[Federal Register Volume 61, Number 92 (Friday, May 10, 1996)]
[Notices]
[Pages 21489-21498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11796]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States of America v. Woman's Hospital Foundation & Woman's
Physician Health Organization; Proposed Final Judgment and Competitive
Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and a Competitive Impact Statement have been filed with
the United States District Court for the Middle District of Louisiana
in United States of America v. Woman's Hospital Foundation & Woman's
Physician Health Organization, Civil No. 96-389-BM2.
The complaint alleges that defendants entered into an agreement
that unreasonably restrained competition among physicians in the Baton
Rouge, Louisiana area, in violation of Section 1 of the Sherman Act, 15
U.S.C. 1. The complaint also alleges that Woman's Hospital Foundation
willfully attempted to maintain and maintained its monopoly in
inpatient obstetrical services in the Baton Rouge, Louisiana area, in
violation of Section 2 of the Sherman Act, 15 U.S.C. 2.
The proposed Final Judgment, agreed to by the defendants, prohibits
defendants' unlawful agreement and the additional acts of Woman's
Hospital Foundation that gave rise to the violations of Section 2.
Public comment on the proposed Final Judgment is invited within the
statutory 60-day comment period. Such comments and responses thereto
will be published in the Federal Register and filed with the Court.
Comments should be directed to Gail Kursh, Chief; Health Care Task
Force; United States Department of Justice; Antitrust Division; 325 7th
Street, NW.; Room
[[Page 21490]]
400; Washington, DC, 20530 (telephone: 202/307-5799).
Rebecca P. Dick,
Deputy Director, Office of Operations, Antitrust Division, U.S.
Department of Justice.
United States District Court for the Middle District of Louisiana
In the matter of: United States of America, plaintiff, vs.
Woman's Hospital Foundation and Woman's Physician Health
Organization, Defendants. Civil Action No: 96-389-B-M2; Filed: April
23, 1996.
Stipulation
The parties, by their attorneys, stipulate that:
1. The Court has jurisdiction over the subject matter of this
action and over each party, and venue is proper in the Middle District
of Louisiana.
2. The Court may file and enter a Final Judgment in the attached
form upon the Court's motion or the motion of a party, after compliance
with the Antitrust Procedures and Penalties Act (15 U.S.C. 16), without
further notice to any party or other proceedings, if plaintiff has not
withdrawn its consent, which it may do before the entry of the proposed
Final Judgment by serving notice on defendants and filing that notice
with the Court.
3. Defendants are bound by the provisions of the proposed Final
Judgment before its approval by the Court and will take the following
actions pursuant to this Stipulation:
a. Notify in writing, within 20 days of the filing of this
Stipulation, each physician who has participated in Woman's Physician
Hospital Organization (WPHO) that he or she is free at all times to
communicate, negotiate, and contract independently from WPHO with any
payer on any terms;
b. While forming or employing a messenger model or forming a
qualified managed care plan before entry of the proposed Final
Judgment: (1) provide a copy of the proposed Final Judgment to each
owner or member of the organization forming the messenger or qualified
managed care plan and to each physician potentially participating in
the messenger model, and (2) require, as a condition precedent to each
physician's ownership, membership or participation, the physician to
affirm in writing that he or she has read and understands the proposed
Final Judgment and agrees to be bound by it;
c. Notify in writing, within 20 days of the filing of this
Stipulation, each payer with which WPHO then has a contract that the
payer may cancel or renegotiate the contract and that each physician
who has participated in WPHO is free at all times to communicate,
negotiate, and contract on any terms with such payer independently
from, and without consultation with, WPHO;
d. Notify in writing, before entry of the proposed Final Judgment,
each payer when it initially discusses (i) using the services of a
messenger that would be subject to the proposed Final Judgment or (ii)
contracting with a qualified managed care plan that would be subject to
the proposed Final Judgment, that each participating physician is free
at all times to communicate, negotiate, and contract with such payer
independently on any terms, without consultation with the messenger or
qualified managed care plan; and
e. Distribute a copy of the proposed Final Judgment to all
directors and officers of defendants within 20 days of the filing of
this Stipulation.
4. Within 30 days after the filing of this Stipulation, each
defendant shall provide to plaintiff a certified statement describing
the notifications and distributions of the Final Judgment it made under
paragraph 3 of this Stipulation.
5. Each defendant shall give plaintiff at least 30-days notice of
any proposed (a) dissolution of that defendant, (b) sale or assignment
of claims or assets of that defendant resulting in a successor person,
or (c) change in corporate structure of that defendant that might
affect its compliance obligations under the proposed Final Judgment.
6. If plaintiff withdraws its consent, or if the Court does not
enter the proposed Final Judgment under the terms of the Stipulation,
this Stipulation shall be of no effect whatsoever, and the making of
this Stipulation shall be without prejudice to any party in this or in
any other proceeding.
FOR PLAINTIFF UNITED STATES OF AMERICA:
Anne K. Bingaman,
Assistant Attorney General.
Joel I. Klein,
Deputy Assistant Attorney General.
Rebecca P. Dick,
Deputy Director, Office of Operations.
Gail Kursh,
Chief, Health Care Task Force.
Mark J. Botti, Steven Kramer, Pamela C. Girardi,
Attorneys, U.S. Department of Justice, Antitrust Division, Health
Care Task Force, Room 450, Liberty Place Bldg., 325 7th Street, NW.,
Washington, DC 20530, (202) 307-0827.
FOR DEFENDANT WOMAN'S HOSPITAL FOUNDATION:
John J. Miles, Bruce R. Stewart,
Ober, Kaler, Grimes & Shriver, Fifth Floor, 1401 H Street, NW.,
Washington, DC 20005, (202) 326-5008.
FOR DEFENDANT WOMAN'S PHYSICIAN HEALTH ORGANIZATION:
Toby G. Singer,
Jones, Day, Reavis & Pogue, 1450 G Street, NW., Washington, DC
20005, (202) 879-4654.
John J. Miles.
United States District Court for the Middle District of Louisiana
In the matter of: United States of America, Plaintiff, vs.
Woman's Hospital Foundation and Woman's Physician Health
Organization, Defendants. Civil Action No: 96-389-B-M2; Filed: April
23, 1996.
Final Judgment
Plaintiff, the United States of America, having filed its Complaint
on April 23, 1996, and plaintiff and defendants, by their respective
attorneys, having consented to the entry of this Final Judgment without
trial or adjudication of any issue of fact or law, and without this
Final Judgment constituting any evidence against or an admission by any
party regarding any issue of fact or law;
NOW, THEREFORE, before the taking of any testimony, and without
trial or adjudication of any issue of fact or law, and upon consent of
the parties, it is hereby ORDERED, ADJUDGED, AND DECREED:
I
Jurisdiction
This Court has jurisdiction over the subject matter and each of the
parties to this action. The Complaint states claims upon which relief
may be granted against the defendants under Sections 1 and 2 of the
Sherman Act, 15 U.S.C. 1 and 2.
