United States et al. v. W.A. Foote Memorial Hospital, d/b/a Allegiance Health; Proposed Final Judgment and Competitive Impact Statement, 9750-9760 [2018-04593]
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(‘‘Commerce’’) to be sold in the United
States at less than fair value (‘‘LTFV’’).2
Background
The Commission, pursuant to section
735(b) of the Act (19 U.S.C. 1673d(b)),
instituted these investigations effective
March 28, 2017, following receipt of a
petition filed with the Commission and
Commerce by Charter Steel, Saukville,
Wisconsin; Gerdau Ameristeel US Inc.,
Tampa, Florida; Keystone Consolidated
Industries, Inc., Peoria, Illinois; and
Nucor Corporation, Charlotte, North
Carolina. The Commission scheduled
the final phase of the investigations
following notification of preliminary
determinations by Commerce that
imports of carbon and certain alloy steel
wire rod from South Africa and Ukraine
were being sold at LTFV within the
meaning of section 733(b) of the Act (19
U.S.C. 1673b(b)). Notice of the
scheduling of the final phase of the
Commission’s investigations and of a
public hearing to be held in connection
therewith was given by posting copies
of the notice in the Office of the
Secretary, U.S. International Trade
Commission, Washington, DC, and by
publishing the notice in the Federal
Register of September 20, 2017 (82 FR
44001). The hearing was held in
Washington, DC, on November 16, 2017
and all persons who requested the
opportunity were permitted to appear in
person or by counsel.
The Commission made these
determinations pursuant to section
735(b) of the Act (19 U.S.C. 1673d(b)).
It completed and filed its
determinations in these investigations
on March 1, 2018. The views of the
Commission are contained in USITC
Publication 4766, March 2018, entitled
Carbon and Certain Alloy Steel Wire
Rod from South Africa and Ukraine:
Investigation Nos. 731–TA–1353 and
1356 (Final).
By order of the Commission.
Issued: March 1, 2018.
Lisa R. Barton,
Secretary to the Commission.
[FR Doc. 2018–04585 Filed 3–6–18; 8:45 am]
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BILLING CODE 7020–02–P
2 The Commission also finds that imports of wire
rod subject to Commerce’s affirmative critical
circumstances determination are not likely to
undermine seriously the remedial effect of the
antidumping duty order on South Africa.
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DEPARTMENT OF JUSTICE
Antitrust Division
United States et al. v. W.A. Foote
Memorial Hospital, d/b/a Allegiance
Health; 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, Notification of
Settlement and Explanation of Consent
Decree Procedures, and Competitive
Impact Statement have been filed with
the United States District Court for the
Eastern District of Michigan in United
States and State of Michigan v. W.A.
Foote Memorial Hospital, Civil Action
No. 15–cv–12311 (JEL) (DRG). On June
25, 2015, the United States and the State
of Michigan filed a Complaint alleging
that Defendant W.A. Foote Memorial
Hospital d/b/a Allegiance Health
(‘‘Allegiance’’) entered into an
agreement with Hillsdale Community
Health Center that unlawfully allocated
customers in violation of Section 1 of
the Sherman Act, 15 U.S.C. 1, and 2 of
the Michigan Antitrust Reform Act,
MCL 445.772. The proposed Final
Judgment, filed February 9, 2018,
prohibits Allegiance from agreeing with
other healthcare providers to prohibit or
limit marketing or to divide any
geographic market or territory. The
proposed Final Judgment also prohibits
Allegiance from communicating with
competing healthcare systems regarding
its marketing plans, with limited
exceptions. The proposed Final
Judgment also imposes an antitrust
compliance officer and other training
and monitoring requirements on
Allegiance.
Copies of the Complaint, proposed
Final Judgment, and Competitive Impact
Statement are available for inspection
on the Antitrust Division’s website at
https://www.justice.gov/atr, and at the
Office of the Clerk of the United States
District Court for the Eastern District of
Michigan. 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 on the proposed
Final Judgment is invited within 60
days of the date of this notice. Such
comments, including the name of the
submitter, and responses thereto, will be
posted on the Antitrust Division’s
website, filed with the Court, and, under
certain circumstances, published in the
Federal Register. Comments should be
directed to Peter J. Mucchetti, Chief,
Healthcare & Consumer Products
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Section, Antitrust Division, Department
of Justice, 450 Fifth Street NW, Suite
4100, Washington, DC 20530
(telephone: 202–307–0001).
Patricia A. Brink,
Director of Civil Enforcement.
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF
MICHIGAN
United States of America and State of
Michigan, and Plaintiffs, v. Hillsdale
Community Health Center, W.A. Foote
Memorial Hospital, D/B/A Allegiance Health,
Community Health Center of Branch County,
and Promedica Health System, Inc.,
Defendants.
Case No.: 2:15–cv–12311–JEL–DRG
Hon. Judith E. Levy
Mag. Judge David R. Grand
COMPLAINT
The United States of America and the
State of Michigan bring this civil
antitrust action to enjoin agreements by
Defendants Hillsdale Community Health
Center (‘‘Hillsdale’’), W.A. Foote
Memorial Hospital, d/b/a Allegiance
Health (‘‘Allegiance’’), Community
Health Center of Branch County
(‘‘Branch’’), and ProMedica Health
System, Inc. (‘‘ProMedica’’)
(collectively, ‘‘Defendants’’) that
unlawfully allocate territories for the
marketing of competing healthcare
services and limit competition among
Defendants.
NATURE OF THE ACTION
1. Defendants are healthcare providers
in Michigan that operate the only
general acute-care hospital or hospitals
in their respective counties. Defendants
directly compete with each other to
provide healthcare services to the
residents of south-central Michigan.
Marketing is a key component of this
competition and includes
advertisements, mailings to patients,
health fairs, health screenings, and
outreach to physicians and employers.
2. Allegiance, Branch, and
ProMedica’s Bixby and Herrick
Hospitals (‘‘Bixby and Herrick’’) are
Hillsdale’s closest Michigan
competitors. Hillsdale orchestrated
agreements to limit marketing of
competing healthcare services.
Allegiance explained in a 2013 oncology
marketing plan: ‘‘[A]n agreement exists
with the CEO of Hillsdale Community
Health Center, Duke Anderson, to not
conduct marketing activity in Hillsdale
County.’’ Branch’s CEO described the
Branch agreement with Hillsdale as a
‘‘gentlemen’s agreement not to market
services.’’ A ProMedica
communications specialist described
the ProMedica agreement with Hillsdale
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Sherman Act, 15 U.S.C. § 1, and Section
2 of the Michigan Antitrust Reform Act,
MCL 445.772.
JURISDICTION, VENUE, AND
INTERSTATE COMMERCE
6. The United States brings this action
pursuant to Section 4 of the Sherman
Act, 15 U.S.C. § 4, to prevent and
restrain Defendants’ violations of
Section 1 of the Sherman Act, 15 U.S.C.
§ 1. The State of Michigan brings this
action in its sovereign capacity under its
statutory, equitable and/or common law
powers, and pursuant to Section 16 of
the Clayton Act, 15 U.S.C. § 26, to
prevent and restrain Defendants’
violations of Section 2 of the Michigan
Antitrust Reform Act, MCL 445.772.
7. This Court has subject matter
jurisdiction over this action under
Section 4 of the Sherman Act, 15 U.S.C.
§ 4 (as to claims by the United States);
Section 16 of the Clayton Act, 15 U.S.C.
§ 26 (as to claims by the State of
Michigan); and 28 U.S.C. §§ 1331,
1337(a), 1345, and 1367.
8. Venue is proper in the Eastern
District of Michigan under 28 U.S.C.
§ 1391 and Section 12 of the Clayton
Act, 15 U.S.C. § 22. Each Defendant
transacts business within the Eastern
District of Michigan, all Defendants
reside in the State of Michigan, and at
least two Defendants reside in the
Eastern District of Michigan.
9. Defendants all engage in interstate
commerce and in activities substantially
affecting interstate commerce.
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Defendants provide healthcare services
to patients for which employers, health
plans, and individual patients remit
payments across state lines. Defendants
purchase supplies and equipment from
out-of-state vendors that are shipped
across state lines.
DEFENDANTS
10. Hillsdale is a Michigan
corporation headquartered in Hillsdale,
Michigan. Its general acute-care
hospital, which is in Hillsdale County,
Michigan, has 47 beds and a medical
staff of over 90 physicians.
11. Allegiance is a Michigan
corporation headquartered in Jackson,
Michigan. Its general acute-care
hospital, which is in Jackson County,
Michigan, has 480 beds and a medical
staff of over 400 physicians.
12. Branch is a Michigan corporation
headquartered in Coldwater, Michigan.
Its general acute-care hospital, which is
in Branch County, Michigan, has 87
beds and a medical staff of over 100
physicians.
13. ProMedica is an Ohio corporation
headquartered in Toledo, Ohio, with
facilities in northwest Ohio and
southern Michigan. ProMedica’s Bixby
and Herrick Hospitals are both in
Lenawee County, Michigan. Bixby is a
general acute-care hospital with 88 beds
and a medical staff of over 120
physicians. Herrick is a general acutecare hospital with 25 beds and a
medical staff of over 75 physicians.
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in an email: ‘‘The agreement is that they
stay our [sic] of our market and we stay
out of theirs unless we decide to
collaborate with them on a particular
project.’’
3. The Defendants’ agreements have
disrupted the competitive process and
harmed patients, physicians, and
employers. For instance, all of these
agreements have deprived patients,
physicians, and employers of
information they otherwise would have
had when making important healthcare
decisions. In addition, the agreement
between Allegiance and Hillsdale has
deprived Hillsdale County patients of
free medical services such as health
screenings and physician seminars that
they would have received but for the
unlawful agreement. Moreover, it
denied Hillsdale County employers the
opportunity to develop relationships
with Allegiance that could have allowed
them to improve the quality of their
employees’ medical care.
4. Defendants’ senior executives
created and enforced these agreements,
which lasted for many years. On certain
occasions when a Defendant violated
one of the agreements, executives of the
aggrieved Defendant complained about
the violation and received assurances
that the previously agreed upon
marketing restrictions would continue
to be observed going forward.
5. Defendants’ agreements are naked
restraints of trade that are per se
unlawful under Section 1 of the
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BACKGROUND ON HOSPITAL
COMPETITION
14. Hillsdale competes with each of
the other Defendants to provide many of
the same hospital and physician
services to patients. Hospitals compete
on price, quality, and other factors to
sell their services to patients,
employers, and insurance companies.
An important tool that hospitals use to
compete for patients is marketing aimed
at informing patients, physicians, and
employers about a hospital’s quality and
scope of services. An executive from
each Defendant has testified at
deposition that marketing is an
important strategy through which
hospitals seek to increase their patient
volume and market share.
15. Defendants’ marketing includes
advertisements through mailings and
media such as local newspapers, radio,
television, and billboards. Allegiance’s
marketing to patients also includes the
provision of free medical services, such
as health screenings, physician
seminars, and health fairs. Some
Defendants also market to physicians
through educational and relationshipbuilding meetings that provide
physicians with information about those
Defendants’ quality and range of
services. Allegiance also engages in
these marketing activities with
employers.
HILLSDALE’S UNLAWFUL
AGREEMENTS
16. Hillsdale has agreements limiting
competition with Allegiance,
ProMedica, and Branch.
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Unlawful Agreement Between Hillsdale
and Allegiance
17. Since at least 2009, Hillsdale and
Allegiance have had an agreement that
limits Allegiance’s marketing for
competing services in Hillsdale County.
As Allegiance explained in a 2013
oncology marketing plan: ‘‘[A]n
agreement exists with the CEO of
Hillsdale Community Health Center,
Duke Anderson, to not conduct
marketing activity in Hillsdale County.’’
18. In compliance with this
agreement, Allegiance has excluded
Hillsdale County from marketing
campaigns since at least 2009. For
example, Allegiance excluded Hillsdale
County from the marketing plans
outlined in the above-referenced 2013
oncology marketing plan. And
according to a February 2014 board
report, Allegiance excluded Hillsdale
from marketing campaigns for
cardiovascular and orthopedic services.
19. On at least two occasions,
Hillsdale’s CEO complained to
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Allegiance after Allegiance sent
marketing materials to Hillsdale County
residents. Both times—at the direction
of Allegiance CEO Georgia Fojtasek—
Allegiance’s Vice President of
Marketing, Anthony Gardner,
apologized in writing to Hillsdale’s
CEO. In one apology he said, ‘‘It isn’t
our style to purposely not honor our
agreement.’’ Mr. Gardner assured
Hillsdale’s CEO that Allegiance would
not repeat this mistake.
20. Allegiance also conveyed its
hands-off approach to Hillsdale in 2009
when Ms. Fojtasek told Hillsdale’s CEO
that Allegiance would take a
‘‘Switzerland’’ approach towards
Hillsdale, and then confirmed this
approach by mailing Hillsdale’s CEO a
Swiss flag.
21. Allegiance executives and staff
have discussed the agreement in
numerous correspondences and
business documents. For example,
Allegiance staff explained in a 2012
cardiovascular services analysis:
‘‘Hillsdale does not permit [Allegiance]
to conduct free vascular screens as they
periodically charge for screenings.’’ As
a result, around that time, Hillsdale
County patients were deprived of free
vascular-health screenings.
22. In another instance, in 2014
Allegiance discouraged one of its newly
employed physicians from giving a
seminar in Hillsdale County relating to
competing services. In response to the
physician’s request to provide the
seminar, the Allegiance Marketing
Director asked the Vice President of
Physician Integration and Business
Development: ‘‘Who do you think is the
best person to explain to [the doctor]
our restrictions in Hillsdale? We’re
happy to do so but often our docs find
it hard to believe and want a higher
authority to confirm.’’
