Department of Justice Antitrust Division

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.

The Federal Trade Commission (“FTC”) and Department of Justice Antitrust Division (“DOJ”) (collectively, “agencies”) issued a joint statement to Virginia’s Certificate of Public Need (“COPN”) Work Group, which was recently charged with reviewing Virginia’s certificate of public need process and its impact on health care services in Virginia, including the development of “specific recommendations for changes to the certificate of public need process to address any problems or challenges identified during [its] review.” The agencies’ statement encourages the Work Group and the General Assembly to reconsider whether “Virginia’s COPN laws best serve its citizens” and suggests that the Work Group consider the repeal or retrenchment of the COPN laws in order to promote the efficient functioning of health care markets. This statement is another example of the agencies’ continued vigilance in their efforts to prevent CON laws from suppressing competition by “limiting the availability of new or expanded health care services.”

Virginia’s CON program requires providers such as hospitals, nursing homes, rehabilitation facilities and other general acute care service providers to obtain a COPN from the State Health Commissioner (“Commissioner”) before initiating certain projects. The Commissioner can only issue a COPN after determining that there is a public need for the project. According to Virginia’s Department of Health, the review process can take six to seven months to complete — applications are examined during 190-day review cycles designated for certain batch groups which occurs just twice a year for most groups. Aggrieved parties, including incumbent providers, can appeal the Commissioner’s decision to the circuit court. From the agencies’ perspective, this time-consuming and costly process may deter beneficial entry “since a potential entrant may decide that the process itself is too costly.” Continue Reading FTC-DOJ Join Forces: Encourage Repeal/Retrenchment of Virginia CON Laws