/2012.
    Description: Antitrust.

[Proposed] Final Judgment

    Whereas, plaintiff, United States of America, filed its Complaint 
on March 27, 2012, and Plaintiff and Defendants, Humana Inc. and 
Arcadian Management Services, Inc., 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 admission by any party 
regarding any issue of fact or law;
    And whereas, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And whereas, the essence of this Final Judgment is the prompt and 
certain divestitures of certain rights and assets by Defendants to 
ensure that competition is not substantially lessened in the sale of 
Medicare Advantage Plans to Medicare beneficiaries in the Arcadian Plan 
Areas and Texarkana Area as described below;
    And whereas, the United States requires Defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And whereas, Defendants have represented to the United States that 
the divestitures required by this Final Judgment can and will be made, 
and that Defendants will not later raise any claim of hardship or 
difficulty as grounds for asking the Court to modify any of the 
provisions of this Final Judgment;
    Now therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ordered, adjudged, and decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of, and each of 
the parties to, this action. The Complaint states a claim upon which 
relief may be granted against Defendants under Section 7 of the Clayton 
Act, as amended, 15 U.S.C. 18.

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the entity or entities to which the 
Divestiture Assets are divested.
    B. ``Amarillo Plan'' means the individual Medicare Advantage Plan 
offered by Arcadian solely insofar as such plan serves enrollees in the 
Amarillo Area under CMS Contract ID H4529, Plan ID 27 or such other 
contract and plan identification number as CMS assigns to such plan.
    C. ``Arcadian'' means Defendant Arcadian Management Services, Inc., 
a Delaware corporation with its headquarters in Oakland, CA, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships and joint ventures, and their respective 
directors, officers, managers, agents, and employees.
    D. ``Arcadian CMS Plans'' means the Amarillo Plan, Arizona Plans, 
Eastern Oklahoma Plan, Fort Smith Plan, Lake Charles Plan, Longview-
Marshall Plan, and Shreveport Plan.
    E. ``Arcadian Contracted Provider'' means a health-care provider 
contracted with Arcadian to provide or arrange for health services 
under an Arcadian CMS Plan as of March 1, 2012.
    F. ``Arcadian Contracts'' means the CMS contracts pursuant to which 
the Arcadian CMS Plans are administered.
    G. ``Arcadian Plan Areas'' means the Amarillo Area (Armstrong, 
Carson, Deaf Smith, Oldham, Potter, and Randall Counties in Texas), 
Eastern Oklahoma Area (Adair, Delaware, Haskell, Le Flore, McCurtain, 
Ottawa, Pushmataha, and Sequoyah Counties in Oklahoma), Longview-
Marshall Area (Gregg, Harrison, and Henderson Counties in Texas), 
Arizona Area (Mohave and Yavapai Counties in Arizona), Shreveport Area 
(Bienville, Bossier, Caddo, Claiborne, De Soto, Red River, and Webster 
Parishes in Louisiana), Lake Charles Area (Allen, Beauregard, 
Calcasieu, Cameron, and Jefferson Davis Parishes in Louisiana), and 
Fort Smith Area (Conway, Crawford, Franklin, Johnson, Logan, Pope, 
Scott, Sebastian, and Yell counties in Arkansas).
    H. ``Arizona Plans'' means the individual Medicare Advantage Plans 
offered by Arcadian solely insofar as such plan serves enrollees in the 
Arizona Area under CMS Contract ID H0320, Plan IDs 5 and 6 or such 
other contract and plan identification numbers as CMS assigns to such 
plan.
    I. ``Broker'' means any independent insurance agent, general agent, 
producer, or broker who facilitates the sale of health-insurance plans 
to individuals or groups.
    J. ``CMS'' means the Centers for Medicare and Medicaid Services, an 
agency within the U.S. Department of Health and Human Services.
    K. ``Divestiture Assets'' means all of Arcadian's rights and 
obligations under the Arcadian Contracts with respect to the Arcadian 
CMS Plans, and all of Humana's rights and obligations under the 
Texarkana Contracts with respect to the Texarkana CMS Plans, including 
the right to offer Medicare Advantage plans to individual enrollees 
pursuant to the bids filed with CMS for the contract year in effect as 
of the closing of the divestiture of the Divestiture Assets, and the 
right to receive from CMS a per member per month capitation payment in 
exchange for providing or arranging