23. The agreement between Hillsdale
and Allegiance has deprived Hillsdale
County patients, physicians, and
employers of information regarding
their healthcare-provider choices and of
free health-screenings and education.
Unlawful Agreement Between Hillsdale
and ProMedica
24. Since at least 2012, Hillsdale and
ProMedica have agreed to limit their
marketing for competing services in one
another’s county.
25. This agreement has restrained
marketing in several ways. For example,
in June 2012, Bixby and Herrick’s
President asked Hillsdale’s CEO if he
would have any issue with Bixby
marketing its oncology services to
Hillsdale physicians. Hillsdale’s CEO
replied that he objected because his
hospital provided those services. Bixby
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and Herrick’s President responded that
he understood. Bixby and Herrick then
refrained from marketing their
competing oncology services in
Hillsdale County.
26. Another incident occurred around
January 2012, when Hillsdale’s CEO
complained to Bixby and Herrick’s
President about the placement of a
ProMedica billboard across from a
physician’s office in Hillsdale County.
At the conclusion of the conversation,
Bixby and Herrick’s President assured
Hillsdale’s CEO that he would check
into taking down the billboard.
27. ProMedica employees have
discussed and acknowledged the
agreement in multiple documents. For
example, after Hillsdale’s CEO called
Bixby and Herrick’s President to
complain about ProMedica’s billboard, a
ProMedica communications specialist
described the agreement to marketing
colleagues via email: ‘‘According to
[Bixby and Herrick’s President] any
potential marketing (including network
development) efforts targeted for the
Hillsdale, MI market should be run by
him so that he can talk to Hillsdale
Health Center in advance. The
agreement is that they stay our [sic] of
our market and we stay out of theirs
unless we decide to collaborate with
them on a particular project.’’
28. The agreement between Hillsdale
and ProMedica deprived patients,
physicians, and employers of Hillsdale
and Lenawee Counties of information
regarding their healthcare-provider
choices.
Unlawful Agreement Between Hillsdale
and Branch
29. Since at least 1999, Hillsdale and
Branch have agreed to limit marketing
in one another’s county. In the fall of
1999, Hillsdale’s then-CEO and Branch’s
CEO reached an agreement whereby
each hospital agreed not to market
anything but new services in the other
hospital’s county. Branch’s CEO
testified recently in deposition that
‘‘There’s a gentlemen’s agreement not to
market services other than new
services.’’
30. Branch has monitored Hillsdale’s
compliance with the agreement. For
example, in November 2004, Hillsdale
promoted one of its physicians through
an advertisement in the Branch County
newspaper. Branch’s CEO faxed
Hillsdale’s then-CEO a copy of the
advertisement, alerting him to the
violation of their agreement.
31. In addition to monitoring
Hillsdale’s compliance, Branch has
directed its marketing employees to
abide by the agreement with Hillsdale.
For example, Branch’s 2013 guidelines
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for sending out media releases
instructed that it had a ‘‘gentleman’s
agreement’’ with Hillsdale and thus
Branch should not send media releases
to the Hillsdale Daily News.
32. The agreement between Hillsdale
and Branch deprived Hillsdale and
Branch County patients, physicians, and
employers of information regarding
their healthcare-provider choices.
NO PROCOMPETITIVE
JUSTIFICATIONS
33. The Defendants’ anticompetitive
agreements are not reasonably necessary
to further any procompetitive purpose.
VIOLATIONS ALLEGED
First Cause of Action: Violation of
Section 1 of the Sherman Act
34. Plaintiffs incorporate paragraphs 1
through 33.
35. Allegiance, Branch, and
ProMedica are each a horizontal
competitor of Hillsdale in the provision
of healthcare services in south-central
Michigan. Defendants’ agreements are
facially anticompetitive because they
allocate territories for the marketing of
competing healthcare services and limit
competition among Defendants. The
agreements eliminate a significant form
of competition to attract patients.
36. The agreements constitute
unreasonable restraints of trade that are
per se illegal under Section 1 of the
Sherman Act, 15 U.S.C. § 1. No
elaborate analysis is required to
demonstrate the anticompetitive
character of these agreements.
37. The agreements are also
unreasonable restraints of trade that are
unlawful under Section 1 of the
Sherman Act, 15 U.S.C. § 1, under an
abbreviated or ‘‘quick look’’ rule of
reason analysis. The principal tendency
of the agreements is to restrain
competition. The nature of the restraints
is obvious, and the agreements lack
legitimate procompetitive justifications.
Even an observer with a rudimentary
understanding of economics could
therefore conclude that the agreements
would have anticompetitive effects on
patients, physicians, and employers,
and harm the competitive process.
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Second Cause of Action: Violation of
MCL 445.772
38. Plaintiff State of Michigan
incorporates paragraphs 1 through 37
above.
39. Defendants entered into unlawful
agreements with each other that
unreasonably restrain trade and
commerce in violation of Section 2 of
the Michigan Antitrust Reform Act,
MCL 445.772.
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REQUESTED RELIEF
The United States and the State of
Michigan request that the Court:
(A) judge that Defendants’ agreements
limiting competition constitute illegal
restraints of interstate trade in violation
of Section 1 of the Sherman Act, 15
U.S.C. § 1, and Section 2 of the
Michigan Antitrust Reform Act, MCL
445.772;
(B) enjoin Defendants and their
members, officers, agents, and
employees from continuing or renewing
in any manner the conduct alleged
herein or from engaging in any other
conduct, agreement, or other
arrangement having the same effect as
the alleged violations;
(C) enjoin each Defendant and its
members, officers, agents, and
employees from communicating with
any other Defendant about any
Defendant’s marketing in its or the other
Defendant’s county, unless such
communication is related to the joint
provision of services, or unless the
communication is part of normal due
diligence relating to a merger,
acquisition, joint venture, investment,
or divestiture;
(D) require Defendants to institute a
comprehensive antitrust compliance
program to ensure that Defendants do
not establish any similar agreements
and that Defendants’ members, officers,
agents and employees are fully informed
of the application of the antitrust laws
to hospital restrictions on competition;
and
(E) award Plaintiffs their costs in this
action, including attorneys’ fees and
investigation costs to the State of
Michigan, and such other relief as may
be just and proper.
9753
(313) 226–9784, P30643, E-mail:
peter.caplan@usdoj.gov.
FOR PLAINTIFF STATE OF MICHIGAN:
Bill Schuette, Attorney General, State of
Michigan.
\s\ with the consent of Joseph Potchen
lllllllllllllllllllll
Joseph Potchen,
Division Chief.
\s\ with the consent of Mark Gabrielse
lllllllllllllllllllll
Mark Gabrielse (P75163),
D.J. Pascoe,
Assistant Attorney Generals, Michigan
Department of Attorney General, Corporate
Oversight Division, G. Mennen Williams
Building, 6th Floor, 525 W. Ottawa Street,
Lansing, Michigan 48933, (517) 373–1160,
Email: gabrielsem@michigan.gov.
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF
MICHIGAN
United States of America and State Of
Michigan, Plaintiffs, v. W.A. Foote Memorial
Hospital, D/B/A Allegiance Health,
Defendant.
Case No.: 5:15–cv–12311–JEL–DRG
Hon. Judith E. Levy
Mag. Judge David R. Grand
[PROPOSED] FINAL JUDGMENT
Whereas, Plaintiffs, the United States
of America and the State of Michigan,
filed their joint Complaint on June 25,
2015, alleging that W.A. Foote Memorial
Hospital, d/b/a/Allegiance Health;
Hillsdale Community Health Center;
Community Health Center of Branch
County; and ProMedica Health System,
Inc. violated Section 1 of the Sherman
Act, 15 U.S.C. § 1, and Section 2 of the
Michigan Antitrust Reform Act, MCL
445.772;
And Whereas, Plaintiffs and W.A.
Dated: June 25, 2015.
Foote Memorial Hospital, d/b/a Henry
Respectfully submitted,
Ford Allegiance Health, by their
FOR PLAINTIFF UNITED STATES OF
respective attorneys, have consented to
AMERICA:
the entry of this Final Judgment without
William J. Baer,
trial or adjudication of any issue of fact
Assistant Attorney General for Antitrust.
or law;
David I. Gelfand,
Deputy Assistant Attorney General.
And Whereas, Plaintiffs require
\s\ lllllllllllllllllll Allegiance to agree to undertake certain
actions and refrain from certain conduct
Katrina Rouse (D.C. Bar #1013035),
for the purpose of remedying the
Jennifer Hane,
Barry Joyce,
anticompetitive effects alleged in the
Attorneys, Litigation I, Antitrust Division,
Complaint;
U.S. Department of Justice, 450 Fifth Street
And Whereas, Plaintiffs require
NW, Suite 4100, Washington, DC 20530,
Allegiance to agree to be bound by the
(202) 305–7498, email: katrina.rouse@
provisions of the Final Judgment
usdoj.gov.
pending its approval by the Court;
LOCAL COUNSEL:
Now Therefore, before any testimony
Barbara L. McQuade,
is taken, without this Final Judgment
United States Attorney.
constituting any evidence against or
\s\ with the consent of Peter Caplan
lllllllllllllllllllll admission by Allegiance regarding any
issue of fact or law, and upon consent
Peter Caplan,
Assistant United States Attorney, 211 W. Fort of the parties to this action, it is
Ordered, Adjudged, and Decreed:
Street, Suite 2001, Detroit, Michigan 48226,
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I. JURISDICTION
This Court has jurisdiction over the
subject matter of and each of the parties
to this action. 28 U.S.C. §§ 1331,
1337(a), 1345, 1367(a). The Complaint
states a claim upon which relief may be
granted against Allegiance under
Section 1 of the Sherman Act, 15 U.S.C.
§ 1, and Section 2 of the Michigan
Antitrust Reform Act, MCL 445.772.
proprietorship, partnership, joint
venture, association, institute,
governmental unit, or other legal entity.
I. ‘‘Provider’’ means any physician or
physician group and any inpatient or
outpatient medical facility including
hospitals, ambulatory surgical centers,
urgent care facilities, and nursing
facilities.
II. DEFINITIONS
As used in this Final Judgment:
A. ‘‘Allegiance’’ means Defendant
W.A. Foote Memorial Hospital, d/b/a
Henry Ford Allegiance Health, a
corporation organized and existing
under the laws of the State of Michigan
and affiliated with the Henry Ford
Health System with headquarters in
Detroit, Michigan, (i) its successors and
assigns, (ii) all subsidiaries, divisions,
groups, affiliates, partnerships, and joint
ventures that are controlled by Henry
Ford Allegiance Health, and (iii) their
directors, officers, managers, agents, and
employees.
B. ‘‘Agreement’’ means any contract,
arrangement, or understanding, formal
or informal, oral or written, between
two or more persons.
C. ‘‘Communicate’’ means to discuss,
disclose, transfer, disseminate, or
exchange information or opinion,
formally or informally, directly or
indirectly, in any manner.
D. ‘‘Communication’’ means any
discussion, disclosure, transfer,
dissemination, or exchange of
information or opinion.
E. ‘‘Joint Provision of Services’’ means
any past, present, or future coordinated
delivery of any healthcare services by
two or more healthcare providers,
including a clinical affiliation, joint
venture, management agreement,
accountable care organization, clinically
integrated network, group purchasing
organization, management services
organization, or physician hospital
organization.
F. ‘‘Marketing’’ means any past,
present, or future activities that are
involved in making persons aware of the
services or products of the hospital or of
physicians employed or with privileges
at the hospital, including advertising,
communications, public relations,
provider network development,
outreach to employers or physicians,
and promotions, such as free health
screenings and education.
G. ‘‘Marketing Manager’’ means any
company officer or employee at the
level of director, or above, with
responsibility for or oversight of
Marketing.
H. ‘‘Person’’ means any natural
person, corporation, firm, company, sole
This Final Judgment applies to
Allegiance and all other persons in
active concert or participation with
Allegiance who receive actual notice of
this Final Judgment by personal service
or otherwise.
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III. APPLICABILITY
IV. PROHIBITED CONDUCT
A. Allegiance shall not enter into,
attempt to enter into, maintain, or
enforce any Agreement with any other
Provider that:
(1) prohibits or limits Marketing; or
(2) allocates any service, customer, or
geographic market or territory between
or among Allegiance and any other
Provider, unless such Agreement is
reasonably necessary for and ancillary
to a bona fide Agreement providing for
the Joint Provision of Services.
B. Allegiance shall not Communicate
with any other Provider about
Allegiance’s Marketing in its or the
Provider’s county, except Allegiance
may:
(1) Communicate with any Provider
about joint Marketing if the
Communication is related to the Joint
Provision of Services;
(2) Communicate with any Provider
about Marketing if the Communication
is part of customary due diligence
relating to a merger, acquisition, joint
venture, investment, or divestiture; or
(3) Market to Providers, including
through its physician liaison program.
C. Allegiance shall not exclude or
eliminate Hillsdale County from its
Marketing or business development
opportunities.
V. REQUIRED CONDUCT
A. Within thirty days of entry of this
Final Judgment, Allegiance shall hire
and appoint an Antitrust Compliance
Officer. The Antitrust Compliance
Officer may be a current employee of
Henry Ford and must be approved by
Plaintiffs.
