United States of America v. Charleston Area Medical Center, Inc. et al
Filing
9
MEMORANDUM OPINION AND ORDER granting the 8 MOTION for entry of the proposed final judgment; the proposed final judgment is entered with the court's approval this same date; and this action is dismissed and stricken from the docket, with the court retaining jurisdiction pursuant to the final judgment and any provision therein contemplating the potential for future action by the court. Signed by Judge John T. Copenhaver, Jr. on 10/21/2016. (cc: counsel of record; any unrepresented parties) (taq)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
UNITED STATES OF AMERICA,
Plaintiff,
v.
Civil Action No. 2:16-3664
CHARLESTON AREA MEDICAL CENTER,
INC., and ST. MARY’S MEDICAL
CENTER, INC.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is the motion for entry of the proposed final
judgment, filed by the United States of America (“United
States”) on July 12, 2016.
I.
Background
Defendant Charleston Area Medical Center, Inc.
(“CAMC”) is a healthcare provider that operates general acutecare hospitals in Charleston, Kanawha County, West Virginia.
St. Mary’s Medical Center, Inc. (“St. Mary’s”) is a healthcare
provider that operates general acute-care hospitals in
Huntington, Cabell County, West Virginia.
Compl. at ¶ 1.
The
United States alleges in its complaint that at least since 2012,
CAMC and St. Mary’s entered into an agreement to limit the
marketing of competing healthcare services.
Id. at ¶¶ 2, 14.
CAMC and St. Mary’s agreed that St. Mary’s “would not advertise
on billboards or in print in Kanawha County and that CAMC would
not advertise on billboards or in print in Cabell County.”
Id.
According to the United States, the agreement “disrupted the
competitive process and harmed patients and physicians . . . [by
a]mong other things[,] . . . depriv[ing] patients of information
they otherwise would have when making important healthcare
decisions and . . . den[ying] physicians . . . the opportunity
to advertise their services to potential patients.”
Id. at ¶ 3.
The complaint alleges multiple instances of where,
pursuant to their agreement, CAMC and St. Mary’s did not approve
certain advertising, or advertising was otherwise later removed
after publication because of a request by one of the hospitals.
For example, in 2012, upon asking CAMC’s marketing department
for permission to advertise in The Harold Dispatch, a CAMC
urology group was told that CAMC does not typically advertise in
that newspaper due to a “gentleman’s agreement” with St. Mary’s
and thereafter, CAMC did not place the requested advertisement.
Id. at ¶ 15.
In May 2013, St. Mary’s Director of Marketing
complained to CAMC’s Director of Advertising after CAMC ran an
ad in The Harold Dispatch promoting a CAMC physician’s group,
2
and upon notification, CAMC agreed to remove the advertisement.
Id. at ¶ 16.
On April 14, 2016, the United States instituted this
civil action with the filing of its complaint.
1.
See Compl., p.
In the complaint, the Government seeks injunctive relief and
its costs in this action for alleged violations of Section 1 of
the Sherman Act, 15 U.S.C. § 1.
Id. at p. 5-7.
On the same day that it filed the complaint, the
United States filed the proposed final judgment and the
competitive impact statement.
In accordance with the Antitrust
Procedures and Penalties Act, 15 U.S.C. § 16(b)-(h) (“APPA”),
the United States published notice of the proposed final
judgment and the competitive impact statement in the Federal
Registrar on April 26, 2016.
A summary of the proposed final
judgment and the competitive impact statement was also published
in The Washington Post and the Charleston Gazette-Mail on April
26-29, 2016 and May 3-5, 2016.
No comments were received by the
expiration of the sixty-day comment period.
Subsequently, on
July 12, 2016, the United States certified its compliance with
the APPA and moved to enter the proposed final judgment.
The
APPA procedures having been complied with, the court must
determine whether the proposed final judgment is in the public
interest.
3
II.
Discussion
a. Governing Standard
Proposed consent judgments in antitrust cases brought
by the United States must be reviewed by the court to
independently determine whether entry of the proposed final
judgment “is in the public interest.”