II
Definitions
As used in this Final Judgment:
(A) ``Competing physicians'' means solo practitioners or separate
physician practice groups in the same relevant physician market.
(B) ``Consenting physician'' means physicians who have agreed,
through implementation of Section V(B), to be bound by this Final
Judgment.
(C) ``Messenger model'' means the use of an agent or third party
(``the messenger'') to convey to payers any information obtained from
participating physicians about the prices or other competitively
sensitive terms and conditions each physician is willing to accept from
any payer, and to convey to physicians any contract offer made by a
payer, where:
[[Page 21491]]
(1) Pursuant to Section V(B), participating physicians have
received actual notice of this Final Judgment and agreed in writing to
be bound by it;
(2) The messenger informs each payer at the outset of the
messenger's involvement with the payer that the payer may refuse to
respond to offers conveyed by the messenger or may terminate
involvement with the messenger at any time and that participating
physicians are free at all times to communicate, negotiate and contract
on any terms with the payer independently from, and without
consultation with, the messenger;
(3) The messenger informs each participating physician when the
physician first authorizes the messenger to carry messages to and from
the physician and annually thereafter that the physician is free at all
times to communicate, negotiate and contract on any terms with any
payer independently from, and without consultation with, the messenger;
(4) The messenger does not communicate to participating physicians
regarding, or comment on, a payer's refusal to use or decision to
discontinue using the messenger's services, other than to inform
participating physicians that a payer has decided not to use the
messenger's services;
(5) The messenger conveys to participating physicians each and
every offer that a payer delivers to the messenger unless (a) the offer
is the payer's first offer and lacks material terms such that it could
not be considered a bona fide offer, or (b) the messenger applies
preexisting objective criteria, not involving prices or other
competitively sensitive terms and conditions, in a nondiscriminatory
manner (for example, refusing to convey offers of payers that refuse to
pay a fee for conveying the offer, offers for plans that do not cover a
certain minimum number of people, or offers made after the agent or
messenger has conveyed a stated maximum number of offers for a given
time period);
(6) All communications by the messenger to participating physicians
(other than communications to physicians in their capacity as directors
or officers of an organization employing the messenger model) regarding
fees, payers and contracts are in writing or recorded, except that the
messenger may communicate orally on these subjects when the
communication pertains to ministerial matters or when an individual
physician initiates the communication and a written record of the date
of, participants to and subject matter of the conversation is kept by
the messenger;
(7) Each participating physician agrees with the messenger not to
discuss with competing physicians information on fees, contract terms
and conditions, contract offers, or reactions to contract offers;
(8) Each competing, participating physician makes a separate,
independent, and unilateral decision to accept or reject a payer's
offer;
(9) Information on prices or other terms and conditions conveyed to
payers is obtained by the messenger separately from each competing,
participating physician;
(10) The messenger does not negotiate collectively for
participating physicians, disseminate to any physician the messenger's
or any other physician's views or intentions as to an offer, or
otherwise serve to facilitate any agreement among competing physicians
on prices or other terms and conditions;
(11) The messenger does not enter into contracts with payers
unless, in executing contracts on behalf of any competing,
participating physician, it acts consistently with the foregoing
requirements of this Section II(C), no contract grants it the authority
to cancel the contract prior to the stated term of the contract, and
each competing physician makes separate, independent and unilateral
decisions whether to cancel or renew contracts; and,
(12) The messenger maintains all documents received or created by
it, relating to contracting, fees or physician participation, other
than invoices, receipts and personnel records, for the duration of this
Final Judgment.
As long as the messenger acts consistently with the foregoing, it
may:
(1) Convey to a participating physician objective information about
proposed contract terms, including comparisons with terms offered by
other payers;
(2) Solicit clarifications from a payer of proposed contract terms,
or engage in discussions with a payer regarding contract terms other
than prices and other competitively sensitive terms and conditions;
(3) Convey to a participating physician any response made by a
payer to information conveyed or clarifications sought;
(4) Convey to a payer the acceptance or rejection by a
participating physician of any contract offer made by the payer; and,
(5) At the request of the payer, provide the individual response,
information, or views of each participating provider concerning any
contract offer made by such payer.
(D) ``Participating physicians'' means those physicians who own an
interest in or authorize a qualified managed care plan to negotiate or
contract on their behalf with payers, or who authorize a messenger to
carry offers, acceptances and other messages between themselves and
payers.
(E) ``Person'' means any natural person, corporation, firm,
company, sole proprietorship, partnership, joint venture, association,
institute, governmental unit, or other legal entity.
(F) ``Pre-existing physician practice group'' mean a physician
practice group existing as of the date of the filing of the Complaint
in this section. A pre-existing physician practice group may add any
physician to the group after the filing of the Compliant, without
losing the status of ``pre-existing'' under this definition for any
relevant physician market, provided the physician was not offering
services in the relevant physician market before joining the group and
would not have entered that market but for the group's efforts to
recruit the physician.
(G) ``Qualified managed care plan'' means an organization that is
owned, in whole or in part, by either or both of the defendants, offers
a provider panel and satisfies each of the following criteria:
(1) Its owners or not-for-profit members (``members'') who compete
with other owners or members or with subcontracting physicians
participating in the plan, (a) share substantial financial risk for the
payment of services provided pursuant to contracts negotiated or
executed by it and (b) in combination with the owners and members of
all other physician networks in which Woman's Hospital, WPHO or any of
them own an interest constitute no more than 30% of the physicians in
any relevant physician market, except that it may include any single
physician, or any single preexisting physician practice group for each
relevant physician market, so long as Woman's Hospital, WPHO and they
do not own an interest in another physician network;
(2) Its participating physicians include no more than 30% of the
physicians in any relevant physician market unless, for those
subcontracting physicians whose participation increases the panel
beyond 30%, (a) there is a sufficient divergence of economic interest
between such subcontracting physicians and the plan's owners or members
to cause the owners or members to bargain down the fees of the
subcontracting physicians because the extent of the owners' or members'
profits under each payer contract depends directly on the fees
[[Page 21492]]
negotiated with the subcontracting physicians, (b) the contractual
relationship between owners or members and such subcontracting
physicians precludes a higher rate for subcontracting physicians
resulting in the same or higher profits for owners or members, (c) the
plan does not directly pass through to a payer liability for making
payments to such subcontracting physicians, (d) a most-favored-nations
clause or any similar term does not apply to the relationship between
the plan and such subcontracting doctors, and (e) the plan does not
compensate such subcontracting physicians in a manner that
substantially replicates ownership in the organization;
(3) It does not facilitate agreements between competing physicians
concerning charges, or other terms and conditions, relating to payers
not contracting with the organization;
(4) Pursuant to Section V(B), its owners or members have received
actual notice of this Final Judgment and agreed in writing to be bound
by it; and
(5) It is not operated with the purpose or effect of maintaining or
increasing physician fees.