B. Antitrust Compliance Officer shall:
(1) within sixty days of entry of the
Final Judgment, furnish a copy of this
Final Judgment, the Competitive Impact
Statement, and a cover letter that is
identical in content to Exhibit 1 to (a)
all of Allegiance’s Marketing Managers
and other employees engaged, in whole
or in part, in activities relating to
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Allegiance’s Marketing or business
development activities; (b) all direct
reports of Allegiance’s CEO; and (c)
Allegiance’s officers and directors
(including their Boards of Directors);
(2) within thirty days of any person’s
succession to any position described in
Section V.B.(1) above, furnish a copy of
this Final Judgment, the Competitive
Impact Statement, and a cover letter that
is identical in content to Exhibit 1;
(3) annually brief each person
designated in Section V.B.(1) and (2) on
the meaning and requirements of this
Final Judgment and the antitrust laws;
(4) obtain from each person
designated in Section V.B.(1) and (2),
within sixty days of that person’s
receipt of the Final Judgment, a
certification that he or she (i) has read
and, to the best of his or her ability,
understands and agrees to abide by the
terms of this Final Judgment; (ii) is not
aware of any violation of the Final
Judgment that has not already been
reported to Allegiance; and (iii)
understands that any person’s failure to
comply with this Final Judgment may
result in an enforcement action for civil
or criminal contempt of court against
Allegiance and/or any person who
violates this Final Judgment;
(5) maintain a record of certifications
received pursuant to Section V.B.(4);
(6) annually communicate to
Allegiance’s employees that they may
disclose to the Antitrust Compliance
Officer, without reprisal, information
concerning any potential violation of
this Final Judgment or the antitrust
laws;
(7) ensure that each person identified
in Section V.B.(1) and (2) of this Final
Judgment receives at least four hours of
training annually on the meaning and
requirements of this Final Judgment and
the antitrust laws, such training to be
delivered by the Antitrust Compliance
Officer or an attorney with relevant
experience in the field of antitrust law;
(8) maintain a log of telephonic,
electronic, in-person, and other
communications regarding Marketing
with any Officers or Directors of any
healthcare system Provider and make it
available to Plaintiffs for inspection
upon either Plaintiff’s request; and
(9) provide to Plaintiffs annually, on
or before the anniversary of the effective
date of this order, a written statement
affirming Allegiance’s compliance with
Section V of this order, and including
the training or instructional materials
used or supplied by Allegiance or Henry
Ford in connection with the training as
required by Section V.B.(7).
C. Allegiance shall:
(1) upon learning of any violation or
potential violation of any of the terms
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and conditions contained in this Final
Judgment, promptly take appropriate
action to terminate or modify the
activity so as to comply with this Final
Judgment and maintain all documents
related to any violation or potential
violation of this Final Judgment;
(2) upon learning of any violation or
potential violation of any of the terms
and conditions contained in this Final
Judgment, within thirty days of its
becoming known, file with each
Plaintiff a statement describing any
violation or potential violation, and any
steps taken in response to the violation,
which statement shall include a
description of any communication
constituting the violation or potential
violation, including the date and place
of the communication, the persons
involved, and the subject matter of the
communication; and
(3) certify to each Plaintiff annually
on the anniversary date of the entry of
this Final Judgment that Allegiance has
complied with the provisions of this
Final Judgment.
VI. COMPLIANCE INSPECTION
A. For the purposes of determining or
securing compliance with this Final
Judgment, or of determining whether
the Final Judgment should be modified
or vacated, and subject to any legally
recognized privilege, from time to time
authorized representatives of the United
States Department of Justice or the
Office of the Michigan Attorney
General, including consultants and
other retained persons, shall, upon the
written request of an authorized
representative of the Assistant Attorney
General in charge of the Antitrust
Division or of the Office of the Michigan
Attorney General, and on reasonable
notice to Allegiance, be permitted:
(1) access during Allegiance’s office
hours to inspect and copy, or at the
option of the United States or the State
of Michigan, to require Allegiance to
provide hard copy or electronic copies
of, all books, ledgers, accounts, records,
data, and documents in the possession,
custody, or control of Allegiance,
relating to any matters contained in this
Final Judgment; and
(2) to interview, either informally or
on the record, Allegiance’s officers,
directors, employees, or agents, who
may have individual counsel present,
regarding such matters. The interviews
shall be subject to the reasonable
convenience of the interviewee and
without restraint or interference by
Allegiance.
B. Upon the written request of an
authorized representative of the
Assistant Attorney General in charge of
the Antitrust Division or of the Office of
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the Michigan Attorney General,
Allegiance shall submit written reports
or response to written interrogatories,
under oath if requested, relating to any
of the matters contained in this Final
Judgment as may be requested.
C. No information or documents
obtained by the means provided in this
section shall be divulged by the United
States or the State of Michigan to any
person other than an authorized
representative of the executive branch of
the United States or the State of
Michigan, except in the course of legal
proceedings to which the United States
or the State of Michigan 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 Allegiance
to the United States or the State of
Michigan, Allegiance represents and
identifies in writing the material in any
such information or documents to
which a claim of protection may be
asserted under Rule 26(c)(1)(G) of the
Federal Rules of Civil Procedure, and
Allegiance marks 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 and the State of
Michigan shall give Allegiance ten
calendar days notice prior to divulging
such material in any legal proceeding
(other than a grand jury proceeding).
VII. INVESTIGATION FEES AND
COSTS
Allegiance shall pay to the United
States the sum of $5,000.00 for pre-trial
litigation costs and the State of
Michigan the sum of $35,000.00 to
partially cover transcripts and related
litigation costs.
VIII. RETENTION OF JURISDICTION
This Court retains jurisdiction to
enable any party to this Final Judgment
to apply to this Court at any time prior
to the expiration of this Final Judgment
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.
IX. ENFORCEMENT OF FINAL
JUDGMENT
A. Plaintiffs retain and reserve all
rights to enforce the provisions of this
Final Judgment, including their right to
seek an order of contempt from this
Court. Allegiance agrees that in any civil
contempt action, any motion to show
cause, or any similar action brought by
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Plaintiffs regarding an alleged violation
of this Final Judgment, Plaintiffs may
establish a violation of the Final
Judgment and the appropriateness of
any remedy therefor by a preponderance
of the evidence, and Allegiance waives
any argument that a different standard
of proof should apply.
B. In any enforcement proceeding in
which the Court finds that Allegiance
has violated this Final Judgment,
Plaintiffs may apply for a one-time
extension of this Final Judgment,
together with such other relief as may be
appropriate. Allegiance agrees to
reimburse the Plaintiffs for any
attorneys’ fees, experts’ fees, and costs
incurred in connection with any effort
to enforce this Final Judgment.
X. EXPIRATION OF FINAL
JUDGMENT
Unless this Court grants an extension,
this Final Judgment shall expire five
years from the date of its entry.
XI. NOTICE
For purposes of this Final Judgment,
any notice or other communication
required to be filed with or provided to
the United States or the State of
Michigan shall be sent to the persons at
the addresses set forth below (or such
other address as the United States or the
State of Michigan may specify in writing
to Allegiance):
Chief
Healthcare & Consumer Products
Section
U.S. Department of Justice
Antitrust Division
450 Fifth Street, Suite 4100
Washington, DC 20530
Division Chief
Corporate Oversight Division
Michigan Department of Attorney
General
525 West Ottawa Street
P.O. Box 30755
Lansing, MI 48909
XII. PUBLIC INTEREST
DETERMINATION
The parties, as required, have
complied with the procedures 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.
Dated:
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Court approval subject to procedures
of Antitrust Procedures and Penalties
Act, 15 U.S.C. § 16
Health (‘‘Allegiance’’) submitted for
entry in this civil antitrust proceeding.
lllllllllllllllllllll
United States District Judge
Exhibit 1
[Letterhead of Allegiance]
[Name and Address of Antitrust Compliance
Officer]
Dear [XX]:
I am providing you this notice to make sure
you are aware of a court order recently
entered by the Honorable Judith E. Levy, a
federal judge in Ann Arbor, Michigan. This
court order applies to our institution and all
of its employees, including you, so it is
important that you understand the
obligations it imposes on us. Ms. Georgia
Fojtasek has asked me to let each of you
know that they expect you to take these
obligations seriously and abide by them.
In a nutshell, the order prohibits us from
agreeing with other healthcare providers,
including hospitals and physicians, to limit
marketing or to divide any geographic
market, territory, customers, or services
between healthcare providers. This means
you cannot give any assurance to another
healthcare provider that Henry Ford
Allegiance Health will refrain from marketing
our services, and you cannot ask for any
assurance from them that they will refrain
from marketing. The court order also
prohibits communicating with any health
care system provider, or their employees
about our marketing plans or about their
marketing plans. There are limited
exceptions to this restriction on
communications, such as discussing joint
projects, but you should check with me
before relying on those exceptions.
A copy of the court order is attached.
Please read it carefully and familiarize
yourself with its terms. The order, rather than
the above description, is controlling. If you
have any questions about the order or how
it affects your activities, please contact me.
Thank you for your cooperation.
Sincerely,
[Allegiance’s Antitrust Compliance Officer]
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF
MICHIGAN
United States of America and State of
Michigan, Plaintiffs, v. W.A. Foote Memorial
Hospital, D/B/A Allegiance Health,
Defendant.
Case No.: 5:15-cv-12311-JEL-DRG
Hon. Judith E. Levy
Mag. Judge David R. Grand
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COMPETITIVE IMPACT STATEMENT
Plaintiff the United States of America,
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
concerning W.A. Foote Memorial
Hospital, d/b/a Henry Ford Allegiance
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I. NATURE AND PURPOSE OF THE
PROCEEDING
On June 25, 2015, the United States
and the State of Michigan filed a civil
antitrust Complaint alleging that
Allegiance, Hillsdale Community Health
Center (‘‘HCHC’’), Community Health
Center of Branch County (‘‘Branch’’),
and ProMedica Health System, Inc.
(‘‘ProMedica’’) violated Section 1 of the
Sherman Act, 15 U.S.C. § 1, and Section
2 of the Michigan Antitrust Reform Act,
MCL 445.772. Concerning Allegiance,
the Complaint alleged that Allegiance
entered into an agreement with HCHC to
limit marketing of competing healthcare
services in Hillsdale County. This
agreement eliminated a significant form
of competition to attract patients and
substantially diminished competition in
Hillsdale County, depriving consumers,
physicians, and employers of important
information and services. The hospitals’
agreement to allocate territories for
marketing is per se illegal under Section
1 of the Sherman Act, 15 U.S.C. § 1, and
Section 2 of the Michigan Antitrust
Reform Act, MCL 445.772.
With the Complaint, the United States
and the State of Michigan filed a
Stipulation and proposed Final
Judgment (‘‘Original Judgment’’) with
respect to HCHC, Branch, and
ProMedica. That Original Judgment
settled this suit as to those three
defendants. Following a Tunney Act
review process, the Court granted
Plaintiffs’ Motion for Entry of the
Original Judgment (Dkt. 36) and
dismissed HCHC, Branch, and
ProMedica from the case (Dkt. 37). The
case against Allegiance continued.
Allegiance has now agreed to a
proposed Final Judgment, which
contains terms that are similar to those
in the Original Judgment, as well as
additional terms. The United States
filed this proposed Final Judgment with
respect to Allegiance (‘‘proposed Final
Judgment’’) on February 9, 2018 (Dkt.
122–1). The proposed Final Judgment is
described in more detail in Section III
below.
The proposed Final Judgment may be
entered by the Court after compliance
with the provisions of the APPA. Entry
of the proposed Final Judgment would
terminate this action, except that this
Court would retain jurisdiction to
construe, modify, and enforce the
proposed Final Judgment and to punish
violations thereof.
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II. DESCRIPTION OF THE EVENTS
GIVING RISE TO THE ALLEGED
VIOLATIONS
A. Background on Allegiance and Its
Marketing Activities
Allegiance is a nonprofit general
medical and surgical hospital in Jackson
County, which is adjacent to HCHC’s
location in Hillsdale County in South
Central Michigan. Allegiance is the only
hospital in its county. Allegiance
directly competes with HCHC to
provide many of the same hospital and
physician services to patients.
An important tool that hospitals use
to compete for patients is marketing
aimed at informing consumers,
physicians, and employers about a
hospital’s quality and scope of services.
Allegiance and HCHC’s marketing
includes advertisements through
mailings and media, such as local
newspapers, radio, television, and
billboards, as well as the provision of
free medical services, such as health
screenings, physician seminars, and
health fairs. Allegiance and HCHC also
market to physicians and employers
through educational and relationshipbuilding meetings that provide
physicians and employers with
information about the hospitals’ quality
and range of services.
B. Allegiance’s Unlawful Agreement
with HCHC to Limit Marketing
Allegiance agreed with HCHC to
suppress its marketing in Hillsdale
County, and since at least 2009 to the
time of filing of the Complaint in June
2015, Allegiance and HCHC’s agreement
limited Allegiance’s marketing for
competing services in Hillsdale County.
Allegiance believed that HCHC might
refer more complicated cases to
Allegiance because of Allegiance’s
agreement to pull its competitive
punches in Hillsdale County. Allegiance
executives acknowledged the agreement
in numerous documents. The hospitals’
senior executives, including their CEOs,
created, monitored, and enforced the
agreement, which lasted for many years.
The harmful effects of the agreement
continue to the present day.
In compliance with this agreement,
Allegiance routinely excluded Hillsdale
County from many of its marketing
campaigns. As Allegiance explained in
a 2013 oncology marketing plan: ‘‘[A]n
agreement exists with the CEO of
Hillsdale Community Health Center
. . . to not conduct marketing activity in
Hillsdale County.’’ Allegiance
employees repeatedly referred in
internal documents to an ‘‘agreement’’
or a ‘‘gentleman’s agreement’’ with
HCHC, with a high-ranking executive
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describing Allegiance’s ‘‘relationship
with HCHC’’ as ‘‘one of seeking
‘approval’ to provide services in their
market.’’ Allegiance executives on
occasion apologized in writing to HCHC
for violating the agreement and assured
HCHC executives that Allegiance would
honor the previously agreed-upon
marketing restrictions going forward: ‘‘It
isn’t our style to purposely not honor
our agreement.’’ Allegiance even
reduced the number of free health
benefits, such as physician seminars
and health screenings, offered to
residents of Hillsdale County because of
the agreement. This unlawful agreement
between Allegiance and HCHC has
deprived Hillsdale County consumers,
physicians, and employers of valuable
free health screenings and education
and information regarding their
healthcare provider choices.
