On Monday, our colleagues Bruce Sokler and Farrah Short released a client alert: Attempted Monopolization Suit Based on Alleged Referral Steering Moves Forward with Court’s Acceptance as Plausible of a Geographic Market Limited to a Single Hospital.

The client alert discusses the holding in a recent monopolization suit brought by a private home health agency against a dominant public hospital system and its own home health agency. In its suit, the plaintiff alleges, among other things, that the hospital’s computer discharge system is set up to favor a home health agency owned by the hospital system.

The alert provides insight into how the plaintiff overcame procedural challenges, as well as an analysis of the substantive issues related to intra-system referrals.

The Department of Justice (“DOJ”) Antitrust Division recently announced plans to hold a series of public roundtable discussions to analyze the relationship between competition and regulation, and its implications for antitrust enforcement policy.  As the Antitrust Division continues to scrutinize the healthcare industry, these roundtables may give a window into the Division’s current thinking about mergers and acquisitions and contracting practices in the industry.  The roundtable series starts on Wednesday, March 14, 2018, with a focus on antitrust exemptions and immunities, including a focus on the appropriate role of the state action doctrine.  The roundables will include perspectives from various industry participants as well as “academics, think tanks, and other interested parties to discuss the economic and legal analyses of competition and deregulation.”  The second roundtable will be held on April 26, 2018, and will focus on consent decrees.  The third roundtable will be held on May 31, 2018, and will analyze the consumer costs of anticompetitive regulations.  The DOJ will accept public comments (not to exceed 20 pages) in advance of each of the roundtables.  The federal antitrust agencies often hold public events of this nature to further inform their antitrust enforcement agendas.  It will be interesting to see if this roundtable series results in any major enforcement policy changes for the Antitrust Division, which is now under the leadership of Assistant Attorney General, Makan Delrahim.

Mintz Levin’s Antitrust & Federal Regulatory Practice recently published a Health Care Antitrust Alert on the DOJ Antitrust Division’s announced settlement with Henry Ford Allegiance Health (“Allegiance”). The settlement concludes nearly three years of litigation involving claims that Allegiance and rival hospitals unlawfully conspired to restrict the marketing of competing services in some South Central Michigan counties. We published an Alert when the claims were first filed in 2015. The new Alert outlines the terms of the proposed settlement agreement.

On September 19, 2017, the Tennessee Department of Health (“TDOH”) granted the request for a Certificate of Public Advantage (“COPA”) from Wellmont Health System and Mountain States Health Alliance.  This approval paves the way for the two entities to form a single corporate entity called Ballad Health.  According to the TDOH, both health systems “agreed through the legislative process to meet a clear and convincing standard that their merger would create a public benefit to the residents of Northeast Tennessee that would outweigh any downsides of a monopoly of services.”  Notably, the Department observed that a Terms of Certification document accompanying the approval “includes how active supervision by the state of the new entity will look.”  This fact is important because the Federal Trade Commission (“FTC”), which is not a fan of COPA regulations, has made clear that it will closely analyze and challenge defenses based on asserted state action immunity where the state fails to provide adequate active supervision.
Continue Reading Tennessee Department of Health Grants COPA Request for Health Care Alliance

On the eve of trial, and after years of litigation (including an appeal to the Sixth Circuit), all claims by Dayton, Ohio hospital The Medical Center at Elizabeth Place (“MCEP”) against Premier Health Partners (“Premier”) have been dismissed with prejudice. This case represents an important development in the body of case law addressing the antitrust risk introduced by joint ventures.  Continue Reading District Court Finds Hospital’s Joint Venture Not “Per Se” Unlawful

On March 30, 2017, in a closely watched case, a federal district court denied the Motion for Judgment on the Pleadings filed by Carolinas Healthcare against a Complaint filed by the DOJ Antitrust Division and the State of North Carolina. The Complaint alleged that Carolinas Healthcare insisted on contract provisions with payors that limited or prohibited steering to lower-cost providers.  In its motion, Carolinas Healthcare relied heavily on the Second Circuit decision in United States v. American Express Co., 838 F.3d 179 (2d Cir. 2016), where the Second Circuit had reversed a trial verdict condemning steering restrictions in Amex’s contracts with merchants.  This alert reviews the court’s ruling and considers its implications for future health care antitrust cases.

Earlier this week, the U.S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) filed an amicus brief with the Fifth Circuit stating that the Texas Medical Board’s (the “Board”) appeal was inappropriate and the Court does not have jurisdiction over the appeal. But the government did not stop there. The brief goes on to argue that if the Court does in fact find that it has jurisdiction, it should affirm the district court’s order denying the Board’s motion to dismiss and allow the case to proceed. Continue Reading Teladoc Receives Support from the Feds

Last week, in Deborah Heart & Lung Center v. Virtua Health, Inc., the Third Circuit affirmed a lower court’s dismissal of a suit filed by a hospital alleging an illegal exclusive dealing arrangement by a competing hospital and physician group for referrals made by the defendants to a third hospital rather than to the plaintiff hospital.  In its decision, the court emphasized the importance of market definitions in antitrust cases, and clarified an antitrust plaintiff’s burden when alleging a Sherman Act Section 1 claim with no allegation of market power.  The court held that anticompetitive effects in those cases must then be shown on the relevant market as a whole, not only on a small subset of the market.  In a Health Care Antitrust Alert, our antitrust colleagues Bruce Sokler and Farrah Short analyze the Third Circuit’s decision.

On June 17, the Texas Medical Board (“Board”) filed a brief with the Fifth Circuit Court of Appeals reiterating that the Board’s rulemaking processes are protected under the state action immunity doctrine, noting that the case could significantly impair state agencies in carrying out their governmental functions. The Board’s brief is the most recent action in the Teldoc case that has dragged on for almost two years and left little certainty for those who provide telemedicine services in the State.

As we previously reported, it all began when the Texas Medical Board issued an emergency proposed rule clarifying that physicians must perform a face-to-face or in-person physical examination of a patient prior to issuing a prescription or risk sanctions for unprofessional conduct. Teladoc, whose business model is based on providing health care services via telephone and without a face-to-face or in-person physical examination, sued the Texas Medical Board, alleging that the proposed rule violated antitrust laws. Late last year, a federal district court denied the Texas Medical Board’s motion to dismiss, finding that the Board is not entitled to state action immunity because its actions are not actively supervised by the state. Continue Reading Texas Medical Board Seeks State Action Immunity Protection in Fifth Circuit Brief

Two West Virginia hospital systems settled a lawsuit filed yesterday by the Department of Justice (“DOJ” or “Department”) alleging that they agreed to allocate territories for marketing health care services in violation of Section 1 of the Sherman Act.  The DOJ alleged that Charleston Area Medical Center (“CAMC”) and St. Mary’s Medical Center (“St. Mary’s”) agreed not to advertise in each other’s geographic territories, which the Department said deprived customers of useful information about competing health care providers.  U.S. v. CAMC, Case No. 2:16-cv-03664 (S.D. W.VA. Apr. 14, 2016).

Certain types of agreements between competitors (e.g., market allocation, price fixing) are strictly prohibited under Section 1 of the Sherman Act.  These types of agreements are considered per se illegal and are presumed as harmful because they deprive consumers of the benefits of competition and provide no offsetting benefit to consumers.  This case is a reminder that the antitrust authorities can, and do, challenge market allocation arrangements and other naked restraints of trade that violate Section 1 of the Sherman Act. Continue Reading Hospitals Settle DOJ Suit Alleging Illegal Division of Marketing Territories