The organization may at any given time exceed the 30% limitation as
a result of any physician exiting any relevant physician market or the
addition of any physician not previously offering services in a
relevant physician market who would not have entered that market but
for the organization's efforts to recruit the physician into the
market; however, the organization may not exceed the 30% limitation by
any greater degree than is directly caused by such exit or entry.
(H) ``Relevant market'' means, unless defendants obtain plaintiff's
prior written approval of a different definition, physicians who
regularly practice (a) in obstetrics or gynecology in the Baton Rouge
area, or (b) services other than obstetric or gynecologic, in any other
relevant market, as defined by federal antitrust principles.
(I) ``Substantial financial risk'' means financial risk achieved
through capitation or the creation of significant financial incentives
for the group to achieve specified cost-containment goals, such as
withholding from all members a substantial amount of the compensation
due to them, with distribution of that amount to the members or owners
only if the cost-containment goals are met.
(J) ``Woman's Hospital'' means Woman's Hospital Foundation, each of
its divisions, parents, subsidiaries, and affiliates, each other person
directly or indirectly, wholly or in part, owned or controlled by it,
and each partnership or joint venture to which any of them is a party,
each of the foregoing person's successors, and all of their directors,
officers, and employees.
(K) ``WPHO'' means Woman's Physician Health Organization, each of
its successors, divisions, parents, subsidiaries, and affiliates, each
other person directly or indirectly, wholly or in part, owned or
controlled by it, and each partnership or joint venture to which any of
them is a party, and all of their directors, officers, and employees.
III
Applicability
This Final Judgment applies to Woman's Hospital and WPHO, to all
consenting physicians, and to all other persons who receive actual
notice of this Final Judgment by personal service or otherwise and then
act or participate in active concert with any or all of the defendants.
IV
Injunctive Relief
(A) Woman's Hospital and WPHO are enjoined from:
(1) Directly or through any agent, organization or other third
party, expressing views on, or conveying information on, competing
physicians' prices or other terms and conditions, or negotiating on
behalf of competing physicians;
(2) Owning an interest in, contracting with, or controlling one or
more organizations, including WPHO, in which individually or
cumulatively participating physicians constitute more than 30% of the
physicians in any relevant market;
(3) Owning an interest or participating in any organization that
directly, or through any agent, organization or other third party,
sets, expresses views on, or conveys information on prices or other
terms and conditions for competing physicians' services, or negotiates
for competing physicians unless the organization complies with
paragraphs (2) through (6) of this Section IV(A) as if those paragraphs
applied to that organization;
(4) Precluding or discouraging any physician from negotiating or
contracting with any payer;
(5) Providing disincentives for, or agreeing with, any physician
not to deal with competitors of Woman's Hospital or WPHO, provided that
nothing in this Final Judgment prohibits Woman's Hospital from entering
into exclusive contracts for anesthesiology, radiology, pathology,
neonatalogy, and perinatalogy services to the extent reasonably
necessary to assure quality of care at the Hospital;
(6) Disclosing to any physician any financial or other
competitively sensitive business information about any competing
physician, except as is reasonably necessary for the operation of a
qualified managed care plan for which defendants have received prior
written approval from the Department of Justice, provided that nothing
in this Final Judgment shall prohibit the disclosure of information
already generally available to the medical community or the public.
(B) Each consenting physician is enjoined from:
(1) Owning an interest or participating in any organization,
connected in any way with Woman's Hospital or WPHO, that directly, or
through any agent, organization or other third party, sets, expresses
views on, or conveys information on prices or other terms and
conditions, or negotiates on behalf of competing physicians, unless the
organization complies with Section IV(A) of this Final Judgment as if
that Section applied to that organization; and
(2) participating in or facilitating any agreement among competing
physicians on fees or other terms and conditions for physician
services, including the willingness of physicians to contract on any
terms with particular payers or to use facilities competing with
Woman's Hospital's facilities, unless the competing physicians share
substantial financial risk and the agreement is ancillary to the shared
risk; provided that nothing in this paragraph IV(B)(2) applies to the
participation of competing physicians in any managed care plan or
network of such a plan not owned or controlled by Woman's Hospital or
WPHO.
(C) Woman's Hospital is enjoined from agreeing with any person
affiliated directly or indirectly with any potential or actual
competing facility to allocate or divide the market for, or set the
price for, any service, including offering lower rates for inpatient
services to any payer on the condition that the payer or any person
affiliated with the payer not offer inpatient obstetrical services.
(D) Nothing in this Final Judgment prohibits the defendants or the
consenting physicians from
(1) Forming, operating, owning an interest in, or participating in
(a) a messenger model, or (b) a qualified managed care plan if
defendants obtain prior written approval from the Department of
Justice, which will not be withheld unreasonably; or
(2) Engaging in activity delineating in the attached Safety Zones
of Statements
[[Page 21493]]
5 and 6 of the 1994 Statements of Enforcement Policy and Analytical
Principles Relating to Health Care and Antitrust.
V
Additional Provisions
Woman's Hospital and WPHO shall:
(A) Notify in writing each WPHO participating physician, within ten
days of entry of this Final Judgment (unless such notification has
already been given) and annually thereafter during the term of this
Final Judgment, that the physician is free at all times to communicate,
negotiate or contract on any terms with any payer independently from,
and without consultation with, WPHO;
(B) While forming or employing a messenger model or forming a
qualified managed care plan, (1) provide a copy of the Final Judgment
to each owner or member of the organization forming the messenger or
qualified managed care plan and to each physician applying for
participation in the messenger model, and (2) require, as a condition
precedent to the physician's ownership or membership in the
organization, or participation in a messenger model, the physician to
affirm in writing that the physician has read and understands this
Final Judgment and agrees to be bound by this Final Judgment;
(C) Notify in writing, within ten days of entry of this Final
Judgment (unless such notification has already been given), each payer
with which WPHO then has a contract that the payer may cancel the
entire contract and that each physician who has participated in WPHO is
free at all times to communicate, negotiate, and contract on any terms
with such payer independently from, and without consultation with,
WPHO;
(D) Notify in writing, within ten days of entry of this Final
Judgment (unless such notification has already been given) each payer
with which WPHO then has a contract, and during the term of this Final
Judgment, each payer when it initially discusses using the services of
a messenger subject to this Final Judgment or contracting with a
qualified managed care plan subject to this Final Judgment, that each
participating physician is free to communicate, negotiate or contract
with such payer on any terms independently from, and without
consultation with, the messenger or qualified managed care plan; and
(E) Notify, as applicable, the plaintiff at least 30 days prior to
any proposed (1) dissolution of a defendant, (2) sale or assignment of
claims or assets of a defendant resulting in a successor person, or (3)
change in corporate structure of a defendant that may affect compliance
obligations arising out of this Final Judgment.