C. Allegiance’s Marketing Agreement Is
Per Se Illegal
The agreement between Allegiance
and HCHC disrupted the competitive
process and harmed consumers. The
agreement deprived consumers of
information they otherwise would have
had when making important healthcare
decisions. The agreement also deprived
Hillsdale County consumers of free
medical services such as health
screenings and physician seminars that
they would have received but for the
unlawful agreement. Moreover,
Allegiance’s agreement with HCHC
denied employers the opportunity to
receive information and to develop
relationships that could have allowed
them to improve the quality of their
employees’ medical care. And the
agreement diminished Allegiance’s and
HCHC’s incentives to compete on
quality or to improve patient
experience, all to the detriment of South
Central Michigan consumers.
The agreement to restrict marketing
constituted a naked restraint of trade
that is per se unlawful under Section 1
of the Sherman Act, 15 U.S.C. § 1, and
Section 2 of the Michigan Antitrust
Reform Act, MCL 445.772. See United
States v. Topco Assocs., Inc., 405 U.S.
596, 607–08 (1972) (holding that naked
market allocation agreements among
horizontal competitors are plainly
anticompetitive and illegal per se);
United States v. Cooperative Theatres of
Ohio, Inc., 845 F.2d 1367, 1371, 1373
(6th Cir. 1988) (holding that the
defendants’ agreement to not ‘‘actively
solicit[] each other’s customers’’ was
‘‘undeniably a type of customer
allocation scheme which courts have
often condemned in the past as a per se
violation of the Sherman Act’’);
Blackburn v. Sweeney, 53 F.3d 825, 828
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(7th Cir. 1995) (holding that the
‘‘[a]greement to limit advertising to
different geographical regions was
intended to be, and sufficiently
approximates[,] an agreement to allocate
markets so that the per se rule of
illegality applies’’). Allegiance’s
agreement with HCHC was not
reasonably necessary to further any
procompetitive purpose.
The antitrust laws would not prohibit
a hospital from making its own
marketing decisions and conducting
marketing activities as it sees fit, so long
as it does so unilaterally. By agreeing
with a competitor to restrict marketing,
however, Allegiance engaged in
concerted action. By doing so,
Allegiance deprived consumers of the
benefits of competition and ran afoul of
the antitrust laws.
III. EXPLANATION OF THE
PROPOSED FINAL JUDGMENT
The proposed Final Judgment will
prevent the recurrence of the violations
alleged in the Complaint and will
restore the competition restrained by the
anticompetitive agreement between
Allegiance and HCHC. Section X of the
proposed Final Judgment provides that
these provisions will expire five years
after its entry.
A. Prohibited Conduct
Under Section IV of the proposed
Final Judgment, Allegiance cannot agree
with any healthcare provider to prohibit
or limit marketing. Allegiance also
cannot allocate any services, customers,
or geographic markets or territories,
subject to narrow exceptions relating to
the provision of certain services jointly
with another healthcare provider.
Allegiance is prohibited from
communicating with any healthcare
provider about Allegiance’s marketing
in its or the provider’s county, subject
to narrow exceptions relating to
legitimate procompetitive activities.
Additionally, Allegiance is prohibited
from excluding Hillsdale County from
its marketing or business development
activities. This prohibition restores
competition that was eliminated during
the course of the agreement, which
Allegiance implemented in part by
carving out Hillsdale County from many
of its marketing activities. This
prohibition ensures that Hillsdale
County consumers will benefit from
competition.
B. Compliance and Inspection
The proposed Final Judgment sets
forth various provisions to ensure
Allegiance’s compliance with the
proposed Final Judgment. Section V of
the proposed Final Judgment requires
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Allegiance to hire and appoint an
Antitrust Compliance Officer within
thirty days of the Final Judgment’s
entry. The Antitrust Compliance Officer
may be a current employee of Henry
Ford Health System, and Allegiance
must obtain Plaintiffs’ approval for the
person appointed to this position.
The Antitrust Compliance Officer
must furnish copies of this Competitive
Impact Statement, the Final Judgment,
and a notice explaining the Final
Judgment’s obligations to Allegiance’s
officers and directors (including its
Board of Directors), direct reports to
Allegiance’s Chief Executive Officer,
marketing managers at the level of
director and above, and all other
employees engaged in activities relating
to Allegiance’s marketing or business
development activities. The Antitrust
Compliance Officer must also obtain
from each recipient a certification that
he or she has read and agrees to abide
by the terms of the Final Judgment. The
Antitrust Compliance Officer must
maintain a record of all certifications
received. The Antitrust Compliance
Officer shall annually brief each person
receiving a copy of the Final Judgment
and this Competitive Impact Statement
on the meaning and requirements of the
Final Judgment and the antitrust laws.
In addition, the Antitrust Compliance
Officer shall ensure that each recipient
of the Final Judgment and this
Competitive Impact Statement receives
at least four hours of training annually
on the meaning and requirements of the
Final Judgment and the antitrust laws.
Section V of the proposed Final
Judgment requires the Antitrust
Compliance Officer to communicate
annually to Allegiance’s employees that
they may disclose to the Antitrust
Compliance Officer, without reprisal,
information concerning any potential
violation of the Final Judgment or the
antitrust laws. In addition, the Antitrust
Compliance Officer shall maintain a log
of communications relating to marketing
between Allegiance staff and any
officers or directors of other healthcare
system providers. Annually, for the term
of the Final Judgment, the Antitrust
Compliance Officer must provide to
Plaintiffs written confirmation of
Allegiance’s compliance with Section V,
including providing copies of the
training materials used for Allegiance’s
antitrust training program.
Additionally, within thirty days of
learning of any violation or potential
violation of the terms and conditions of
the Final Judgment, Allegiance must file
with the United States a statement
describing the violation and the actions
Allegiance took to terminate it.
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To ensure Allegiance’s compliance
with the Final Judgment, Section VI of
the proposed Final Judgment requires
Allegiance to grant the United States
and the State of Michigan access, upon
reasonable notice, to Allegiance’s
records and documents relating to
matters contained in the Final
Judgment. Upon request, Allegiance also
must make its employees available for
interviews or depositions and answer
interrogatories and prepare written
reports relating to matters contained in
the Final Judgment.
After entering into the settlement and
specifically agreeing not to carve out
Hillsdale County from its marketing
campaigns, Allegiance issued a press
release that claimed that it was allowed
to ‘‘continue [its] marketing strategies.’’
John Commins, Henry Ford Allegiance
‘‘Reluctantly’’ Settles DOJ Antitrust Suit,
HealthLeaders Media, Feb. 12, 2018,
https://www.healthleadersmedia.com/
marketing/henry-ford-allegiancereluctantly-settles-doj-antitrust-suit#.
This statement demonstrates that
Allegiance’s need for an effective
antitrust compliance program is
particularly acute and underscores the
importance of provisions in the
proposed Final Judgment to allow
Plaintiffs to closely monitor Allegiance’s
actions to ensure compliance.
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C. Investigation Fees and Costs
The proposed Final Judgment requires
Allegiance to reimburse Plaintiffs for a
portion of their litigation costs.
Allegiance is required to pay the United
States the sum of $5,000.00 and the
State of Michigan the sum of
$35,000.00.
D. Enforcement and Expiration of the
Final Judgment
The proposed Final Judgment
contains provisions designed to promote
compliance and make the enforcement
of consent decrees as effective as
possible. Paragraph IX(A) provides that
Plaintiffs retain and reserve all rights to
enforce the provisions of the proposed
Final Judgment, including their rights to
seek an order of contempt from the
Court. Under the terms of this
paragraph, Allegiance has agreed that in
any civil contempt action, any motion to
show cause, or any similar action
brought by Plaintiffs regarding an
alleged violation of the Final Judgment,
Plaintiffs may establish the violation
and the appropriateness of any remedy
by a preponderance of the evidence and
that Allegiance has waived any
argument that a different standard of
proof should apply. This provision
aligns the standard for compliance
obligations with the standard of proof
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that applies to the underlying offense
that the compliance commitments
address.
Paragraph IX(B) of the proposed Final
Judgment further provides that should
the Court find in an enforcement
proceeding that Allegiance has violated
the Final Judgment, Plaintiffs may apply
to the Court for a one-time extension of
the Final Judgment, together with such
other relief as may be appropriate. In
addition, in order to compensate
American taxpayers for any costs
associated with the investigation and
enforcement of violations of the
proposed Final Judgment, Paragraph
IX(B) requires Allegiance to reimburse
Plaintiffs for attorneys’ fees, experts’
fees, or costs incurred in connection
with any enforcement effort.
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
Allegiance.
V. PROCEDURES AVAILABLE FOR
MODIFICATION OF THE PROPOSED
FINAL JUDGMENT
The proposed Final Judgment may be
entered by the Court after compliance
with the provisions of the APPA, which
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 U.S. Department of
Justice. The comments and the response
of the United States will be filed with
the Court. In addition, comments will be
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posted on the U.S. Department of
Justice, Antitrust Division’s internet
website and, under certain
circumstances, published in the Federal
Register.
Written comments should be
submitted to:
Peter J. Mucchetti
Chief, Healthcare and Consumer
Products Section
Antitrust Division
United States Department of Justice
450 Fifth Street, N.W., Suite 4100
Washington, D.C. 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 Allegiance. The United States is
satisfied, however, that the relief in the
proposed Final Judgment will prevent
the recurrence of the violations alleged
in the Complaint and ensure that
consumers, physicians, and employers
benefit from competition. 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
the United States be subject to a sixtyday 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
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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).1 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 generally United
States v. U.S. Airways Group, Inc., 38 F.
Supp. 3d 69, 75 (D.D.C. 2014) (noting
the court has broad discretion of the
adequacy of the relief at issue); United
States v. SBC Commc’ns, Inc., 489 F.
Supp. 2d 1 (D.D.C. 2007) (describing the
public-interest standard under the
Tunney Act); United States v. InBev
N.V./S.A., No. 08–1965 (JR), 2009 U.S.
Dist. LEXIS 84787, 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’’).
Under the APPA, a court considers,
among other things, the relationship
between the remedy secured and the
specific allegations set forth in the
government’s complaint, whether the
decree is sufficiently clear, whether
enforcement mechanisms are sufficient,
and whether the decree may positively
harm third parties. See 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) (quoting United States v.
Bechtel Corp., 648 F.2d 660, 666 (9th
Cir. 1981)); see also Microsoft, 56 F.3d
at 1460–62; United States v. Alcoa, Inc.,
152 F. Supp. 2d 37, 40 (D.D.C. 2001);
InBev, 2009 U.S. Dist. LEXIS 84787, at
*3. One court explained:
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[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
1 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).
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protecting the public interest is one of
[e]nsuring that the government has not
breached its duty to the public in consenting
to the decree. The court is required to
determine not whether a particular decree is
the one that will best serve society, but
whether the settlement is ‘‘within the reaches
of the public interest.’’ More elaborate
requirements might undermine the
effectiveness of antitrust enforcement by
consent decree.
Bechtel, 648 F.2d at 666 (emphasis
added) (citations omitted).2 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 U.S. Airways, 38 F. Supp. 3d at 75
(noting that a court should not reject the
proposed remedies because it believes
others are preferable); 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).
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); see also U.S. Airways, 38 F.
Supp. 3d at 75 (noting that room must
be made for the government to grant
concessions in the negotiation process
for settlements) (citing Microsoft, 56
F.3d at 1461); 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
2 Cf. BNS, 858 F.2d at 464 (holding that the
court’s ‘‘ultimate authority under the [APPA] is
limited to approving or disapproving the consent
decree’’); 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’ ’’).
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Fmt 4703
Sfmt 4703
9759
‘‘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 U.S. Airways, 38
F. Supp. 3d at 76 (noting that the court
must simply determine whether there is
a factual foundation for the
government’s decisions such that its
conclusions regarding the proposed
settlements are reasonable); 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); see also
U.S. Airways, 38 F. Supp. 3d at 76
(noting that a court is not required to
hold an evidentiary hearing or to permit
intervenors as part of its review under
the Tunney Act). The language captured
Congress’s intent when it enacted the
Tunney Act in 1974. Senator Tunney
explained: ‘‘The 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 Sen. Tunney). Rather, the procedure
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for the public-interest determination is
left to the discretion of the court, with
the recognition that the court’s ‘‘scope
of review remains sharply proscribed by
precedent and the nature of Tunney Act
proceedings.’’ SBC Commc’ns, 489 F.
Supp. 2d at 11.3 A court can make its
public-interest determination based on
the competitive impact statement and
response to public comments alone.
U.S. Airways, 38 F. Supp. 3d at 76.
VIII. DETERMINATIVE DOCUMENTS
There are no determinative materials
or documents within the meaning of the
APPA that were considered by the
United States in formulating the
proposed Final Judgment.
Dated: February 27, 2018
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF
AMERICA:
Peter Caplan (P–30643),
Assistant United States Attorney, U.S.
Attorney’s Office, Eastern District of
Michigan, 211 W. Fort Street, Suite 2001,
Detroit, Michigan 48226, (313) 226–9784,
peter.caplan@usdoj.gov.
\s\Katrina Rouse
Katrina Rouse (D.C. Bar No. 1013035),
Garrett Liskey,
Andrew Robinson,
Jill Maguire,
Healthcare & Consumer Products Section,
Antitrust Division, U.S. Department of
Justice, 450 Fifth St., NW, Washington, DC
20530, (415) 934–5346, Katrina.Rouse@
usdoj.gov.