15 U.S.C. § 16(e)(1); see
also United States of America v. Microsoft Corp., 56 F.3d 1448
(D.C. Cir. 1995) (“Microsoft I”) (quoting H.R. Rep. No. 1463,
93d Cong., 2d Sess. 8 (1974) and S. Rep. No. 298, 93d Cong. 1st
Sess. 5 (1974)).
In making this determination, the court must
consider:
(A)
the competitive impact of such judgment, including
termination of alleged violations, provisions for
enforcement and modification, duration of relief
sought, anticipated effects of alternative remedies
actually considered, whether its terms are ambiguous,
and any other competitive considerations bearing upon
the adequacy of such judgment that the court deems
necessary to a determination of whether the consent
judgment is in the public interest; and
(B)
the impact of entry of such judgment upon competition
in the relevant market or markets, upon the public
generally and individuals alleging specific injury
from 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).
In evaluating whether the proposed final
judgment is in the public interest, the inquiry is “a narrow
one.”
See Massachusetts v. Microsoft Corp., 373 F.3d 1199, 1236
4
(D.C. Cir. 2004) (“Microsoft II”).
The court is directed to
look at the complaint and the proposed final judgment to
determine if the remedies in the proposed final judgment
effectively address the harms identified in the complaint.
Microsoft I, 56 F.3d at 1459.
See
“The district court should
withhold its approval of the decree only if any of the terms
appear ambiguous, if the enforcement mechanism is inadequate, if
third parties will be positively injured, or if the decree
otherwise makes a mockery of judicial power.”
Microsoft II, 373
F.3d at 1237 (internal quotations and citations omitted).
b. The Proposed Final Judgment
The proposed final judgment requires CAMC and St.
Mary’s to adhere to and refrain from certain anti-competitive
conduct and establishes procedures to ensure compliance with the
final judgment.
The proposed final judgment prohibits CAMC and St.
Mary’s from entering into or maintaining an agreement that
excludes or limits marketing or allocates territory among
themselves.
See Proposed Final Judgment at 4.
CAMC and St.
Mary’s also may not communicate with each other about their
marketing except if: it relates to joint services they provide;
it is part of due diligence relating to a merger or acquisition;
5
or one defendant believes that the other has made false or
misleading statements about it in its marketing.
Id.
CAMC and St. Mary’s are required to appoint an
Antitrust Compliance Officer within thirty days of entry of the
final judgment.
Id.
The Antitrust Compliance Officer is
required to, among other things, distribute the final judgment
and competitive impact statement to all officers, directors and
marketing managers of CAMC and St. Mary’s, annually brief each
of these people on the final judgment and obtain certification
from them that they understand the final judgment and agree to
abide by its terms.
Id. at 4-5.
CAMC and St. Mary’s must,
promptly upon learning of violations of the final judgment,
modify the activity so that it complies with the final judgment
and notify the United States of the violation.
Id. at 6.
CAMC
and St. Mary’s must annually certify that it has complied with
all provisions of the final judgment.
Id.
Authorized representatives of the Department of
Justice, upon reasonable notice to defendants and upon the
written request of an authorized representative of the Assistant
Attorney General in charge of the Antitrust Division, shall be
permitted to inspect and copy, or require defendants to provide
copies of, documents relating to the final judgment and
question, either in person or by interrogatories, employees,
6
directors, officers, or agents of CAMC or St. Mary’s.
Id. at 6-
7.
Under the proposed final judgment, the court is to
retain jurisdiction so that a party may apply “for further
orders and directions as may be necessary or appropriate to
carry out or construe” the final judgment, modify any provision,
enforce compliance, and punish violations.
Id. at 7-8.
The
final judgment expires five years after the date of its entry,
unless the court grants an extension.1
Id.
The complaint in this matter alleges that CAMC and St.
Mary’s agreement not to advertise in the other’s respective
county is an unreasonable restraint of trade because it limits
competition in attracting patients.
Compl. at ¶ 22.