[[Page 20430]]

for the benefits enumerated in the bids; and copies of all business, 
financial and operational books, records, and data, both current and 
historical, that primarily relate to the Arcadian Contracts or 
Texarkana Contracts. Where books, records, or data primarily relate to 
the Arcadian CMS Plans or Texarkana CMS Plans, but not solely to these 
Plans, Defendants must provide excerpts relating to these Plans. 
Nothing herein requires Defendants to take any action prohibited by the 
Health Insurance Portability and Accountability Act of 1996 (HIPAA).
    L. ``Duplicate'' means a contract with identical terms to a 
contract with an Arcadian Contracted Provider, except for those terms 
that identify (i) the contract's effective date and (ii) the Medicare 
Advantage organization or the entity contracting on behalf of the 
Medicare Advantage organization.
    M. ``Eastern Oklahoma Plan'' means the individual Medicare 
Advantage Plan offered by Arcadian solely insofar as such plan serves 
enrollees in the Eastern Oklahoma Area under CMS Contract ID H4125, 
Plan ID 1 or such other contract and plan identification number as CMS 
assigns to such plan.
    N. ``Fort Smith Plan'' means the individual Medicare Advantage Plan 
offered by Arcadian solely insofar as such plan serves enrollees in the 
Fort Smith Area under CMS Contract ID H5700, Plan ID 9 or such other 
contract and plan identification number as CMS assigns to such plan.
    O. ``Health-care provider'' means any person or entity that 
contracts with Arcadian or Humana to provide or arrange for the 
provision of any health-care service, including hospitals, physician 
groups, laboratories, ambulatory surgical centers, nursing facilities, 
pharmacies, and other providers of health-care services.
    P. ``Humana'' means defendant Humana Inc., a Delaware corporation 
with its headquarters in Louisville, Kentucky, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and their respective directors, 
officers, managers, agents, and employees.
    Q. ``Lake Charles Plan'' means the individual Medicare Advantage 
Plan offered by Arcadian solely insofar as such plan serves enrollees 
in the Lake Charles Area under CMS Contract ID H7179, Plan ID 2 or such 
other contract and plan identification number as CMS assigns to such 
plan.
    R. ``Longview-Marshall Plan'' means the individual Medicare 
Advantage Plan offered by Arcadian solely insofar as such plan serves 
enrollees in the Longview-Marshall Area under CMS Contract ID H4529, 
Plan ID 30 or such other contract and plan identification number as CMS 
assigns to such plan.
    S. ``Medicare Advantage Plan'' means Medicare Advantage health 
maintenance organization plans, Medicare Advantage preferred provider 
organization plans, and Medicare Advantage private fee-for-service 
plans, as defined in 42 U.S.C. Sec.  1395w-28.
    T. ``Shreveport Plan'' means the individual Medicare Advantage Plan 
offered by Arcadian solely insofar as such plan serves enrollees in the 
Shreveport Area under CMS Contract ID H7179, Plan ID 2 or such other 
contract and plan identification number as CMS assigns to such plan.
    U. ``Texarkana Area'' means Columbia, Hempstead, Howard, Lafayette, 
Little River, Miller, Nevada, and Sevier Counties in Arkansas, and 
Bowie, Cass, and Titus Counties in Texas.
    V. ``Texarkana Contracts'' means the CMS contracts pursuant to 
which the Texarkana CMS Plans are administered.
    W. ``Texarkana CMS Plans'' means the individual Medicare Advantage 
Plans offered by Humana solely insofar as such plan serves enrollees in 
the Texarkana Area under CMS Contract ID H2944, Plan IDs 13, 197, and 
204; Contract ID H4520, Plan ID 6; Contract ID H7188, Plan IDs 3 and 6; 
and Contract ID H8145, Plan IDs 120 and 122, or such other contract and 
plan identification numbers as CMS assigns to such plans.
    X. ``Transaction'' means the merger contemplated by the Agreement 
and Plan of Merger dated as of August 24, 2011, by and among Humana, 
Humsol, Inc., and Arcadian.