Certificate of Service
daltland on DSKBBV9HB2PROD with NOTICES
I hereby certify that on February 27, 2018,
I electronically filed the foregoing paper with
the Clerk of Court using the ECF system,
which will send notification of the filing to
the counsel of record for all parties for civil
action 5:15-cv-12311–JEL–DRG, and I hereby
certify that there are no individuals entitled
to notice who are non-ECF participants.
\s\Garrett Liskey
Garrett Liskey (D.C. Bar No. 1000937)
Antitrust Division, Healthcare and Consumer
Products Section, U.S. Department of Justice,
3 See United States v. Enova Corp., 107 F. Supp.
2d 10, 17 (D.D.C. 2000) (noting that the ‘‘Tunney
Act expressly allows the court to make its public
interest determination on the basis of the
competitive impact statement and response to
comments alone’’); United States v. Mid-Am.
Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 Trade
Cas. (CCH) ¶ 61,508, at 71,980, *22 (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.’’).
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450 Fifth St., NW, Washington, DC 20530,
(202) 598–2849, Garrett.Liskey@usdoj.gov.
[FR Doc. 2018–04593 Filed 3–6–18; 8:45 am]
BILLING CODE 4410–11–P
DEPARTMENT OF JUSTICE
Notice of Lodging of Proposed
Consent Decree Under the
Comprehensive Environmental
Response, Compensation and Liabiilty
Act
On February 22, 2018, the Department
of Justice lodged a proposed Consent
Decree with the United States District
Court for the Southern District of New
York in a lawsuit entitled United States
v. Steel of West Virginia, Civil Action
No. 18–1661.
In this action the United States seeks,
as provided under the Comprehensive
Environmental Response, Compensation
and Liability Act, recovery of response
costs from Steel of West Virginia
regarding the Port Refinery Superfund
Site (‘‘Site’’) in the Village of Rye Brook,
New York. The proposed Consent
Decree resolves the United States’
claims and requires Steel of West
Virginia to pay $35,829 in
reimbursement of the United States’
past response costs regarding the Site.
The publication of this notice opens
a public comment period on the
proposed Consent Decree. Comments
should be addressed to the Assistant
Attorney General, Environment and
Natural Resources Division, and should
refer to United States v. Steel of West
Virginia, Civil Action No. 18–1661, D.J.
Ref. 90–11–3–1142/4. All comments
must be submitted no later than 30 days
after the publication date of this notice.
Comments may be submitted either by
email or by mail:
To submit
comments:
Send them to:
By e-mail ......
pubcomment-ees.enrd@
usdoj.gov.
Assistant Attorney General,
U.S. DOJ—ENRD, P.O.
Box 7611, Washington, DC
20044–7611.
By mail .........
During the public comment period,
the Consent Decree may be examined
and downloaded at this Justice
Department website: https://
www.usdoj.gov/enrd/Consent_
Decrees.html. We will provide a paper
copy of the Consent Decree upon
written request and payment of
reproduction costs. Please email your
request and payment to: Consent Decree
Library, U.S. DOJ–ENRD, P.O. Box 7611,
Washington, DC 20044–7611.
PO 00000
Frm 00037
Fmt 4703
Sfmt 4703
Please enclose a check or money order
for $4.25 (25 cents per page
reproduction cost) payable to the United
States Treasury.
Robert E. Maher, Jr.,
Assistant Section Chief, Environmental
Enforcement Section, Environment and
Natural Resources Division.
[FR Doc. 2018–04570 Filed 3–6–18; 8:45 am]
BILLING CODE 4410–15–P
NUCLEAR REGULATORY
COMMISSION
Advisory Committee on the Medical
Uses of Isotopes Renewal Notice
Nuclear Regulatory
Commission.
ACTION: This notice is to announce the
renewal of the Advisory Committee on
the Medical Uses of Isotopes (ACMUI)
for a period of 2 years.
AGENCY:
The U.S.
Nuclear Regulatory Commission (NRC)
has determined that the renewal of the
Charter for the Advisory Committee on
the Medical Uses of Isotopes for the 2
year period commencing on March 1,
2018, is in the public interest, in
connection with duties imposed on the
Commission by law. This action is being
taken in accordance with the Federal
Advisory Committee Act, after
consultation with the Committee
Management Secretariat, General
Services Administration.
The purpose of the ACMUI is to
provide advice to NRC on policy and
technical issues that arise in regulating
the medical use of byproduct material
for diagnosis and therapy.
Responsibilities include providing
guidance and comments on current and
proposed NRC regulations and
regulatory guidance concerning medical
use; evaluating certain non-routine uses
of byproduct material for medical use;
and evaluating training and experience
of proposed authorized users. The
members are involved in preliminary
discussions of major issues in
determining the need for changes in
NRC policy and regulation to ensure the
continued safe use of byproduct
material. Each member provides
technical assistance in his/her specific
area(s) of expertise, particularly with
respect to emerging technologies.
Members also provide guidance as to
NRC’s role in relation to the
responsibilities of other Federal
agencies as well as of various
professional organizations and boards.
Members of this Committee have
demonstrated professional
SUPPLEMENTARY INFORMATION:
E:\FR\FM\07MRN1.SGM
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]]>Agencies
[Federal Register Volume 83, Number 45 (Wednesday, March 7, 2018)]
[Notices]
[Pages 9750-9760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04593]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Antitrust Division
United States et al. v. W.A. Foote Memorial Hospital, d/b/a
Allegiance Health; 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,
Notification of Settlement and Explanation of Consent Decree
Procedures, and Competitive Impact Statement have been filed with the
United States District Court for the Eastern District of Michigan in
United States and State of Michigan v. W.A. Foote Memorial Hospital,
Civil Action No. 15-cv-12311 (JEL) (DRG). On June 25, 2015, the United
States and the State of Michigan filed a Complaint alleging that
Defendant W.A. Foote Memorial Hospital d/b/a Allegiance Health
(``Allegiance'') entered into an agreement with Hillsdale Community
Health Center that unlawfully allocated customers in violation of
Section 1 of the Sherman Act, 15 U.S.C. 1, and 2 of the Michigan
Antitrust Reform Act, MCL 445.772. The proposed Final Judgment, filed
February 9, 2018, prohibits Allegiance from agreeing with other
healthcare providers to prohibit or limit marketing or to divide any
geographic market or territory. The proposed Final Judgment also
prohibits Allegiance from communicating with competing healthcare
systems regarding its marketing plans, with limited exceptions. The
proposed Final Judgment also imposes an antitrust compliance officer
and other training and monitoring requirements on Allegiance.
Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection on the Antitrust
Division's website at https://www.justice.gov/atr, and at the Office of
the Clerk of the United States District Court for the Eastern District
of Michigan. 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 on the proposed Final Judgment is invited within 60
days of the date of this notice. Such comments, including the name of
the submitter, and responses thereto, will be posted on the Antitrust
Division's website, filed with the Court, and, under certain
circumstances, published in the Federal Register. Comments should be
directed to Peter J. Mucchetti, Chief, Healthcare & Consumer Products
Section, Antitrust Division, Department of Justice, 450 Fifth Street
NW, Suite 4100, Washington, DC 20530 (telephone: 202-307-0001).
Patricia A. Brink,
Director of Civil Enforcement.
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN
United States of America and State of Michigan, and Plaintiffs,
v. Hillsdale Community Health Center, W.A. Foote Memorial Hospital,
D/B/A Allegiance Health, Community Health Center of Branch County,
and Promedica Health System, Inc., Defendants.
Case No.: 2:15-cv-12311-JEL-DRG
Hon. Judith E. Levy
Mag. Judge David R. Grand
COMPLAINT
The United States of America and the State of Michigan bring this
civil antitrust action to enjoin agreements by Defendants Hillsdale
Community Health Center (``Hillsdale''), W.A. Foote Memorial Hospital,
d/b/a Allegiance Health (``Allegiance''), Community Health Center of
Branch County (``Branch''), and ProMedica Health System, Inc.
(``ProMedica'') (collectively, ``Defendants'') that unlawfully allocate
territories for the marketing of competing healthcare services and
limit competition among Defendants.
NATURE OF THE ACTION
1. Defendants are healthcare providers in Michigan that operate the
only general acute-care hospital or hospitals in their respective
counties. Defendants directly compete with each other to provide
healthcare services to the residents of south-central Michigan.
Marketing is a key component of this competition and includes
advertisements, mailings to patients, health fairs, health screenings,
and outreach to physicians and employers.
2. Allegiance, Branch, and ProMedica's Bixby and Herrick Hospitals
(``Bixby and Herrick'') are Hillsdale's closest Michigan competitors.
Hillsdale orchestrated agreements to limit marketing of competing
healthcare services. Allegiance explained in a 2013 oncology marketing
plan: ``[A]n agreement exists with the CEO of Hillsdale Community
Health Center, Duke Anderson, to not conduct marketing activity in
Hillsdale County.'' Branch's CEO described the Branch agreement with
Hillsdale as a ``gentlemen's agreement not to market services.'' A
ProMedica communications specialist described the ProMedica agreement
with Hillsdale
[[Page 9751]]
in an email: ``The agreement is that they stay our [sic] of our market
and we stay out of theirs unless we decide to collaborate with them on
a particular project.''
3. The Defendants' agreements have disrupted the competitive
process and harmed patients, physicians, and employers. For instance,
all of these agreements have deprived patients, physicians, and
employers of information they otherwise would have had when making
important healthcare decisions. In addition, the agreement between
Allegiance and Hillsdale has deprived Hillsdale County patients of free
medical services such as health screenings and physician seminars that
they would have received but for the unlawful agreement. Moreover, it
denied Hillsdale County employers the opportunity to develop
relationships with Allegiance that could have allowed them to improve
the quality of their employees' medical care.
4. Defendants' senior executives created and enforced these
agreements, which lasted for many years. On certain occasions when a
Defendant violated one of the agreements, executives of the aggrieved
Defendant complained about the violation and received assurances that
the previously agreed upon marketing restrictions would continue to be
observed going forward.
5. Defendants' agreements are naked restraints of trade that are
per se unlawful under Section 1 of the Sherman Act, 15 U.S.C. Sec. 1,
and Section 2 of the Michigan Antitrust Reform Act, MCL 445.772.
JURISDICTION, VENUE, AND INTERSTATE COMMERCE
6. The United States brings this action pursuant to Section 4 of
the Sherman Act, 15 U.S.C. Sec. 4, to prevent and restrain Defendants'
violations of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. The
State of Michigan brings this action in its sovereign capacity under
its statutory, equitable and/or common law powers, and pursuant to
Section 16 of the Clayton Act, 15 U.S.C. Sec. 26, to prevent and
restrain Defendants' violations of Section 2 of the Michigan Antitrust
Reform Act, MCL 445.772.
7. This Court has subject matter jurisdiction over this action
under Section 4 of the Sherman Act, 15 U.S.C. Sec. 4 (as to claims by
the United States); Section 16 of the Clayton Act, 15 U.S.C. Sec. 26
(as to claims by the State of Michigan); and 28 U.S.C. Sec. Sec. 1331,
1337(a), 1345, and 1367.
8. Venue is proper in the Eastern District of Michigan under 28
U.S.C. Sec. 1391 and Section 12 of the Clayton Act, 15 U.S.C. Sec.
22. Each Defendant transacts business within the Eastern District of
Michigan, all Defendants reside in the State of Michigan, and at least
two Defendants reside in the Eastern District of Michigan.
9. Defendants all engage in interstate commerce and in activities
substantially affecting interstate commerce. Defendants provide
healthcare services to patients for which employers, health plans, and
individual patients remit payments across state lines. Defendants
purchase supplies and equipment from out-of-state vendors that are
shipped across state lines.
DEFENDANTS
10. Hillsdale is a Michigan corporation headquartered in Hillsdale,
Michigan. Its general acute-care hospital, which is in Hillsdale
County, Michigan, has 47 beds and a medical staff of over 90
physicians.
11. Allegiance is a Michigan corporation headquartered in Jackson,
Michigan. Its general acute-care hospital, which is in Jackson County,
Michigan, has 480 beds and a medical staff of over 400 physicians.
12. Branch is a Michigan corporation headquartered in Coldwater,
Michigan. Its general acute-care hospital, which is in Branch County,
Michigan, has 87 beds and a medical staff of over 100 physicians.
13. ProMedica is an Ohio corporation headquartered in Toledo, Ohio,
with facilities in northwest Ohio and southern Michigan. ProMedica's
Bixby and Herrick Hospitals are both in Lenawee County, Michigan. Bixby
is a general acute-care hospital with 88 beds and a medical staff of
over 120 physicians. Herrick is a general acute-care hospital with 25
beds and a medical staff of over 75 physicians.
[GRAPHIC] [TIFF OMITTED] TN07MR18.002
[[Page 9752]]
BACKGROUND ON HOSPITAL COMPETITION
14. Hillsdale competes with each of the other Defendants to provide
many of the same hospital and physician services to patients. Hospitals
compete on price, quality, and other factors to sell their services to
patients, employers, and insurance companies. An important tool that
hospitals use to compete for patients is marketing aimed at informing
patients, physicians, and employers about a hospital's quality and
scope of services. An executive from each Defendant has testified at
deposition that marketing is an important strategy through which
hospitals seek to increase their patient volume and market share.
15. Defendants' marketing includes advertisements through mailings
and media such as local newspapers, radio, television, and billboards.
Allegiance's marketing to patients also includes the provision of free
medical services, such as health screenings, physician seminars, and
health fairs. Some Defendants also market to physicians through
educational and relationship-building meetings that provide physicians
with information about those Defendants' quality and range of services.