The
proposed final judgment broadly prohibits CAMC and St. Mary’s
from agreeing to or maintaining an agreement to allocate
territory for marketing purposes and broadly prohibits the two
from discussing their marketing plans except in limited
circumstances.
CAMC and St. Mary’s must annually certify their
1
In order to determine the meaning of the phrase “[u]nless this
Court grants an extension,” the court conferred with counsel for
each of the parties on October 19, 2016, which conference has
resulted in a separate order this day entered with respect to
the circumstances under which the quoted phrase is to be
exercised.
7
compliance with the judgment order.
Furthermore, the proposed
judgment order establishes an Antitrust Compliance Officer, to
ensure compliance with the final judgment, as well as external
inspections to be completed by representatives of the Department
of Justice.
The United States has demonstrated that the proposed
final judgment furthers the public interest.
It eliminates the
anti-competitive impact of the agreement between CAMC and St.
Mary’s alleged in the complaint by prohibiting such agreements
and limiting marketing communications between the two except in
certain circumstances.
See 15 U.S.C. § 16(e)(1)(A).
The
proposed final judgment is not ambiguous and does not propose
difficulties in implementation.
See id.
It provides a
mechanism of enforcement through both internal briefing on
compliance with the final judgment by the Antitrust Compliance
Officer and outside inspections to be completed by
representatives for the Department of Justice.
See id.
In addition, the proposed final judgment will foster
competition in the healthcare market, giving patients access to
more information regarding which hospitals and physicians to
choose for their health care needs.
16(e)(1)(B).
See 15 U.S.C. §
It also allows physicians the opportunity to
advertise their services to potential patients in a larger
8
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
geographic region than the alleged agreement previously
AT CHARLESTON
permitted. PARKER, U.S.C. § 16(e)(1)(B).
THOMAS See 15
Accordingly, the court
finds that the public interest is served by approving the
Plaintiff,
proposed final judgment between the United States, CAMC and St.
v.
Civil Action No. 15-14025
Mary’s. DOW CHEMICAL COMPANY LONG TERM DISABILITY PROGRAM,
THE
an Employee Welfare Benefits Plan,
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON,
III. Conclusion
a Massachusetts Corporation, and
DOES 1 THROUGH 10, inclusive,
In view of these findings, and inasmuch as no party or
Defendants.
person has opposed entry of the final judgment, the court ORDERS
ORDER AND NOTICE
as follows:
Pursuant to L.R. Civ. P. 16.1, it is ORDERED that the
following dates are hereby fixed as the time by or on which
certain events must motion
1. That the unopposed occur: of the United States to enter the
01/28/2016
Motions under F.R. Civ. P. 12(b), together with
proposed final judgment briefs, memoranda, is, granted; or other
supporting be, and it hereby affidavits,
such matter in support thereof. (All motions
unsupported by memoranda will be denied without
2. That the proposed final judgment be, and it hereby is,
prejudice pursuant to L.R. Civ. P. 7.1 (a)).
entered with Last court’s approval this same date;
the day for Rule 26(f) meeting.
02/08/2016
02/15/2016
Last day to file Report of Parties= Planning
Meeting. See L.R. Civ. P. 16.1.
3. That this action be, and it hereby is, dismissed and
stricken
02/22/2016 from the docket, with the at 4:30 p.m. at the Robert C.
Scheduling conference court retaining
Byrd United States Courthouse in Charleston, before
jurisdiction the undersigned, final judgment and Lead counsel
pursuant to the unless canceled. any
directed to appear.
provision therein contemplating the potential for future
02/29/2016
Entry of scheduling order.
action by the court.
03/08/2016
Last day to serve F.R. Civ. P 26(a)(1) disclosures.
The The Clerk directed to transmit copies of Order order
Clerk is is requested to transmit this this and
Notice to all counsel of record and to any unrepresented
to all counsel of record and any unrepresented parties.
parties.
DATED: January 5, 2016
ENTER: October 21, 2016
9
John T. Copenhaver, Jr.
United States District Judge
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