III. Applicability

    A. This Final Judgment applies to each Defendant and any other 
person in active concert or participation with any Defendant who 
receives actual notice of this Final Judgment by personal service or 
otherwise.
    B. If, prior to complying with Section IV and V of this Final 
Judgment, Defendants sell or otherwise dispose of all or substantially 
all of their assets or of lesser business units that include the 
Divestiture Assets, Defendants must require the purchaser(s) to be 
bound by the provisions of this Final Judgment. Defendants need not 
obtain such an agreement from the Acquirer of the assets divested 
pursuant to this Final Judgment.

IV. Divestitures

    A. Defendants are ordered and directed to divest the Divestiture 
Assets in a manner consistent with this Final Judgment to one or more 
Acquirers acceptable to the United States, in its sole discretion, 
within sixty calendar days after the filing of the Complaint in this 
matter. The United States, in its sole discretion, may agree to one or 
more extensions of this time period not to exceed ninety days total and 
must notify the Court in such circumstances.
    B. Defendants must obtain all regulatory approvals necessary for 
such divestitures as expeditiously as possible. If applications for 
approval have been filed with the appropriate governmental units within 
five calendar days after the United States has provided written notice, 
pursuant to Section 0, that it does not object to a proposed 
divestiture, but these required approvals have not been issued or 
become effective before the end of the period permitted for 
divestiture, the period for divestiture shall be extended until five 
business days after all necessary government approvals have been 
received. With respect to this Section IV.B, an application for CMS 
approval will be deemed to have been filed when Defendants have given 
CMS advance notice of a possible change in ownership pursuant to 42 CFR 
422.550(b), provided that Defendants timely submit all materials 
required by CMS for approval.
    C. In accomplishing the divestitures ordered by this Final 
Judgment, Defendants promptly must make known, by usual and customary 
means, the availability of the Divestiture Assets. Defendants must 
inform any person making an inquiry regarding a possible purchase that 
the divestitures are being made pursuant to this Final Judgment and 
must provide that person with a copy of this Final Judgment. Defendants 
must offer to furnish to all prospective Acquirers, subject to 
reasonable confidentiality assurances, all information and documents 
relating to the Divestiture Assets customarily provided in a due 
diligence process, except information and documents subject to the 
attorney-client privilege or the attorney work-product privilege. 
Defendants must make available such information to the United States at 
the same time that such information is made available to prospective 
Acquirers.
    D. Defendants must permit prospective Acquirers of the Divestiture 
Assets to have reasonable access to personnel and access to any and all 
financial, operational, or other documents and information as is 
customarily provided as part of a due diligence process for a 
transaction of this type.

[[Page 20431]]