VI
Compliance Program
Each defendant shall maintain a judgment compliance program, which
shall include:
(A) Distributing within 60 days from the entry of this Final
Judgment, a copy of the Final Judgment and Competitive Impact Statement
to all directors and officers;
(B) Distributing in a timely manner a copy of the Final Judgment
and Competitive Impact Statement to any person who succeeds to a
position described in Paragraph VI(A);
(C) Briefing annually in writing or orally those persons designated
in Paragraphs VI (A) and (B) on the meaning and requirements of this
Final Judgment and the antitrust laws, including penalties for
violation thereof;
(D) Obtaining from those persons designated in Paragraphs VI (A)
and (B) annual written certifications that they (1) have read,
understand, and agree to abide by this Final Judgment, (2) understand
that their noncompliance with this Final Judgment may result in
conviction for criminal contempt of court and imprisonment and/or fine,
and (3) have reported violations, if any, of the this Final Judgment of
which they are aware to counsel for the respective defendant; and
(E) Maintaining for inspection by plaintiff a record of recipients
to whom this Final Judgment and Competitive Impact Statement have been
distributed and from whom annual written certifications regarding this
Final Judgment have been received.
VII
Certifications
(A) Within 75 days after entry of this Final Judgment, each
defendant shall certify to plaintiff that it has given the
notifications required by Section V and made the distribution of the
Final Judgment and Competitive Impact Statement as required by
Paragraph VI (A); and
(B) For 10 years after the entry of this Final Judgment, on or
before its anniversary date, each defendant shall certify annually to
plaintiff whether it has complied with the provisions of Sections V and
VI applicable to it.
VIII
Plaintiff's Access
For the sole purpose of determining or securing compliance with
this Final Judgment, and subject to any recognized privilege,
authorized representatives of the United States Department of Justice,
upon written request of the Assistant Attorney General in charge of the
Antitrust Division, shall on reasonable notice be permitted:
(A) Access during regular business hours of any defendant to
inspect and copy all records and documents in the possession or under
the control of that defendant relating to any matters contained in this
Final Judgment;
(B) To interview officers, directors, employees, and agents of any
defendant, who may have counsel present, concerning such matters; and
(C) To obtain written reports from any defendant, under oath if
requested, relating to any matters contained in this Final Judgment.
IX
Jurisdiction Retained
This Court retains jurisdiction to enable any of the parties to
this Final Judgment to apply to this Court at any time for further
orders and directions as may be necessary or appropriate to carry out
or construe this Final Judgment, to modify or terminate any of its
provisions, to enforce compliance, and to punish violations of its
provisions.
X
Expiration of Final Judgment
This Final Judgment shall expire ten (10) years from the date of
entry.
XI
Public Interest Determination
Entry of this Final Judgment is in the public interest.
Dated: ______________________.
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United States District Judge
United States District Court for the Middle District of Louisiana
In the matter of: United States of America, Plaintiff, vs.
Woman's Hospital Foundation and Woman's Physician Health
Organization, Defendants. Civil Action No: 96-389-BMZ.
Amended Competitive Impact Statement
Pursuant to Section 2(b) of the Antitrust Procedures and Penalties
Act, 15 U.S.C. 16(b)-(h) (``APPA''), the United States files this
Competitive Impact Statement relating to the proposed Final Judgment
submitted for entry in this civil antitrust proceeding.
[[Page 21494]]
I
Nature and Purpose of the Proceeding
On April 23, 1996, the United States filed a civil antitrust
complaint alleging that defendant Woman's Health Foundation (``WHF''),
which owns and operates Woman's Hospital, and defendant Woman's
Physician Health Organization (``WPHO''), with others not named as
defendants, entered into an agreement and took other actions, the
purpose and effect of which were, among other things, to reduce
competition among obstetrician/gynecologists (``OB/GYNs'') and other
doctors and prevent or delay the continued development of managed care
in Baton Rouge, Louisiana (``Baton Rouge''), and to maintain willfully
Woman's Hospital's monopoly in inpatient obstetric care, in violation
of Sections 1 and 2 of the Sherman Act, 15 U.S.C. 1, 2. The Complaint
seeks injunctive relief to enjoin continuance and recurrence of these
violations.
The United States filed with the Complaint a proposed Final
Judgment intended to resolve this matter. Entry of the proposed Final
Judgment will terminate this action, except that the Court will retain
jurisdiction over the matter to interpret, enforce, or modify the
judgment, or punish violations of its provisions.
Plaintiff and both defendants have stipulated that the Court may
enter the proposed Final Judgment after compliance with the APPA,
unless prior to entry plaintiff has withdrawn its consent. The proposed
Final Judgment provides that its entry does not constitute any evidence
against, or admission by, any party concerning any issue of fact or
law.
The present proceeding is designed to ensure full compliance with
the public notice and other requirements of the APPA. In the
Stipulation to the proposed Final Judgment, defendants have also agreed
to be bound by the provisions of the proposed Final Judgment pending
its entry by the Court and to take certain corrective actions.
II
Practices Giving Rise to the Alleged Violations
Woman's Hospital is the dominant provider of private inpatient
obstetrical care in Baton Rouge. In the late 1980's, competition among
doctors for participation in managed care plans created the opportunity
for the entry of other Baton Rouge area hospitals into the market for
inpatient obstetrical care. In 1991, General Health, Inc. (``General
Health'') announced that it would build a hospital (the ``Health
Center'') with 5 to 6 dedicated OB/GYN beds. Wonman's Hospital was
particularly threatened by General Health's Center because General
Health also owned Gulf South Health Plans, Inc. (``Gulf South''), the
largest managed care plan in Baton Rouge. Once General Health's new
facility achieved full-service status, Gulf South would have
substantially more negotiating leverage with Woman's Hospital because
Gulf South could employ the Health Center as a preferred hospital over
Woman's Hospital in Gulf South's network.
Women's Hospital entered into negotiations with General Health and
offered to continue contracting with Gulf South if General Health would
agree to stay out of the obstetrical business in Baton Rouge for the
next 5 to 7 years. Woman's Hospital eventually retreated from this
attempt to foreclose the Health Center from offering inpatient
obstetrical services and took alternative steps to achieve the same
result.
Managed care plans could not use the Health Center's availability
to obtain significant price concessions from Woman's Hospital, if
Woman's Hospital could disrupt the competitive forces that would prompt
the OB/GYNs on its medical staff to admit patients to the Health
Center. Accordingly, in 1993, Woman's Hospital formed defendant WPHO, a
physician-hospital organization, whose purpose at the time of formation
was to establish a minimum physician fee schedule and serve as a joint
bargaining agent on behalf of Woman's Hospital and these OB/GYNs.