Allegiance also engages in these marketing activities with employers.
HILLSDALE'S UNLAWFUL AGREEMENTS
16. Hillsdale has agreements limiting competition with Allegiance,
ProMedica, and Branch.
Unlawful Agreement Between Hillsdale and Allegiance
17. Since at least 2009, Hillsdale and Allegiance have had an
agreement that limits Allegiance's marketing for competing services in
Hillsdale County. As Allegiance explained in a 2013 oncology marketing
plan: ``[A]n agreement exists with the CEO of Hillsdale Community
Health Center, Duke Anderson, to not conduct marketing activity in
Hillsdale County.''
18. In compliance with this agreement, Allegiance has excluded
Hillsdale County from marketing campaigns since at least 2009. For
example, Allegiance excluded Hillsdale County from the marketing plans
outlined in the above-referenced 2013 oncology marketing plan. And
according to a February 2014 board report, Allegiance excluded
Hillsdale from marketing campaigns for cardiovascular and orthopedic
services.
19. On at least two occasions, Hillsdale's CEO complained to
Allegiance after Allegiance sent marketing materials to Hillsdale
County residents. Both times--at the direction of Allegiance CEO
Georgia Fojtasek--Allegiance's Vice President of Marketing, Anthony
Gardner, apologized in writing to Hillsdale's CEO. In one apology he
said, ``It isn't our style to purposely not honor our agreement.'' Mr.
Gardner assured Hillsdale's CEO that Allegiance would not repeat this
mistake.
20. Allegiance also conveyed its hands-off approach to Hillsdale in
2009 when Ms. Fojtasek told Hillsdale's CEO that Allegiance would take
a ``Switzerland'' approach towards Hillsdale, and then confirmed this
approach by mailing Hillsdale's CEO a Swiss flag.
21. Allegiance executives and staff have discussed the agreement in
numerous correspondences and business documents. For example,
Allegiance staff explained in a 2012 cardiovascular services analysis:
``Hillsdale does not permit [Allegiance] to conduct free vascular
screens as they periodically charge for screenings.'' As a result,
around that time, Hillsdale County patients were deprived of free
vascular-health screenings.
22. In another instance, in 2014 Allegiance discouraged one of its
newly employed physicians from giving a seminar in Hillsdale County
relating to competing services. In response to the physician's request
to provide the seminar, the Allegiance Marketing Director asked the
Vice President of Physician Integration and Business Development: ``Who
do you think is the best person to explain to [the doctor] our
restrictions in Hillsdale? We're happy to do so but often our docs find
it hard to believe and want a higher authority to confirm.''
23. The agreement between Hillsdale and Allegiance has deprived
Hillsdale County patients, physicians, and employers of information
regarding their healthcare-provider choices and of free health-
screenings and education.
Unlawful Agreement Between Hillsdale and ProMedica
24. Since at least 2012, Hillsdale and ProMedica have agreed to
limit their marketing for competing services in one another's county.
25. This agreement has restrained marketing in several ways. For
example, in June 2012, Bixby and Herrick's President asked Hillsdale's
CEO if he would have any issue with Bixby marketing its oncology
services to Hillsdale physicians. Hillsdale's CEO replied that he
objected because his hospital provided those services. Bixby and
Herrick's President responded that he understood. Bixby and Herrick
then refrained from marketing their competing oncology services in
Hillsdale County.
26. Another incident occurred around January 2012, when Hillsdale's
CEO complained to Bixby and Herrick's President about the placement of
a ProMedica billboard across from a physician's office in Hillsdale
County. At the conclusion of the conversation, Bixby and Herrick's
President assured Hillsdale's CEO that he would check into taking down
the billboard.
27. ProMedica employees have discussed and acknowledged the
agreement in multiple documents. For example, after Hillsdale's CEO
called Bixby and Herrick's President to complain about ProMedica's
billboard, a ProMedica communications specialist described the
agreement to marketing colleagues via email: ``According to [Bixby and
Herrick's President] any potential marketing (including network
development) efforts targeted for the Hillsdale, MI market should be
run by him so that he can talk to Hillsdale Health Center in advance.
The agreement is that they stay our [sic] of our market and we stay out
of theirs unless we decide to collaborate with them on a particular
project.''
28. The agreement between Hillsdale and ProMedica deprived
patients, physicians, and employers of Hillsdale and Lenawee Counties
of information regarding their healthcare-provider choices.
Unlawful Agreement Between Hillsdale and Branch
29. Since at least 1999, Hillsdale and Branch have agreed to limit
marketing in one another's county. In the fall of 1999, Hillsdale's
then-CEO and Branch's CEO reached an agreement whereby each hospital
agreed not to market anything but new services in the other hospital's
county. Branch's CEO testified recently in deposition that ``There's a
gentlemen's agreement not to market services other than new services.''
30. Branch has monitored Hillsdale's compliance with the agreement.
For example, in November 2004, Hillsdale promoted one of its physicians
through an advertisement in the Branch County newspaper. Branch's CEO
faxed Hillsdale's then-CEO a copy of the advertisement, alerting him to
the violation of their agreement.
31. In addition to monitoring Hillsdale's compliance, Branch has
directed its marketing employees to abide by the agreement with
Hillsdale. For example, Branch's 2013 guidelines
[[Page 9753]]
for sending out media releases instructed that it had a ``gentleman's
agreement'' with Hillsdale and thus Branch should not send media
releases to the Hillsdale Daily News.
32. The agreement between Hillsdale and Branch deprived Hillsdale
and Branch County patients, physicians, and employers of information
regarding their healthcare-provider choices.
NO PROCOMPETITIVE JUSTIFICATIONS
33. The Defendants' anticompetitive agreements are not reasonably
necessary to further any procompetitive purpose.
VIOLATIONS ALLEGED
First Cause of Action: Violation of Section 1 of the Sherman Act
34. Plaintiffs incorporate paragraphs 1 through 33.
35. Allegiance, Branch, and ProMedica are each a horizontal
competitor of Hillsdale in the provision of healthcare services in
south-central Michigan. Defendants' agreements are facially
anticompetitive because they allocate territories for the marketing of
competing healthcare services and limit competition among Defendants.
The agreements eliminate a significant form of competition to attract
patients.
36. The agreements constitute unreasonable restraints of trade that
are per se illegal under Section 1 of the Sherman Act, 15 U.S.C. Sec.
1. No elaborate analysis is required to demonstrate the anticompetitive
character of these agreements.
37. The agreements are also unreasonable restraints of trade that
are unlawful under Section 1 of the Sherman Act, 15 U.S.C. Sec. 1,
under an abbreviated or ``quick look'' rule of reason analysis. The
principal tendency of the agreements is to restrain competition. The
nature of the restraints is obvious, and the agreements lack legitimate
procompetitive justifications. Even an observer with a rudimentary
understanding of economics could therefore conclude that the agreements
would have anticompetitive effects on patients, physicians, and
employers, and harm the competitive process.
Second Cause of Action: Violation of MCL 445.772
38. Plaintiff State of Michigan incorporates paragraphs 1 through
37 above.
39. Defendants entered into unlawful agreements with each other
that unreasonably restrain trade and commerce in violation of Section 2
of the Michigan Antitrust Reform Act, MCL 445.772.
REQUESTED RELIEF
The United States and the State of Michigan request that the Court:
(A) judge that Defendants' agreements limiting competition
constitute illegal restraints of interstate trade in violation of
Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, and Section 2 of the
Michigan Antitrust Reform Act, MCL 445.772;
(B) enjoin Defendants and their members, officers, agents, and
employees from continuing or renewing in any manner the conduct alleged
herein or from engaging in any other conduct, agreement, or other
arrangement having the same effect as the alleged violations;
(C) enjoin each Defendant and its members, officers, agents, and
employees from communicating with any other Defendant about any
Defendant's marketing in its or the other Defendant's county, unless
such communication is related to the joint provision of services, or
unless the communication is part of normal due diligence relating to a
merger, acquisition, joint venture, investment, or divestiture;
(D) require Defendants to institute a comprehensive antitrust
compliance program to ensure that Defendants do not establish any
similar agreements and that Defendants' members, officers, agents and
employees are fully informed of the application of the antitrust laws
to hospital restrictions on competition; and
(E) award Plaintiffs their costs in this action, including
attorneys' fees and investigation costs to the State of Michigan, and
such other relief as may be just and proper.
Dated: June 25, 2015.
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA:
William J. Baer,
Assistant Attorney General for Antitrust.
David I. Gelfand,
Deputy Assistant Attorney General.
\s\--------------------------------------------------------------------
Katrina Rouse (D.C. Bar #1013035),
Jennifer Hane,
Barry Joyce,
Attorneys, Litigation I, Antitrust Division, U.S. Department of
Justice, 450 Fifth Street NW, Suite 4100, Washington, DC 20530,
(202) 305-7498, email: [email protected].
LOCAL COUNSEL:
Barbara L. McQuade,
United States Attorney.
\s\ with the consent of Peter Caplan
-----------------------------------------------------------------------
Peter Caplan,
Assistant United States Attorney, 211 W. Fort Street, Suite 2001,
Detroit, Michigan 48226, (313) 226-9784, P30643, E-mail:
[email protected].
FOR PLAINTIFF STATE OF MICHIGAN:
Bill Schuette, Attorney General, State of Michigan.
\s\ with the consent of Joseph Potchen
-----------------------------------------------------------------------
Joseph Potchen,
Division Chief.
\s\ with the consent of Mark Gabrielse
-----------------------------------------------------------------------
Mark Gabrielse (P75163),
D.J. Pascoe,
Assistant Attorney Generals, Michigan Department of Attorney
General, Corporate Oversight Division, G. Mennen Williams Building,
6th Floor, 525 W. Ottawa Street, Lansing, Michigan 48933, (517) 373-
1160, Email: [email protected].
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN
United States of America and State Of Michigan, Plaintiffs, v.
W.A. Foote Memorial Hospital, D/B/A Allegiance Health, Defendant.
Case No.: 5:15-cv-12311-JEL-DRG
Hon. Judith E. Levy
Mag. Judge David R. Grand
[PROPOSED] FINAL JUDGMENT
Whereas, Plaintiffs, the United States of America and the State of
Michigan, filed their joint Complaint on June 25, 2015, alleging that
W.A. Foote Memorial Hospital, d/b/a/Allegiance Health; Hillsdale
Community Health Center; Community Health Center of Branch County; and
ProMedica Health System, Inc. violated Section 1 of the Sherman Act, 15
U.S.C. Sec. 1, and Section 2 of the Michigan Antitrust Reform Act, MCL
445.772;
And Whereas, Plaintiffs and W.A. Foote Memorial Hospital, d/b/a
Henry Ford Allegiance Health, 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 Whereas, Plaintiffs require Allegiance to agree to undertake
certain actions and refrain from certain conduct for the purpose of
remedying the anticompetitive effects alleged in the Complaint;
And Whereas, Plaintiffs require Allegiance to agree to be bound by
the provisions of the Final Judgment pending its approval by the Court;
Now Therefore, before any testimony is taken, without this Final
Judgment constituting any evidence against or admission by Allegiance
regarding any issue of fact or law, and upon consent of the parties to
this action, it is Ordered, Adjudged, and Decreed:
[[Page 9754]]
I. JURISDICTION
This Court has jurisdiction over the subject matter of and each of
the parties to this action. 28 U.S.C. Sec. Sec. 1331, 1337(a), 1345,
1367(a). The Complaint states a claim upon which relief may be granted
against Allegiance under Section 1 of the Sherman Act, 15 U.S.C. Sec.
1, and Section 2 of the Michigan Antitrust Reform Act, MCL 445.772.
II. DEFINITIONS
As used in this Final Judgment:
A. ``Allegiance'' means Defendant W.A. Foote Memorial Hospital, d/
b/a Henry Ford Allegiance Health, a corporation organized and existing
under the laws of the State of Michigan and affiliated with the Henry
Ford Health System with headquarters in Detroit, Michigan, (i) its
successors and assigns, (ii) all subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures that are controlled by
Henry Ford Allegiance Health, and (iii) their directors, officers,
managers, agents, and employees.
B. ``Agreement'' means any contract, arrangement, or understanding,
formal or informal, oral or written, between two or more persons.
C. ``Communicate'' means to discuss, disclose, transfer,
disseminate, or exchange information or opinion, formally or
informally, directly or indirectly, in any manner.
D. ``Communication'' means any discussion, disclosure, transfer,
dissemination, or exchange of information or opinion.
E. ``Joint Provision of Services'' means any past, present, or
future coordinated delivery of any healthcare services by two or more
healthcare providers, including a clinical affiliation, joint venture,
management agreement, accountable care organization, clinically
integrated network, group purchasing organization, management services
organization, or physician hospital organization.
F. ``Marketing'' means any past, present, or future activities that
are involved in making persons aware of the services or products of the
hospital or of physicians employed or with privileges at the hospital,
including advertising, communications, public relations, provider
network development, outreach to employers or physicians, and
promotions, such as free health screenings and education.
G. ``Marketing Manager'' means any company officer or employee at
the level of director, or above, with responsibility for or oversight
of Marketing.
H. ``Person'' means any natural person, corporation, firm, company,
sole proprietorship, partnership, joint venture, association,
institute, governmental unit, or other legal entity.
I. ``Provider'' means any physician or physician group and any
inpatient or outpatient medical facility including hospitals,
ambulatory surgical centers, urgent care facilities, and nursing
facilities.
III. APPLICABILITY
This Final Judgment applies to Allegiance and all other persons in
active concert or participation with Allegiance who receive actual
notice of this Final Judgment by personal service or otherwise.