    E. Defendants may not take any action that will impede in any way 
the permitting, operation, or divestiture of the Divestiture Assets.
    F. Unless the United States otherwise consents in writing, the 
divestitures pursuant to Section IV, or by a Divestiture Trustee 
appointed pursuant to Section V, must include the entire Divestiture 
Assets and must be accomplished in such a way as to satisfy the United 
States, in its sole discretion, that the Divestiture Assets can and 
will be used by the Acquirer as part of a viable, ongoing business 
engaged in the sale of Medicare Advantage Plans in the Divestiture 
Areas. The divestiture of the Divestiture Assets may be made to one or 
more Acquirers, provided that in each instance it is demonstrated to 
the sole satisfaction of the United States that the Divestiture Assets 
will remain viable and the divestitures will remedy the competitive 
harm alleged in the Complaint. The divestitures, whether pursuant to 
Section IV or Section V of this Final Judgment: (1) Must be made to 
Acquirer(s) that, in the United States' sole judgment, each have the 
intent and capability (including the necessary managerial, operational, 
technical, and financial capability) to compete effectively in the sale 
of Medicare Advantage Plans in the Divestiture Areas; and (2) must be 
accomplished so as to satisfy the United States, in its sole 
discretion, that none of the terms of any agreement between Defendants 
and any Acquirer gives Defendants the ability to interfere with the 
Acquirer's ability to compete effectively.
    G. At the Acquirer's option, Defendants must (1) assign to the 
Acquirer or, if acceptable to the Arcadian Contracted Provider, arrange 
for entry into a Duplicated contract for the Acquirer's benefit, all of 
the Arcadian contracts with Arcadian Contracted Providers that provide 
or arrange for the provision of health services in an Arcadian Plan 
Area where those contracts are freely assignable; and (2) for such 
contracts that are not freely assignable, use their best efforts to 
obtain any necessary provider consents to assignment or to entry into a 
Duplicated contract for the Acquirer's benefit and assign those 
contracts to the Acquirer after obtaining the necessary consents or 
deliver such Duplicated contracts as applicable.
    H. At the Acquirer's option, for each Arcadian Contracted Provider 
not subject to Section IV.G, that provides or arranges for the 
provision of health-care services in a county or parish contiguous to 
an Arcadian Plan Area, where at least fifty percent of the services 
provided under the health-care provider's Arcadian contract are 
provided to members of the Arcadian CMS Plans who reside in a single 
Arcadian Plan Area (as measured by 2011 claims payments), Defendants 
must (1) assign to the Acquirer or, if acceptable to the Arcadian 
Contracted Provider, arrange for entry into a Duplicated contract for 
the Acquirer's benefit, all such contracts that are freely assignable; 
and (2) for such contracts that are not freely assignable, use their 
best efforts to obtain any necessary provider consents to assignment or 
to entry into a Duplicated contract for the Acquirer's benefit, and 
assign them to the Acquirer after obtaining the necessary consents or 
deliver such Duplicated contracts as applicable.
    I. The requirements of Sections IV.G and IV.H do not apply to 
Arcadian Contracted Providers that provide or arrange in three or more 
states for durable medical equipment, pharmacy and pharmacy benefit 
management services, transplant services, dental care, vision care, 
clinical laboratory services, home health services, prosthetics and 
orthotics, and rehabilitation services.
    J. At the Acquirer's option, Defendants must assist and facilitate 
the negotiation of and entry into agreements between the Acquirer and 
such Arcadian Contracted Providers as account for substantially all of 
the health-care services to members of the Arcadian CMS Plans that are 
provided through an Arcadian contract, and on terms substantially as 
favorable as those in the Arcadian contract as of March 1, 2012.
    K. At the Acquirer's option, Humana must contract through December 
31, 2014, to provide access to Humana's ChoiceCare and LifeSynch 
provider networks in the States of Arkansas and Texas to the Acquirer 
of the Texarkana CMS Plans for members of the Texarkana CMS Plans. The 
contract terms may not be less favorable than the terms on which 
Humana's own Medicare Advantage plans access ChoiceCare and LifeSynch, 
and Humana may not charge any administrative, network access, leasing, 
or other fee to the Acquirer greater than the fees that Humana charged 
itself for access to ChoiceCare and LifeSynch as of December 31, 2011. 
Humana may not contract with the Acquirer to provide access to 
ChoiceCare and LifeSynch for the members of the Texarkana CMS Plans 
after December 31, 2014, unless the United States consents. Humana may 
not interfere with the Acquirer's efforts to contract independently 
with health-care providers participating in ChoiceCare and LifeSynch.
    L. Defendants must provide to the Acquirer, the United States, and 
any Monitoring Trustee, information relating to the personnel primarily 
involved in the operation of the Divestiture Assets to enable the 
Acquirer to make offers of employment to those persons. Defendants may 
not interfere with any negotiations by the Acquirer to employ, and must 
waive all noncompete agreements for, any of those persons. For a period 
of two years from the filing of the Complaint in this matter, 
Defendants may not solicit to hire any such person who was hired by any 
Acquirer, unless the Acquirer has notified such person that the 
Acquirer does not intend to continue to employ the person.
    M. Upon completing the divestitures and through December 31, 2014, 
Defendants may not use any Arcadian brand, or any substantially similar 
brand, name, or logo, for any type of Medicare Advantage plan of 
Defendants in the Arcadian Plan Areas, with the exception of any 
Arcadian Special Needs Plan, as defined in 42 U.S.C. 1395w-28(b)(6). 
Defendants may use the Arcadian brand or any substantially similar 
brand, name, or logo, for any Arcadian Special Needs Plan in the 
Arcadian Plan Areas.
    N. At the Acquirer's option, and subject to approval by the United 
States, Defendants will allow the Acquirer to license and use the 
Arcadian brand, and any substantially similar brand, name, or logo, 
with the Divestiture Assets for twelve months upon completing the 
divestitures, and solely in the Arcadian Plan Areas.
    O. At the Acquirer's option, and subject to approval by the United 
States, Humana will allow the Acquirer to license and use the Humana 
brand, or any substantially similar brand, name, or logo, for a period 
of up to three months after the effective date of the divestiture to 
such Acquirer (or any such longer period as CMS shall require) solely 
for the purpose of communicating to enrollees and prospective enrollees 
the transition from Humana's CMS Texarkana Plans to the Acquirer, and 
solely in the Texarkana Area. Humana may place reasonable limitation on 
the use of materials bearings its brand, including prior submission of 
materials containing Humana's brand, name or logo, to Humana for review 
and approval, which such approval shall not unreasonably be withheld. 
Nothing in this provision shall supersede any CMS marketing guidelines 
or regulations concerning Medicare Advantage plans.
    P. At the Acquirer's option, and subject to approval by the United 
States,