Woman's Hospital hoped to assure the continued ``loyalty'' of its OB/
GYNs through WPHO.
WPHO developed a minimum fee schedule that listed fees for OB/GYNs
that were substantially higher than the fees managed care plans were
then paying OB/GYNs under individual contracts. Approximately 90% of
the OB/GYNs delivering privately insured babies in the Baton Rouge area
committed to WPHO after reviewing this fee schedule.
WPHO then signed contracts with a number of managed care plans, two
of which were attempting to set up operations in the Baton Rouge area.
Each of these new plans first attempted to contract directly with OB/
GYNs independently of WPHO but was unsuccessful. In addition, Gulf
South was forced to accept OB/GYNs on its panel with whom it had not
previously contracted and to accept the WPHO fee schedule for all OB/
GYNs in WPHO, which was significantly higher than the fee schedule Gulf
South had previously applied to its participating physicians.
Based on the facts described above and those set forth more fully
in the Complaint, the Complaint alleges that the defendants (1) entered
into a contract, combination, or conspiracy that eliminated competition
among physicians and reduced or limited the development of managed care
plans in violation of Section 1 of the Sherman Act, 15 U.S.C. 1; and
defendant Woman's Hospital (2) attempted to maintain its monopoly in
inpatient obstetrical services, with the specific intent to do so, and
(3) willfully maintained its monopoly in inpatient obstetrical services
in violation of Section 2 of the Sherman Act, 15 U.S.C. 2.
III
Explanation of the Proposed Final Judgment
The proposed Final Judgment is intended to restore to Baton Rouge
consumers of obstetrical services the benefits of competition among
obstetrical providers that defendants have eliminated or prevented. At
the same time, the proposed Final Judgment takes into account any
benefits to consumers that Woman's Hospital and Woman's medical staff
may offer through collective marketing of their services by permitting
such collective action that is unlikely to reduce competition among the
physicians or prevent competition between Woman's Hospital and other
hospitals.
A. Scope of the Proposed Final Judgment
Section III of the proposed Final Judgment provides that the Final
Judgment shall apply to defendants, to all ``consenting physicians,''
and to all other persons who receive actual notice of the proposed
Final Judgment by personal service or otherwise and then participate in
active concert with any defendant. The proposed Final Judgment applies
to Woman's Hospital, WPHO, and all ``consenting physicians'' defined as
physicians who remain or become owners or participants in physician
networks owned or operated by Woman's Hospital or WPHO.
B. Prohibitions and Obligations
Sections IV and V of the proposed Final Judgment contain the
substantive provisions of the Judgment.
In Section IV(A), Woman's Hospital and WPHO are enjoined from
setting, negotiating, or expressing views on, prices or other
competitive terms and conditions, for competing physicians.
[[Page 21495]]
Women's Hospital and WPHO are further enjoined from owning an interest
in, contracting, with, or controlling any organization in which
participating physicians constitute more than 30% of the physicians in
any relevant market. Section IV(D), however, permits Woman's Hospital
and WPHO to use a messenger model, and, provided they obtain the prior
written approval of the Department of Justice, to form and operate a
Qualified Managed Care Plan (``QMCP'')--as defined in the proposed
Final Judgment and discussed below. Section IV(A) also prohibits
Woman's Hospital and WPHO from precluding or discouraging any physician
from contracting with any payer, or providing incentives for, or
agreeing with, any physician not to deal with competitors of Woman's
Hospital or WPHO. Nothing in Section IV(A), however, prohibits Woman's
Hospital from entering into exclusive contracts for anesthesiology,
radiology, pathology, neonatalogy, and perinatalogy services to the
extent reasonably necessary to assure quality of care at the Hospital.
In addition, Section IV(A) enjoins Woman's Hospital and WPHO from
disclosing to any physician financial or other competitively sensitive
business information about any competing physicians. An exception
permits disclosure of such information if reasonably necessary for the
operation of an approved QMCP, or if the information is already
generally available to the medical community or the public. Section
IV(C) also permits the exchange of information pursuant to the
Antitrust Safety Zones delineated in Statements 5 and 6 of the 1994
Statements of Enforcement Policy and Analytical Principles Relating to
Health Care and Antitrust (``Health Care Policy Statements'').\1\
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\1\ 4 Trade Reg. Rep. (CCH) para. 13,152 at 20,782, 20,784.
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Section IV(B) enjoins each ``consenting physician'' from owning an
interest or participating in any organization, connected in any way
with Woman's Hospital or WPHO, that directly or through any agent,
organization or other third party, sets, expresses views on, or conveys
information on prices or other terms and conditions, or negotiatees for
competing physicians, unless that organization complies with Section
IV(A). Section IV(B) further enjoins ``consenting physicians'' from
participating in or facilitating any agreement among competing
physicians on fees or other terms and conditions for physician
services, including the willingness of physicians to contract on any
terms with particular payers, or to use facilities competing with
Woman's Hospital's facilities, unless the competing physicians share
substantial financial risk and and the agreement is ancillary to the
shared risk. However, noting in Section IV(B) applies to the
participation of competing physicians in any managed care plan or
network of such plan not owned or controlled by Woman's Hospital or
WPHO.
Section IV(C) enjoins Woman's Hospital from agreeing with any
person affiliated directly or indirectly with any potential or actual
competing facility or allocate or divide the market, or set the price,
for any service, including offering lower rates for inpatient services
to any payer on the condition that the payer or any person affiliated
with the payer not offer inpatient obstetrical services.
Section V of the proposed Final Judgment contains additional
provisions regarding Woman's Hospital and WPHO. Section V(A) requires
Woman's Hospital and WPHO to notify in writing participating physicians
annually that they are free to communicate, negotiate or contract on
any terms with any payer independently from, and without consultation
with, WPHO. Similarly, Sections V(C) and V(D) require Women's Hospital
and WPHO to notify in writing each payer with whom WPHO has a contract,
and during the term of the Final Judgment, each payer when it initially
discusses using the services of a messenger or contracting with a QMCP
subject to this Final Judgment, that each participating physician is
free to communicate, negotiate or contract with such payer on any terms
independently from, and without consultation with, WPHO, the messenger,
or the QMCP.
Under Section V(B), Woman's Hospital and WPHO are required to,
while forming or employing a messenger model or forming a QMCP, (1)
provide a copy of the Final Judgment to each owner or member of the
organization forming the messenger or QMCP and to each physician
applying for participation in the messenger model, and (2) require as a
condition precedent to the physician's ownership or membership in the
organization, or participation in a messenger model, the physician to
affirm in writing that the physician has read and understands the Final
Judgment and agrees to be bound by it.