IV. PROHIBITED CONDUCT
A. Allegiance shall not enter into, attempt to enter into,
maintain, or enforce any Agreement with any other Provider that:
(1) prohibits or limits Marketing; or
(2) allocates any service, customer, or geographic market or
territory between or among Allegiance and any other Provider, unless
such Agreement is reasonably necessary for and ancillary to a bona fide
Agreement providing for the Joint Provision of Services.
B. Allegiance shall not Communicate with any other Provider about
Allegiance's Marketing in its or the Provider's county, except
Allegiance may:
(1) Communicate with any Provider about joint Marketing if the
Communication is related to the Joint Provision of Services;
(2) Communicate with any Provider about Marketing if the
Communication is part of customary due diligence relating to a merger,
acquisition, joint venture, investment, or divestiture; or
(3) Market to Providers, including through its physician liaison
program.
C. Allegiance shall not exclude or eliminate Hillsdale County from
its Marketing or business development opportunities.
V. REQUIRED CONDUCT
A. Within thirty days of entry of this Final Judgment, Allegiance
shall hire and appoint an Antitrust Compliance Officer. The Antitrust
Compliance Officer may be a current employee of Henry Ford and must be
approved by Plaintiffs.
B. Antitrust Compliance Officer shall:
(1) within sixty days of entry of the Final Judgment, furnish a
copy of this Final Judgment, the Competitive Impact Statement, and a
cover letter that is identical in content to Exhibit 1 to (a) all of
Allegiance's Marketing Managers and other employees engaged, in whole
or in part, in activities relating to Allegiance's Marketing or
business development activities; (b) all direct reports of Allegiance's
CEO; and (c) Allegiance's officers and directors (including their
Boards of Directors);
(2) within thirty days of any person's succession to any position
described in Section V.B.(1) above, furnish a copy of this Final
Judgment, the Competitive Impact Statement, and a cover letter that is
identical in content to Exhibit 1;
(3) annually brief each person designated in Section V.B.(1) and
(2) on the meaning and requirements of this Final Judgment and the
antitrust laws;
(4) obtain from each person designated in Section V.B.(1) and (2),
within sixty days of that person's receipt of the Final Judgment, a
certification that he or she (i) has read and, to the best of his or
her ability, understands and agrees to abide by the terms of this Final
Judgment; (ii) is not aware of any violation of the Final Judgment that
has not already been reported to Allegiance; and (iii) understands that
any person's failure to comply with this Final Judgment may result in
an enforcement action for civil or criminal contempt of court against
Allegiance and/or any person who violates this Final Judgment;
(5) maintain a record of certifications received pursuant to
Section V.B.(4);
(6) annually communicate to Allegiance's employees that they may
disclose to the Antitrust Compliance Officer, without reprisal,
information concerning any potential violation of this Final Judgment
or the antitrust laws;
(7) ensure that each person identified in Section V.B.(1) and (2)
of this Final Judgment receives at least four hours of training
annually on the meaning and requirements of this Final Judgment and the
antitrust laws, such training to be delivered by the Antitrust
Compliance Officer or an attorney with relevant experience in the field
of antitrust law;
(8) maintain a log of telephonic, electronic, in-person, and other
communications regarding Marketing with any Officers or Directors of
any healthcare system Provider and make it available to Plaintiffs for
inspection upon either Plaintiff's request; and
(9) provide to Plaintiffs annually, on or before the anniversary of
the effective date of this order, a written statement affirming
Allegiance's compliance with Section V of this order, and including the
training or instructional materials used or supplied by Allegiance or
Henry Ford in connection with the training as required by Section
V.B.(7).
C. Allegiance shall:
(1) upon learning of any violation or potential violation of any of
the terms
[[Page 9755]]
and conditions contained in this Final Judgment, promptly take
appropriate action to terminate or modify the activity so as to comply
with this Final Judgment and maintain all documents related to any
violation or potential violation of this Final Judgment;
(2) upon learning of any violation or potential violation of any of
the terms and conditions contained in this Final Judgment, within
thirty days of its becoming known, file with each Plaintiff a statement
describing any violation or potential violation, and any steps taken in
response to the violation, which statement shall include a description
of any communication constituting the violation or potential violation,
including the date and place of the communication, the persons
involved, and the subject matter of the communication; and
(3) certify to each Plaintiff annually on the anniversary date of
the entry of this Final Judgment that Allegiance has complied with the
provisions of this Final Judgment.
VI. COMPLIANCE INSPECTION
A. For the purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time authorized representatives of the United States
Department of Justice or the Office of the Michigan Attorney General,
including consultants and other retained persons, shall, upon the
written request of an authorized representative of the Assistant
Attorney General in charge of the Antitrust Division or of the Office
of the Michigan Attorney General, and on reasonable notice to
Allegiance, be permitted:
(1) access during Allegiance's office hours to inspect and copy, or
at the option of the United States or the State of Michigan, to require
Allegiance to provide hard copy or electronic copies of, all books,
ledgers, accounts, records, data, and documents in the possession,
custody, or control of Allegiance, relating to any matters contained in
this Final Judgment; and
(2) to interview, either informally or on the record, Allegiance's
officers, directors, employees, or agents, who may have individual
counsel present, regarding such matters. The interviews shall be
subject to the reasonable convenience of the interviewee and without
restraint or interference by Allegiance.
B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division or of
the Office of the Michigan Attorney General, Allegiance shall submit
written reports or response to written interrogatories, under oath if
requested, relating to any of the matters contained in this Final
Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States or the State of
Michigan to any person other than an authorized representative of the
executive branch of the United States or the State of Michigan, except
in the course of legal proceedings to which the United States or the
State of Michigan 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
Allegiance to the United States or the State of Michigan, Allegiance
represents and identifies in writing the material in any such
information or documents to which a claim of protection may be asserted
under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure, and
Allegiance marks 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 and the State of Michigan
shall give Allegiance ten calendar days notice prior to divulging such
material in any legal proceeding (other than a grand jury proceeding).
VII. INVESTIGATION FEES AND COSTS
Allegiance shall pay to the United States the sum of $5,000.00 for
pre-trial litigation costs and the State of Michigan the sum of
$35,000.00 to partially cover transcripts and related litigation costs.
VIII. RETENTION OF JURISDICTION
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time prior to the expiration of
this Final Judgment 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.
IX. ENFORCEMENT OF FINAL JUDGMENT
A. Plaintiffs retain and reserve all rights to enforce the
provisions of this Final Judgment, including their right to seek an
order of contempt from this Court. Allegiance agrees that in any civil
contempt action, any motion to show cause, or any similar action
brought by Plaintiffs regarding an alleged violation of this Final
Judgment, Plaintiffs may establish a violation of the Final Judgment
and the appropriateness of any remedy therefor by a preponderance of
the evidence, and Allegiance waives any argument that a different
standard of proof should apply.
B. In any enforcement proceeding in which the Court finds that
Allegiance has violated this Final Judgment, Plaintiffs may apply for a
one-time extension of this Final Judgment, together with such other
relief as may be appropriate. Allegiance agrees to reimburse the
Plaintiffs for any attorneys' fees, experts' fees, and costs incurred
in connection with any effort to enforce this Final Judgment.
X. EXPIRATION OF FINAL JUDGMENT
Unless this Court grants an extension, this Final Judgment shall
expire five years from the date of its entry.
XI. NOTICE
For purposes of this Final Judgment, any notice or other
communication required to be filed with or provided to the United
States or the State of Michigan shall be sent to the persons at the
addresses set forth below (or such other address as the United States
or the State of Michigan may specify in writing to Allegiance):
Chief
Healthcare & Consumer Products Section
U.S. Department of Justice
Antitrust Division
450 Fifth Street, Suite 4100
Washington, DC 20530
Division Chief
Corporate Oversight Division
Michigan Department of Attorney General
525 West Ottawa Street
P.O. Box 30755
Lansing, MI 48909
XII. PUBLIC INTEREST DETERMINATION
The parties, as required, have complied with the procedures of the
Antitrust Procedures and Penalties Act, 15 U.S.C. Sec. 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.
Dated:-----------------------------------------------------------------
[[Page 9756]]
-----------------------------------------------------------------------
Court approval subject to procedures
of Antitrust Procedures and Penalties
Act, 15 U.S.C. Sec. 16
-----------------------------------------------------------------------
United States District Judge
Exhibit 1
[Letterhead of Allegiance]
[Name and Address of Antitrust Compliance Officer]
Dear [XX]:
I am providing you this notice to make sure you are aware of a
court order recently entered by the Honorable Judith E. Levy, a
federal judge in Ann Arbor, Michigan. This court order applies to
our institution and all of its employees, including you, so it is
important that you understand the obligations it imposes on us. Ms.
Georgia Fojtasek has asked me to let each of you know that they
expect you to take these obligations seriously and abide by them.
In a nutshell, the order prohibits us from agreeing with other
healthcare providers, including hospitals and physicians, to limit
marketing or to divide any geographic market, territory, customers,
or services between healthcare providers. This means you cannot give
any assurance to another healthcare provider that Henry Ford
Allegiance Health will refrain from marketing our services, and you
cannot ask for any assurance from them that they will refrain from
marketing. The court order also prohibits communicating with any
health care system provider, or their employees about our marketing
plans or about their marketing plans. There are limited exceptions
to this restriction on communications, such as discussing joint
projects, but you should check with me before relying on those
exceptions.
A copy of the court order is attached. Please read it carefully
and familiarize yourself with its terms. The order, rather than the
above description, is controlling. If you have any questions about
the order or how it affects your activities, please contact me.
Thank you for your cooperation.
Sincerely,
[Allegiance's Antitrust Compliance Officer]
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN
United States of America and State of Michigan, Plaintiffs, v.
W.A. Foote Memorial Hospital, D/B/A Allegiance Health, Defendant.
Case No.: 5:15-cv-12311-JEL-DRG
Hon. Judith E. Levy
Mag. Judge David R. Grand
COMPETITIVE IMPACT STATEMENT
Plaintiff the United States of America, pursuant to Section 2(b) of
the Antitrust Procedures and Penalties Act (``APPA'' or ``Tunney
Act''), 15 U.S.C. Sec. 16(b)-(h), files this Competitive Impact
Statement relating to the proposed Final Judgment concerning W.A. Foote
Memorial Hospital, d/b/a Henry Ford Allegiance Health (``Allegiance'')
submitted for entry in this civil antitrust proceeding.
I. NATURE AND PURPOSE OF THE PROCEEDING
On June 25, 2015, the United States and the State of Michigan filed
a civil antitrust Complaint alleging that Allegiance, Hillsdale
Community Health Center (``HCHC''), Community Health Center of Branch
County (``Branch''), and ProMedica Health System, Inc. (``ProMedica'')
violated Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, and Section 2
of the Michigan Antitrust Reform Act, MCL 445.772. Concerning
Allegiance, the Complaint alleged that Allegiance entered into an
agreement with HCHC to limit marketing of competing healthcare services
in Hillsdale County. This agreement eliminated a significant form of
competition to attract patients and substantially diminished
competition in Hillsdale County, depriving consumers, physicians, and
employers of important information and services. The hospitals'
agreement to allocate territories for marketing is per se illegal under
Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, and Section 2 of the
Michigan Antitrust Reform Act, MCL 445.772.
With the Complaint, the United States and the State of Michigan
filed a Stipulation and proposed Final Judgment (``Original Judgment'')
with respect to HCHC, Branch, and ProMedica. That Original Judgment
settled this suit as to those three defendants. Following a Tunney Act
review process, the Court granted Plaintiffs' Motion for Entry of the
Original Judgment (Dkt. 36) and dismissed HCHC, Branch, and ProMedica
from the case (Dkt. 37). The case against Allegiance continued.
Allegiance has now agreed to a proposed Final Judgment, which
contains terms that are similar to those in the Original Judgment, as
well as additional terms. The United States filed this proposed Final
Judgment with respect to Allegiance (``proposed Final Judgment'') on
February 9, 2018 (Dkt. 122-1). The proposed Final Judgment is described
in more detail in Section III below.
The proposed Final Judgment may be entered by the Court after
compliance with the provisions of the APPA. Entry of the proposed Final
Judgment would terminate this action, except that this Court would
retain jurisdiction to construe, modify, and enforce the proposed Final
Judgment and to punish violations thereof.
II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATIONS
A. Background on Allegiance and Its Marketing Activities
Allegiance is a nonprofit general medical and surgical hospital in
Jackson County, which is adjacent to HCHC's location in Hillsdale
County in South Central Michigan. Allegiance is the only hospital in
its county. Allegiance directly competes with HCHC to provide many of
the same hospital and physician services to patients.
An important tool that hospitals use to compete for patients is
marketing aimed at informing consumers, physicians, and employers about
a hospital's quality and scope of services. Allegiance and HCHC's
marketing includes advertisements through mailings and media, such as
local newspapers, radio, television, and billboards, as well as the
provision of free medical services, such as health screenings,
physician seminars, and health fairs. Allegiance and HCHC also market
to physicians and employers through educational and relationship-
building meetings that provide physicians and employers with
information about the hospitals' quality and range of services.
B. Allegiance's Unlawful Agreement with HCHC to Limit Marketing
Allegiance agreed with HCHC to suppress its marketing in Hillsdale
County, and since at least 2009 to the time of filing of the Complaint
in June 2015, Allegiance and HCHC's agreement limited Allegiance's
marketing for competing services in Hillsdale County. Allegiance
believed that HCHC might refer more complicated cases to Allegiance
because of Allegiance's agreement to pull its competitive punches in
Hillsdale County. Allegiance executives acknowledged the agreement in
numerous documents. The hospitals' senior executives, including their
CEOs, created, monitored, and enforced the agreement, which lasted for
many years. The harmful effects of the agreement continue to the
present day.