[[Page 20432]]

Defendants will provide transitional support services for medical and 
prescription drug claims processing, appeals and grievances, call-
center support, enrollment and eligibility services, access to form 
templates, 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. Defendants may not provide such transitional support services 
for more than twelve months from the date of the completion of the 
divestitures unless the United States approves.
    Q. To ensure an effective transition and transfer of enrollees in 
the Arcadian CMS Plans and Texarkana CMS Plans, Defendants must 
cooperate and work with the Acquirer in transition planning and 
implementing the transfer of the Divestiture Assets.
    R. Defendants will communicate and cooperate fully with the 
Acquirer to promptly identify and obtain all consents, approvals, and 
novations of government agencies necessary to divest the Divestiture 
Assets.
    S. Defendants will communicate and cooperate fully with the 
Acquirer to work in good faith with CMS to implement a novation process 
that is efficient and adheres to CMS's requirements requiring notices 
to plan members so as to minimize any potential disruption and 
confusion to enrollees in the Arcadian CMS Plans and Texarkana CMS 
Plans.
    T. Humana must warrant to the Acquirer that, since the date of its 
acquisition of Arcadian, Humana has operated the Divestiture Assets in 
all material respects in accordance with the requirements of the 
Arcadian Contracts and the Texarkana Contracts.
    U. Defendants may not take any action having the effect of delaying 
the authorization or scheduling of health-care services provided to 
enrollees in the Arcadian CMS Plans or Texarkana CMS Plans in a manner 
inconsistent with Defendants' past practice with respect to the 
Arcadian CMS Plans or Texarkana CMS Plans.
    V. Defendants may not make any material change to the customary 
terms and conditions upon which they do business with respect to the 
Arcadian CMS Plans that would be expected, individually or in the 
aggregate, to have a materially adverse effect on the Arcadian CMS 
Plans. Defendants may not make any material change to the customary 
terms and conditions upon which they do business with respect to the 
Texarkana CMS Plans that would be expected, individually or in the 
aggregate, to have a materially adverse effect on the Texarkana CMS 
Plans.
    W. Defendants must identify the top ten Brokers with respect to the 
Arcadian CMS Plans and the Texarkana CMS Plans along with the 
corresponding number of enrollees produced by each such Broker. 
Defendants will introduce the Acquirer to any such Broker for the 
purpose of the Acquirer having an opportunity, at the Acquirer's 
option, to negotiate an agreement with the Broker to market and sell 
the Arcadian CMS Plans or Texarkana CMS Plans after the completion of 
the divestitures.
    X. If Defendants fail to divest the Divestiture Assets by May 15, 
2012, Humana must prepare and submit to CMS, in the ordinary course of 
business and consistent with past practice, subject to actuarially 
reasonable adjustment, all necessary filings for the Arcadian CMS Plans 
and the Texarkana CMS Plans, including Medicare Advantage Plan bids for 
2013, so that the Divestiture Assets remain viable, ongoing Medicare 
Advantage offerings.