Section V(E) provides that each defendant must notify the Antitrust
Division of the United States Department of Justice of any proposed
change in corporate structure at least 30 days before that change to
the extent the change may affect compliance obligations arising out of
the proposed Final Judgment.
Section VI of the proposed Final Judgment requires defendants to
implement a judgment compliance program. Section VI(A) requires that
within 60 days of entry of the Final Judgment, defendants must provide
a copy of the proposed Final Judgment and the Competitive Impact
Statement to all directors and officers. Sections VI (B) and (C)
require defendants to provide a copy of the proposed Final Judgment and
Competitive Impact Statement to persons who assume those positions in
the future and to brief such persons annually on the meaning and
requirements of the proposed Final Judgment and the antitrust laws,
including penalties for violating them. Section VI(D) requires
defendants to maintain records of such persons' annual written
certifications indicating that they (1) have read, understand, and
agree to abide by the terms of the proposed Final Judgment, (2)
understand that their noncompliance with the proposed Final Judgment
may result in conviction for criminal contempt of court, and
imprisonment, and/or fine, and (3) have reported any violation of the
proposed Final Judgment of which they are aware to counsel for
defendants. Section VI(E) requires defendants to maintain for
inspection by the Antitrust Division a record of recipients to whom the
proposed Final Judgment and Competitive Impact Statement have been
distributed and from whom annual written certifications regarding the
proposed Final Judgment have been received.
The proposed Final Judgment also contains provisions in Section VII
requiring defendants to certify their compliance with specified
obligations of Section VI(A) of the proposed Final Judgment. Section
VIII of the proposed Final Judgment sets forth a series of measures by
which the Antitrust Division may have access to information needed to
determine or secure defendants' compliance with the proposed Final
Judgment.
Finally, Section X states that the Judgment expires ten years from
the date of entry.
C. Effect of the Proposed Final Judgment on Competition
The proposed Final Judgment remedies, and prevents recurrence of,
violations of Sections 1 and 2 of the Sherman Act. Defendant Woman's
Hospital violated Section 2 by attempting to maintain and maintaining
its monopoly in inpatient obstetrical services. Woman's Hospital and
WPHO
[[Page 21496]]
violated Section 1 by entering into an agreement with OB/GYNs on
Woman's Hospital's medical staff that unreasonably restrained
competition among the OB/GYNs and prevented significant competition
from developing in the market for inpatient obstetrical services.
1. Competition for Inpatient Obstetric Services
Woman's Hospital violated Section 2 by depriving Baton Rouge health
care consumers of the significant benefits from competition for
inpatient obstetric business between Woman's Hospital and General
Health's Health Center. Some competition started to develop with the
entry of General Health and another Baton Rouge hospital, causing
Woman's Hospital to waive direct payments by women who expressed a
desire to deliver at one of the competing facilities. Woman's Hospital,
in the minutes of the first meeting of its Strategic Planning Committee
in 1994, articulated its concern that competition from General Health
might cause more significant competition in the form of ``deep
discounting'' of the rates charged to managed care plans for
deliveries.
In response to that concern, Woman's Hospital tried to prevent the
development of competing obstetric facilities in Baton Rouge. Woman's
Hospital attempted first to prevent General Health from entering the
market by offering to continue contracting with Gulf South, General
Health's wholly owned managed care plan, if General Health did not
enter the market. Though General Health ultimately did not accept
Woman's Hospital's offer, Woman's Hospital could realistically seek the
same type of agreement in the future. Woman's Hospital and General
Health have an ongoing relationship through Woman's participation in
the Gulf South provider network and both Woman's Hospital and General
Health might find it in their mutual self interest to eliminate
competition in inpatient obstetrics. Accordingly, Section IV(C) of the
proposed Final Judgment prohibits Woman's Hospital from pursuing this
type of anticompetitive conduct in the future.
Woman's Hospital succeeded in preventing the development of
inpatient obstetrical competition through the formation of WPHO. By
organizing WPHO, Woman's Hospital created a vehicle for the OB/GYNs on
its medical staff to wield market power. Creation of market power for
such a group of physicians would not normally further a hospital's
interests and could, in some circumstances, work against its interests.
Accordingly, Woman's Hospital would not have organized the physicians
toward this end, absent Woman's interest in preventing the development
of inpatient obstetrical competition.
Woman's Hospital's organization of WPHO furthered this interest of
Woman's Hospital by substantially limiting the ability of managed care
plans to steer patients to General Health's facility. Managed care
plans had successfully selectively contracted with OB/GYNs in the
competitive market that existed before the formation of WPHO. The
formation of WPHO deprived plans of the opportunity to use competition
among the OB/GYNs to induce the OB/GYNs to admit patients to General
Health's facility. The proposed Final Judgment, as discussed in the
next section, restores the competitive market by preventing price
fixing by physicians or their exercise of market power.
2. Competition Among OB/GYNs and Other Physicians
The agreement among Woman's Hospital, WPHO and the WPHO OB/GYNs
unreasonably restrained competition among the OB/GYNs and competition
among hospitals for inpatient obstetrical business. The agreement
constitutes a per se violation of Section 1 because of its naked
purpose and effect of reducing price competition among the OB/GYNs. The
agreement's reduction of competition among the OB/GYNs and among
hospitals, without any substantial offsetting benefit, establishes a
violation of Section 1 under the rule of reason, as well.
a. The Contract, Combination or Conspiracy in Restraint of Trade
The full scope of the unlawful conspiracy charged in this case is
not confined to the four corners of the documents incorporating WPHO or
signed by Woman's Hospital and members of its medical staff. Rather,
the facts alleged in the Complaint establish a broader understanding
among competing OB/GYNs to restrain price competition among themselves
by contracting either through WPHO at or above the minimum WPHO fee
schedule or individually on the same basis.2
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\2\ The existence of this agreement made it unnecessary for the
Department to resolve whether physician representation on the board
of WPHO, physician influence over Woman's Hospital, or other factors
established that competing doctors controlled the establishment of
their fees through WPHO and thus established an agreement among
those competitors.
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Woman's Hospital orchestrated the formation of WPHO through a
number of general meetings with its medical staff, including the OB/
GYNs. The Hospital solicited the OB/GYNs' preliminary commitment to
WPHO and their final agreement to the fee schedule through memoranda
addressed to all members of the medical staff.
The proposal to form WPHO necessarily carried with it the
understanding that a substantial percentage, if not all, of the OB/GYNs
would present a united front to managed care plans and other payers on
terms established through WPHO. Each OB/GYN's agreement to permit WPHO
to negotiate on that doctor's behalf would have been useless at best,
or actually harmful, to the doctor without an understanding that most
would not contract independently of WPHO at rates below WPHO's minimum
fee schedule. WPHO was proposing a broader panel and higher fees than
managed care plans had already obtained through individual contracts
with OB/GYNs. Neither Woman's Hospital nor the OB/GYNs could
realistically have believed that the plans would have agreed with WPHO
to increase fees to OB/GYNs and include additional OB/GYNs in their
panels absent an understanding that the physicians would not continue
to contract individually at competitive rates.