In compliance with this agreement, Allegiance routinely excluded
Hillsdale County from many of its marketing campaigns. As Allegiance
explained in a 2013 oncology marketing plan: ``[A]n agreement exists
with the CEO of Hillsdale Community Health Center . . . to not conduct
marketing activity in Hillsdale County.'' Allegiance employees
repeatedly referred in internal documents to an ``agreement'' or a
``gentleman's agreement'' with HCHC, with a high-ranking executive
[[Page 9757]]
describing Allegiance's ``relationship with HCHC'' as ``one of seeking
`approval' to provide services in their market.'' Allegiance executives
on occasion apologized in writing to HCHC for violating the agreement
and assured HCHC executives that Allegiance would honor the previously
agreed-upon marketing restrictions going forward: ``It isn't our style
to purposely not honor our agreement.'' Allegiance even reduced the
number of free health benefits, such as physician seminars and health
screenings, offered to residents of Hillsdale County because of the
agreement. This unlawful agreement between Allegiance and HCHC has
deprived Hillsdale County consumers, physicians, and employers of
valuable free health screenings and education and information regarding
their healthcare provider choices.
C. Allegiance's Marketing Agreement Is Per Se Illegal
The agreement between Allegiance and HCHC disrupted the competitive
process and harmed consumers. The agreement deprived consumers of
information they otherwise would have had when making important
healthcare decisions. The agreement also deprived Hillsdale County
consumers of free medical services such as health screenings and
physician seminars that they would have received but for the unlawful
agreement. Moreover, Allegiance's agreement with HCHC denied employers
the opportunity to receive information and to develop relationships
that could have allowed them to improve the quality of their employees'
medical care. And the agreement diminished Allegiance's and HCHC's
incentives to compete on quality or to improve patient experience, all
to the detriment of South Central Michigan consumers.
The agreement to restrict marketing constituted a naked restraint
of trade that is per se unlawful under Section 1 of the Sherman Act, 15
U.S.C. Sec. 1, and Section 2 of the Michigan Antitrust Reform Act, MCL
445.772. See United States v. Topco Assocs., Inc., 405 U.S. 596, 607-08
(1972) (holding that naked market allocation agreements among
horizontal competitors are plainly anticompetitive and illegal per se);
United States v. Cooperative Theatres of Ohio, Inc., 845 F.2d 1367,
1371, 1373 (6th Cir. 1988) (holding that the defendants' agreement to
not ``actively solicit[] each other's customers'' was ``undeniably a
type of customer allocation scheme which courts have often condemned in
the past as a per se violation of the Sherman Act''); Blackburn v.
Sweeney, 53 F.3d 825, 828 (7th Cir. 1995) (holding that the
``[a]greement to limit advertising to different geographical regions
was intended to be, and sufficiently approximates[,] an agreement to
allocate markets so that the per se rule of illegality applies'').
Allegiance's agreement with HCHC was not reasonably necessary to
further any procompetitive purpose.
The antitrust laws would not prohibit a hospital from making its
own marketing decisions and conducting marketing activities as it sees
fit, so long as it does so unilaterally. By agreeing with a competitor
to restrict marketing, however, Allegiance engaged in concerted action.
By doing so, Allegiance deprived consumers of the benefits of
competition and ran afoul of the antitrust laws.
III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT
The proposed Final Judgment will prevent the recurrence of the
violations alleged in the Complaint and will restore the competition
restrained by the anticompetitive agreement between Allegiance and
HCHC. Section X of the proposed Final Judgment provides that these
provisions will expire five years after its entry.
A. Prohibited Conduct
Under Section IV of the proposed Final Judgment, Allegiance cannot
agree with any healthcare provider to prohibit or limit marketing.
Allegiance also cannot allocate any services, customers, or geographic
markets or territories, subject to narrow exceptions relating to the
provision of certain services jointly with another healthcare provider.
Allegiance is prohibited from communicating with any healthcare
provider about Allegiance's marketing in its or the provider's county,
subject to narrow exceptions relating to legitimate procompetitive
activities.
Additionally, Allegiance is prohibited from excluding Hillsdale
County from its marketing or business development activities. This
prohibition restores competition that was eliminated during the course
of the agreement, which Allegiance implemented in part by carving out
Hillsdale County from many of its marketing activities. This
prohibition ensures that Hillsdale County consumers will benefit from
competition.
B. Compliance and Inspection
The proposed Final Judgment sets forth various provisions to ensure
Allegiance's compliance with the proposed Final Judgment. Section V of
the proposed Final Judgment requires Allegiance to hire and appoint an
Antitrust Compliance Officer within thirty days of the Final Judgment's
entry. The Antitrust Compliance Officer may be a current employee of
Henry Ford Health System, and Allegiance must obtain Plaintiffs'
approval for the person appointed to this position.
The Antitrust Compliance Officer must furnish copies of this
Competitive Impact Statement, the Final Judgment, and a notice
explaining the Final Judgment's obligations to Allegiance's officers
and directors (including its Board of Directors), direct reports to
Allegiance's Chief Executive Officer, marketing managers at the level
of director and above, and all other employees engaged in activities
relating to Allegiance's marketing or business development activities.
The Antitrust Compliance Officer must also obtain from each recipient a
certification that he or she has read and agrees to abide by the terms
of the Final Judgment. The Antitrust Compliance Officer must maintain a
record of all certifications received. The Antitrust Compliance Officer
shall annually brief each person receiving a copy of the Final Judgment
and this Competitive Impact Statement on the meaning and requirements
of the Final Judgment and the antitrust laws. In addition, the
Antitrust Compliance Officer shall ensure that each recipient of the
Final Judgment and this Competitive Impact Statement receives at least
four hours of training annually on the meaning and requirements of the
Final Judgment and the antitrust laws.
Section V of the proposed Final Judgment requires the Antitrust
Compliance Officer to communicate annually to Allegiance's employees
that they may disclose to the Antitrust Compliance Officer, without
reprisal, information concerning any potential violation of the Final
Judgment or the antitrust laws. In addition, the Antitrust Compliance
Officer shall maintain a log of communications relating to marketing
between Allegiance staff and any officers or directors of other
healthcare system providers. Annually, for the term of the Final
Judgment, the Antitrust Compliance Officer must provide to Plaintiffs
written confirmation of Allegiance's compliance with Section V,
including providing copies of the training materials used for
Allegiance's antitrust training program.
Additionally, within thirty days of learning of any violation or
potential violation of the terms and conditions of the Final Judgment,
Allegiance must file with the United States a statement describing the
violation and the actions Allegiance took to terminate it.
[[Page 9758]]
To ensure Allegiance's compliance with the Final Judgment, Section
VI of the proposed Final Judgment requires Allegiance to grant the
United States and the State of Michigan access, upon reasonable notice,
to Allegiance's records and documents relating to matters contained in
the Final Judgment. Upon request, Allegiance also must make its
employees available for interviews or depositions and answer
interrogatories and prepare written reports relating to matters
contained in the Final Judgment.
After entering into the settlement and specifically agreeing not to
carve out Hillsdale County from its marketing campaigns, Allegiance
issued a press release that claimed that it was allowed to ``continue
[its] marketing strategies.'' John Commins, Henry Ford Allegiance
``Reluctantly'' Settles DOJ Antitrust Suit, HealthLeaders Media, Feb.
12, 2018, https://www.healthleadersmedia.com/marketing/henry-ford-allegiance-reluctantly-settles-doj-antitrust-suit#. This statement
demonstrates that Allegiance's need for an effective antitrust
compliance program is particularly acute and underscores the importance
of provisions in the proposed Final Judgment to allow Plaintiffs to
closely monitor Allegiance's actions to ensure compliance.
C. Investigation Fees and Costs
The proposed Final Judgment requires Allegiance to reimburse
Plaintiffs for a portion of their litigation costs. Allegiance is
required to pay the United States the sum of $5,000.00 and the State of
Michigan the sum of $35,000.00.
D. Enforcement and Expiration of the Final Judgment
The proposed Final Judgment contains provisions designed to promote
compliance and make the enforcement of consent decrees as effective as
possible. Paragraph IX(A) provides that Plaintiffs retain and reserve
all rights to enforce the provisions of the proposed Final Judgment,
including their rights to seek an order of contempt from the Court.
Under the terms of this paragraph, Allegiance has agreed that in any
civil contempt action, any motion to show cause, or any similar action
brought by Plaintiffs regarding an alleged violation of the Final
Judgment, Plaintiffs may establish the violation and the
appropriateness of any remedy by a preponderance of the evidence and
that Allegiance has waived any argument that a different standard of
proof should apply. This provision aligns the standard for compliance
obligations with the standard of proof that applies to the underlying
offense that the compliance commitments address.
Paragraph IX(B) of the proposed Final Judgment further provides
that should the Court find in an enforcement proceeding that Allegiance
has violated the Final Judgment, Plaintiffs may apply to the Court for
a one-time extension of the Final Judgment, together with such other
relief as may be appropriate. In addition, in order to compensate
American taxpayers for any costs associated with the investigation and
enforcement of violations of the proposed Final Judgment, Paragraph
IX(B) requires Allegiance to reimburse Plaintiffs for attorneys' fees,
experts' fees, or costs incurred in connection with any enforcement
effort.
IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS
Section 4 of the Clayton Act, 15 U.S.C. Sec. 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.
Sec. 16(a), the proposed Final Judgment has no prima facie effect in
any subsequent private lawsuit that may be brought against Allegiance.
V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT
The proposed Final Judgment may be entered by the Court after
compliance with the provisions of the APPA, which 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 U.S. Department of Justice. The comments and the
response of the United States will be filed with the Court. In
addition, comments will be posted on the U.S. Department of Justice,
Antitrust Division's internet website and, under certain circumstances,
published in the Federal Register.
Written comments should be submitted to:
Peter J. Mucchetti
Chief, Healthcare and Consumer Products Section
Antitrust Division
United States Department of Justice
450 Fifth Street, N.W., Suite 4100
Washington, D.C. 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 Allegiance. The
United States is satisfied, however, that the relief in the proposed
Final Judgment will prevent the recurrence of the violations alleged in
the Complaint and ensure that consumers, physicians, and employers
benefit from competition. 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 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. Sec. 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
[[Page 9759]]
or markets, upon the public generally and individuals alleging
specific injury from the violations set forth in the complaint
including consideration of the public benefit, if any, to be derived
from a determination of the issues at trial.
15 U.S.C. Sec. 16(e)(1)(A) & (B).\1\ 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 generally
United States v. U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75
(D.D.C. 2014) (noting the court has broad discretion of the adequacy of
the relief at issue); United States v. SBC Commc'ns, Inc., 489 F. Supp.
2d 1 (D.D.C. 2007) (describing the public-interest standard under the
Tunney Act); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009
U.S. Dist. LEXIS 84787, 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'').
---------------------------------------------------------------------------
\1\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for courts to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
Sec. 16(e) (2004), with 15 U.S.C. Sec. 16(e)(1) (2006); 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 government's 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) (quoting United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d
at 1460-62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40
(D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. One court
explained:
[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 [e]nsuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ 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 U.S. Airways, 38 F. Supp. 3d at 75 (noting
that a court should not reject the proposed remedies because it
believes others are preferable); 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).
---------------------------------------------------------------------------
\2\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); 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' '').
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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); see also U.S.
Airways, 38 F. Supp. 3d at 75 (noting that room must be made for the
government to grant concessions in the negotiation process for
settlements) (citing Microsoft, 56 F.3d at 1461); 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 U.S. Airways,
38 F. Supp. 3d at 76 (noting that the court must simply determine
whether there is a factual foundation for the government's decisions
such that its conclusions regarding the proposed settlements are
reasonable); 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. Sec. 16(e)(2); see also U.S. Airways, 38 F.
Supp. 3d at 76 (noting that a court is not required to hold an
evidentiary hearing or to permit intervenors as part of its review
under the Tunney Act). The language captured Congress's intent when it
enacted the Tunney Act in 1974. Senator Tunney explained: ``The 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 Sen. Tunney). Rather, the
procedure
[[Page 9760]]
for the public-interest determination is left to the discretion of the
court, with the recognition that the court's ``scope of review remains
sharply proscribed by precedent and the nature of Tunney Act
proceedings.'' SBC Commc'ns, 489 F. Supp. 2d at 11.\3\ A court can make
its public-interest determination based on the competitive impact
statement and response to public comments alone. U.S. Airways, 38 F.
Supp. 3d at 76.
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\3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone'');
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (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.'').
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VIII. DETERMINATIVE DOCUMENTS
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: February 27, 2018
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA:
Peter Caplan (P-30643),
Assistant United States Attorney, U.S. Attorney's Office, Eastern
District of Michigan, 211 W. Fort Street, Suite 2001, Detroit,
Michigan 48226, (313) 226-9784, [email protected].
\s\Katrina Rouse
Katrina Rouse (D.C. Bar No. 1013035),
Garrett Liskey,
Andrew Robinson,
Jill Maguire,
Healthcare & Consumer Products Section, Antitrust Division, U.S.
Department of Justice, 450 Fifth St., NW, Washington, DC 20530,
(415) 934-5346, [email protected]
Certificate of Service
I hereby certify that on February 27, 2018, I electronically
filed the foregoing paper with the Clerk of Court using the ECF
system, which will send notification of the filing to the counsel of
record for all parties for civil action 5:15-cv-12311-JEL-DRG, and I
hereby certify that there are no individuals entitled to notice who
are non-ECF participants.
\s\Garrett Liskey
Garrett Liskey (D.C. Bar No. 1000937)
Antitrust Division, Healthcare and Consumer Products Section, U.S.
Department of Justice, 450 Fifth St., NW, Washington, DC 20530,
(202) 598-2849, [email protected].
[FR Doc. 2018-04593 Filed 3-6-18; 8:45 am]
BILLING CODE 4410-11-P