V. Appointment of Divestiture Trustee

    A. If Defendants have not divested some or all of the Divestiture 
Assets within the time period specified in Section 0, Defendants must 
notify the United States of that fact in writing. Upon application of 
the United States, the Court shall appoint a Divestiture Trustee 
selected by the United States and approved by the Court to effect the 
divestiture of any Divestiture Assets not already divested.
    B. After the appointment of a Divestiture Trustee becomes 
effective, only the Divestiture Trustee shall have the right to sell 
the Divestiture Assets. The Divestiture Trustee shall have the power 
and authority to accomplish the divestitures to one or more Acquirers 
acceptable to the United States at such price and on such terms as are 
then obtainable upon reasonable effort by the Divestiture Trustee, 
subject to the provisions of Sections 0, V, and VI of this Final 
Judgment, and shall have such other powers as this Court deems 
appropriate. Subject to Section 0.0 of this Final Judgment, the 
Divestiture Trustee may hire at the cost and expense of Defendants any 
professionals and agents, who shall be solely accountable to the 
Divestiture Trustee, that are reasonably necessary in the Divestiture 
Trustee's judgment to assist in the divestiture.
    C. Defendants may not object to a sale by the Divestiture Trustee 
authorized by this Order on any ground other than the Divestiture 
Trustee's malfeasance. Defendants must convey any such objections in 
writing to the United States and the Divestiture Trustee within ten 
calendar days after the Divestiture Trustee has provided the notice 
required under Section 0.
    D. The Divestiture Trustee shall serve, without bond or other 
security, at the cost and expense of Defendants, on such terms and 
conditions as the United States approves, and must account for all 
monies derived from the sale of the assets sold by the Divestiture 
Trustee and all costs and expenses so incurred. After approval by the 
Court of the Divestiture Trustee's accounting, including fees for its 
services and those of any professionals and agents retained by the 
Divestiture Trustee, all remaining money shall be paid to Defendants 
and the trust shall then be terminated. The compensation of the 
Divestiture Trustee and any professionals and agents retained by the 
Divestiture Trustee must be reasonable in light of the value of the 
Divestiture Assets and based on a fee arrangement providing the 
Divestiture Trustee with an incentive based on the price and terms of 
the divestitures and the speed with which it is accomplished, but 
timeliness is paramount.
    E. Defendants must assist the Divestiture Trustee in accomplishing 
the required divestiture. The Divestiture Trustee and any professionals 
and agents retained by the Divestiture Trustee shall have full and 
complete access to the personnel, books, records, and facilities 
relating to the Divestiture Assets, and Defendants must develop 
financial and other information relevant to such business as the 
Divestiture Trustee may reasonably request, subject to reasonable 
protection for trade secret or other confidential research, 
development, or commercial information. Defendants may not interfere 
with or impede the Divestiture Trustee's accomplishment of the 
divestiture.
    F. After its appointment, the Divestiture Trustee must file monthly 
reports with the United States and the Court setting forth the 
Divestiture Trustee's efforts to accomplish the divestitures ordered 
under this Final Judgment. To the extent that such reports contain 
information that the Divestiture Trustee deems confidential, such 
reports shall not be filed in the public docket of the Court. Such 
reports must include the name, address, and telephone number of each 
person who, during the preceding month, made an offer to acquire, 
expressed an interest in acquiring, entered into negotiations to 
acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divestiture Assets, and must describe in detail each 
contact with any

[[Page 20433]]

such person. The Divestiture Trustee must maintain full records of all 
efforts made to divest the Divestiture Assets.
    G. If the Divestiture Trustee has not accomplished the divestitures 
ordered under this Final Judgment by November 21, 2012, the Divestiture 
Trustee must promptly file with the Court a report setting forth (1) 
the Divestiture Trustee's efforts to accomplish the required 
divestiture, (2) the reasons, in the Divestiture Trustee's judgment, 
why the required divestitures have not been accomplished, and (3) the 
Divestiture Trustee's recommendations. To the extent that the report 
contains information that the Divestiture Trustee deems confidential, 
the report shall not be filed in the public docket of the Court. The 
Divestiture Trustee must at the same time furnish such report to the 
United States, which shall have the right to make additional 
recommendations consistent with the purpose of the trust. The Court 
thereafter shall enter such orders as it deems appropriate to carry out 
the purpose of the Final Judgment, which may, if necessary, include 
extending the trust and the term of the Divestiture Trustee's 
appointment by a period requested by the United States.