Participating OB/GYNs had substantial reasons to expect that WPHO
would further their understanding to eliminate price competition. Their
interest in not competing with each other was aligned with Woman's
Hospital's interest in not competing with the Health Center. Woman's
Hospital and the OB/GYNs appointed 12 of the 14 Directors to WPHO's
Board of Directors, thus assuring that WPHO would pursue higher OB/GYN
fees and resist contractual terms that could induce the OB/GYNs to make
use of General Health's new inpatient obstetric facility.
Knowing that concerted action was contemplated and invited, each
OB/GYN gave adherence to WPHO and participated in it. Each OB/GYN was
well aware that others were asked to participate; each knew that
cooperation was essential to successful operation of WPHO; each knew
that WPHO, if successful, would result in an elimination of competition
among OB/GYNs; and knowing that, each committed to WPHO and authorized
WPHO to contract on their behalf.3 In
[[Page 21497]]
short, an agreement among OB/GYNs to restrain price competition among
themselves is shown by the nature of the market for OB/GYNs' services
existing before formation of WPHO, the purposes for which WPHO was
formed, and the manner in which it was formed. See Interstate Circuit,
Inc. v. United States, 306 U.S. 208, 226-27 (1939); In re Chain
Pharmacy Ass'n of New York, Inc., No. 9227, slip op. at 70-71 (FTC
Initial Decision, filed May 17, 1991).
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\3\ WPHO strengthened the ability of the OB/GYNs to police the
agreement among themselves. There was little likelihood that any
substantial number of the approximately 45 OB/GYNs who joined WPHO
could secretly break ranks. Woman's Hospital's monopoly in inpatient
obstetrics assured Woman's Hospital knowledge of the identity of
managed care plans operating in Baton Rouge and of the OB/GYNs in
the networks of those plans. WPHO would thus readily detect any OB/
GYN who contracted outside of WPHO at lower rates. Under these
circumstances, the agreement of the OB/GYNs did, and was likely to,
lead to real anticompetitive harm.
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The agreement among Woman's Hospital, WPHO, and the WPHO OB/GYNs to
limit price competition among OB/GYNs was per se unlawful.4 WPHO
did not develop utilization review standards, and the agreement to
limit price competition was not reasonably necessary to further any
efforts by WPHO to encourage physicians to practice more cost-
effectively. No legitimate argument exists, in this case, therefore,
that the collective pricing of OB/GYNs' services here was ancillary to
any procompetitive activity.
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\4\ The agreement does not escape condemnation simply because
WPHO appointed a consultant and a committee of nonphysicians to
determine the fee schedule. The procedure employed by WPHO here is
sharply distinguishable from a properly structured messenger model,
discussed infra and permitted under the proposed Final Judgment.
Here, a single agent was used precisely to fix fees to be charged to
managed care plans by all of WPHO's member doctors, not simply to
convey information.
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Defendants and WPHO physicians collectively obtained higher fees
for OB/GYNs, deprived managed care plans of the ability to selectively
contract with OB/GYNs, and prevented the development of competition for
inpatient obstetrical services. These anticompetitive effects were not
offset by any procompetitive effect. Thus, even under a rule of reason
analysis, defendants violated Section 1 of the Sherman Act.
As discussed above, Sections IV (A) and (B) of the proposed Final
Judgment prevent the continuation or recurrence of defendants' price
fixing activity and exercise of market power by enjoining Woman's
Hospital and WPHO from, directly or indirectly, negotiating or setting
prices or other competitive terms and conditions for competing
physicians and from disclosing financial or other competitively
sensitive information about competing physicians. The requirements of
the proposed Final Judgment should restore and protect competition
among physicians and permit the development of competition for
inpatient obstetrical services in Baton Rouge.
b. Permitted Conduct
Section IV(D) of the Judgment describes two circumstances in which
WPHO or similar organizations subject to the Judgment may participate
in the contracting activities of competing physicians: first, by using
a ``messenger model,'' a term defined in the proposed Final Judgment;
second, by obtaining approval from the Department of Justice to own and
operate a QMCP.
i. The Messenger Model
The proposed Final Judgment permits WPHO to use an agent or third
party to facilitate the transfer of information concerning prices and
other competitively sensitive information between individual physicians
and purchasers of physician services.\5\ Appropriately designed and
administered, such messenger models rarely present substantial
competitive concerns and indeed have the potential to reduce the
transaction costs of negotiations between health plans and numerous
physicians.
---------------------------------------------------------------------------
\5\ ``Other competitively sensitive terms and conditions''
includes, for example, contractual terms concerning utilization
review and quality assurance issues.
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The proposed Final Judgment makes clear that the critical feature
of a properly devised and operated messenger model is the individual
providers make their own separate decisions about whether to accept or
reject a purchaser's proposal, independent of other physicians'
decisions and without any influence by the messenger (Section II(C))
The messenger may not, under the proposed Judgment, coordinate
individual providers' responses to a particular proposal, disseminate
to physicians the messenger's or other physicians' views or intentions
concerning the proposal, act as an agent for collective negotiation and
agreement, or otherwise serve to facilitate collusive behavior.\6\ The
proper role of messenger is simply to facilitate the transfer of
information between purchasers of physician services and individual
physicians or physician group practices and not to coordinate or
otherwise influence the physicians' decision-making processes.\7\
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\6\ For example, it would be a violation of the proposed Final
Judgment if the messenger were to select a fee for a particular
procedure from a range of fees previously authorized by the
individual physician, or if the messenger were to convey collective
price offers from physicians to purchasers or negotiate collective
agreements with purchasers on behalf of physicians. This would be so
even if individual physicians were given the opportunity to ``opt
in'' or to ``opt out'' of any agreement. In each instance, it would
in fact be the messenger, not the individual physician, who would be
making the critical decision, and the purchaser would be faced with
the prospect of a collective response.
\7\ For Example, the messenger may convey to a physician
objective or empirical information about proposed contract terms,
convey to a purchaser any individual physician's acceptance or
rejection of a contract offer, canvass member physicians for the
rates at which each would be willing to contract even before a
purchaser's offer is made, and charge a reasonable, non-
discriminatory fee for messenger services. The proposal Final
Judgment gives guidelines for these and other activities that a
messenger may undertake without violating the Final Judgment.
(Section II(C)).