VI. Notice of Proposed Divestiture

    A. Within two business days following execution of a definitive 
divestiture agreement, Defendants or the Divestiture Trustee, whichever 
is then responsible for effecting the divestitures required herein, 
must notify the United States and any Monitoring Trustee of any 
proposed divestiture required by Section 0 or V of this Final Judgment. 
If the Divestiture Trustee is responsible, it must similarly notify 
Defendants. The notice must set forth the details of the proposed 
divestiture and list the name, address, and telephone number of each 
person not previously identified who offered or expressed an interest 
in or desire to acquire any ownership interest in the Divestiture 
Assets, together with full details of the same.
    B. Within fifteen calendar days of receipt by the United States of 
such notice, the United States may request from Defendants, the 
proposed Acquirer, any other third party, or the Divestiture Trustee, 
if applicable, additional information concerning the proposed 
divestiture, the proposed Acquirer, and any other potential Acquirer. 
Defendants and the Divestiture Trustee must furnish any additional 
information requested within fifteen calendar days of the receipt of 
the request, unless the parties otherwise agree.
    C. Within thirty calendar days after receipt of the notice or 
within twenty calendar days after the United States has been provided 
the additional information requested from Defendants, the proposed 
Acquirer, any third party, and the Divestiture Trustee, whichever is 
later, the United States must provide written notice to Defendants and 
the Divestiture Trustee, if there is one, stating whether or not it 
objects to the proposed divestiture. If the United States provides 
written notice that it does not object, the divestiture may be 
consummated, subject only to Defendants' limited right to object to the 
sale under Section V.C of this Final Judgment. Absent written notice 
that the United States does not object to the proposed Acquirer or upon 
objection by the United States, a divestiture proposed under Section 0 
or Section V may not be consummated. Upon objection by Defendants under 
Section V.0, a divestiture proposed under Section V may not be 
consummated unless approved by the Court.

VII. Financing

    Defendants may not finance all or any part of any purchase made 
pursuant to Section 0 or V of this Final Judgment.

VIII. Preservation of Assets

    Until the divestitures required by this Final Judgment has been 
accomplished, Defendants must take all steps necessary to comply with 
the Asset Preservation Stipulation and Order entered by this Court. 
Defendants may not take any action that would jeopardize any 
divestiture ordered by this Court.

IX. Appointment of Monitoring Trustee

    A. Upon the filing of this Final Judgment, the United States may, 
in its sole discretion, appoint a Monitoring Trustee, subject to 
approval by the Court.
    B. The Monitoring Trustee shall have the power and authority to 
monitor Defendants' compliance with the terms of this Final Judgment 
and the Asset Preservation Stipulation and Order entered by this Court 
and shall have such powers as this Court deems appropriate. Subject to 
Section IX.D of this Final Judgment, the Monitoring Trustee may hire at 
the cost and expense of Humana any professionals and agents reasonably 
necessary in the Monitoring Trustee's judgment. These persons shall be 
solely accountable to the Monitoring Trustee.
    C. Defendants may not object to actions taken by the Monitoring 
Trustee in fulfillment of the Monitoring Trustee's responsibilities 
under any Order of this Court on any ground other than the Monitoring 
Trustee's malfeasance. Defendants must convey any such objections in 
writing to the United States and the Monitoring Trustee within ten 
calendar days after the action taken by the Monitoring Trustee giving 
rise to Defendants' objection.
    D. The Monitoring Trustee and any persons retained by the 
Monitoring Trustee pursuant to Section IX.B shall serve at the cost and 
expense of Defendants, on such terms and conditions as the United 
States approves. The compensation of the Monitoring Trustee and any 
professionals and agents retained by the Monitoring Trustee must be on 
reasonable and customary terms commensurate with the individuals' 
experience and responsibilities.
    E. The Monitoring Trustee shall have no responsibility or 
obligation for the operation of Defendants' businesses.
    F. Defendants must assist the Monitoring Trustee in monitoring 
Defendants' compliance with their individual obligations under this 
Final Judgment and under the Asset Preservation Stipulation and Order. 
The Monitoring Trustee and any professionals and agents retained by the 
Monitoring Trustee shall have full and complete access to the 
personnel, books, records, and facilities relating to the Divestiture 
Assets, subject to reasonable protection for trade secret or other 
confidential research, development, or commercial information or any 
applicable privileges. Defendants may not interfere with or impede the 
Monitoring Trustee's accomplishment of its responsibilities.
    G. After its appointment, the Monitoring Trustee must file monthly 
reports with the United States and the Court setting forth the 
Defendants' efforts to comply with their individual obligations under 
this Final Judgment and under the Asset Preservation Stipulation and 
Order. To the extent such reports contain information that the 
Monitoring Trustee deems confidential, such reports shall not be filed 
in the public docket of the Court.
    H. The Monitoring Trustee shall serve until the divestiture of all 
the Divestiture Assets is finalized pursuant to either Section 0 or 
Section V of this Final Judgment and any agreement(s) for transitional 
support services described in Section 0 herein have expired. If the 
United States determines that the Monitoring Trustee has ceased to act 
or failed to act diligently, the United States may appoint a substitute 
Monitoring Trustee in the same manner as provided in this Section. The 
Monitoring Trustee appointed pursuant to this Final

[[Page 20434]]

Judgment may be the same person or entity appointed as a Divestiture 
Trustee pursuant to Section 0 of this Final Judgment.

X. Affidavits and Records

    A. Within twenty calendar days of the filing of the Complaint in 
this matter, and every thirty calendar days thereafter until the 
divestitures have been completed under Section 0 or V, Defendants must 
deliver to the United States and any Monitoring Trustee an affidavit as 
to the fact and manner of its compliance with Section IV or V of this 
Final Judgment. Each such affidavit must include the name, address, and 
telephone number of each person who, during the preceding thirty 
calendar days, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Divestiture 
Assets, and must describe in detail each contact with any such person 
during that period. Each such affidavit must also include a description 
of the efforts Defendants have taken to solicit buyers for the 
Divestiture Assets, and to provide required information to prospective 
Acquirers, including the limitations, if any, on such information. 
Provided that the information set forth in the affidavit is true and 
complete, any objection by the United States to information provided by 
Defendants, including limitation on information, must be made within 
fourteen calendar days of receipt of such affidavit.
    B. Within twenty calendar days of the filing of the Complaint in 
this matter, Defendants must deliver to the United States and any 
Monitoring Trustee an affidavit that describes in reasonable detail all 
actions that Defendants have taken and all steps that Defendants have 
implemented on an ongoing basis to comply with Section 0 of this Final 
Judgment. Defendants must deliver to the United States and any 
Monitoring Trustee an affidavit describing any changes to the efforts 
and actions outlined in Defendants' earlier affidavits filed pursuant 
to this section within fifteen calendar days after the change is 
implemented.
    C. Defendants must keep all records of all efforts made to preserve 
and divest the Divestiture Assets until one year after such 
divestitures have been completed.

XI. 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 authorized representatives of the United States 
Department of Justice, including persons retained by the United States, 
shall, upon written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, and on 
reasonable notice to Defendants, be permitted:
    (1) Access during Defendants' office hours to inspect and copy, or 
at the option of the United States, to require that Defendants provide 
hard copy and electronic copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control of 
Defendants, relating to any matters contained in this Final Judgment; 
and
    (2) To interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding these matters. The interviews shall be subject to 
the reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants must submit written reports, or responses to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment.
    C. The United States shall not divulge any information or documents 
obtained by the means provided in this section to any person other than 
an authorized representative of the executive branch of the United 
States, which includes CMS, 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 information or documents are furnished by 
Defendants to the United States, Defendants represent and identify in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(1)(G) of the 
Federal Rules of Civil Procedure, and Defendants mark each pertinent 
page of such material, ``Subject to claim of protection under Rule 
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United 
States must give Defendants ten calendar days notice prior to divulging 
such material in any legal proceeding (other than grand jury 
proceedings).

XII. No Reacquisition

    Defendants may not reacquire any part of the Divestiture Assets 
during the term of this Final Judgment provided, however, that this 
Final Judgment does not prohibit Defendants from offering Medicare 
Advantage Plans in the ordinary course of business otherwise in 
conformity with this Final Judgment.

XIII. 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.

XIV. Expiration of Final Judgment

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

XV. Public Interest Determination

    The parties have complied with the requirements of the Antitrust 
Procedures and Penalties Act, 15 U.S.C. 16, including making copies 
available to the public of this Final Judgment, the Competitive Impact 
Statement, and any comments thereon and the United States' responses to 
comments. Based upon the record before the Court, which includes the 
Competitive Impact Statement and any comments and response to comments 
filed with the Court, entry of this Final Judgment is in the public 
interest.
    Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16.

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Date

United States District Judge

[FR Doc. 2012-8070 Filed 4-3-12; 8:45 am]
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