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ii. The Qualified Managed Care Plan
The proposed Final Judgment provides defendants with the
opportunity to seek approval from the Department of Justice to operate
a QMCP. The requirement of prior approval by the Department was
necessary for several reasons. First, because a QMCP, in contrast with
a messenger model, allows for some collective decision-making among
competitors, the Department must look carefully at the potential for a
QMCP to result in anticompetitive behavior. In this case, the
Department was particularly concerned that past behavior indicated a
potential for physician boycott of new entrants into the inpatient
obstetrics market. Indeed, managed care plans have been deprived of
benefits of competition in the market for inpatient obstetrical
services because OB/GYNs have refused to deliver at the Health Center.
In addition, the Department perceived there to be a greater potential
for abuse of a QMCP operated by a single specialty with very closely
aligned interests. Finally, there was no indication that the operation
of a QMCP by defendants in this case would have any pro-competitive
benefits. Specifically, Woman's Hospital and WPHO did not indicate that
their motivation for operating a QMCP was to offer their community a
locally owned and operated managed care plan, a factor that has been an
important consideration for the Department in permitting the operation
of QMCPs in other communities.\8\ In reviewing a request from
defendants for approval to operate a QMCP, the Department will consider
the totality of circumstances in light of the concerns discussed above.
The proposed Final Judgment provides that the Department's approval
will not
[[Page 21498]]
be withheld unreasonably. (Section IV(D)(I)).
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\8\ See United States v. Health Care Partners, Inc., 60 Fed.
Reg. 52014 (October 4, 1995) (Competitive Impact Statement); United
States v. Health Choice of Missouri, Inc., 60 Fed. Reg. 51808
(October 3, 1995) (Competitive Impact Statement).
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To comply with the requirements of a QMCP set forth in the proposed
Final Judgment, (1) the owners or members of WPHO (to the extent they
compete with other owners or members or compete with physicians on
their provider panels) must share substantial financial risk, and
constitute no more than 30% of the physicians in any relevant market;
\9\ and (2) to the extent WPHO has a provider panel that exceeds this
limit in any relevant market, there must be a divergence of economic
interest between the owners and the subcontracting physicians, such
that the owners have the incentive to bargain down the fees of the
subcontracting physicians.\10\ (Section II(G) (1) and (2)) In addition,
a QMCP cannot facilitate agreements between competing physicians
concerning charges, or other terms and conditions relating to payers
not contracting with the organization, and cannot be operated with the
purpose or effect of maintaining or increasing physician fees. (Section
II(G) (3) and (5)) The requirements of a QMCP are necessary to avoid
the creation of a physician cartel while at the same time allowing
payers access to provider-controlled plans.
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\9\ The financial risk-sharing requirement of a QMCP ensures
that the physician owners in the venture share a clear economic
incentive to achieve substantial cost savings and provide better
services at lower prices to consumers. The 30% limitation is
designed to ensure that there are available sufficient remaining
physicians in the market with the incentive to contract with
competing managed care plans or to form their own plans. These
limitations are particularly critical in this case in view of
defendants' prior conduct in forming negotiating groups with nearly
every OB/GYN practicing at private hospitals in Baton Rouge and
obtaining higher prices for these doctors.
\10\ The QMCP's subcontracting requirements are designed to
permit physician panels above the 30% limit, but with sufficient
safeguards to avoid the risk of competitive harm. Specifically, the
owners of a QMCP must bear significant financial risk for the
payments to, and utilization practices of, the panel physicians in
excess of the 30% limitation. In this way, a QMCP must operate with
the same incentives as a nonprovider-controlled plan to bargain down
the fees of the subcontracting physicians, and the risk of it using
the subcontracts as a mechanism for increasing fees for physician
services is substantially reduced.
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3. Applicability to Consenting Physicians
The proposed Final Judgment applies not only to named defendants
Woman's Hospital and WPHO, but also to all ``consenting physicians''
defined as physicians who continue as owners or participants in
physician networks owned or operated by Woman's Hospital or WPHO.
Consenting physicians are required to affirm in writing that the
physician has read and understands the Final Judgment and agrees to be
bound by it. (Section IV(B)).
Application of the proposed Final Judgment to consenting physicians
will help prevent recurrence of the violations alleged in the
Complaint. Those violations could not have occurred without the willing
participation of physicians who, in addition to Woman's Hospital, were
the intended beneficiaries of those violations. Physicians could abuse
the messenger model and the QMCP in ways that might not violate the
Final Judgment but would at the same time achieve the anticompetitive
results addressed by the Final Judgment. The ``consenting physicians''
provisions should reduce this risk.
IV
Alternative to the Proposed Final Judgment
The alternative to the proposed Final Judgment would be a full
trial on the merits of the case. In the view of the Department of
Justice, such a trial would involve substantial costs to the United
States and defendants and is not warranted because the proposed Final
Judgment provides all of the relief necessary to remedy the violations
of the Sherman Act alleged in the Complaint.
V
Remedies Available to 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 suffered, as well as costs and a reasonable attorney's fee.
Entry of the proposed Final Judgment will neither impair nor assist in
the bringing of such actions. 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 lawsuits that may be brought
against one or more defendants in this matter.
VI
Procedures Available for Modification of the Proposed Final Judgment
As provided by Sections 2 (b) and (d) of the APPA, 15 U.S.C. 16 (b)
and (d), any person believing that the proposed Final Judgment should
be modified may submit written comments to Gail Kursh, Chief; Health
Care Task Force; United States Department of Justice; Antitrust
Division; 325 7th Street, NW., Room 400; Washington, DC 20530, within
the 60-day period provided by the Act. Comments received, and the
Government's responses to them, will be filed with the Court and
published in the Federal Register. All comments will be given due
consideration by the Department of Justice, which remains free,
pursuant to Paragraph 2 of the Stipulation, to withdraw its consent to
the proposed Final Judgment at any time before its entry, if the
Department should determine that some modification of the Final
Judgment is necessary for the public interest. Moreover, the proposed
Final Judgment provides in Section IX that the Court will retain
jurisdiction over this action, and that the parties may apply to the
Court for such orders as may be necessary or appropriate for the
modification, interpretation, or enforcement of the proposed Final
Judgment.
VII
Determinative Documents
No materials and documents of the type described in Section 2(b) of
the APPA, 15 U.S.C. 16(b), were considered in formulating the proposed
Final Judgment. Consequently, none are filed herewith.
Dated: April 23, 1996.
Respectfully submitted,
----------------------------------------------------------------------
Mark J. Botti,
Steven Kramer,
Pamela C. Girardi,
Attorneys, Antitrust Division, U.S. Dept. of Justice, 325 7th
Street, N.W., Room 450, Washington, D.C. 20530, (202) 307-0827.
L.J. Hymel,
United States Attorney.
By:--------------------------------------------------------------------
John J. Gaupp,
LBN# 14976, Assistant United States Attorney, 777 Florida St., Suite
208, Baton Rouge, LA 70801, (504) 389-0443, Local Counsel.
[FR Doc. 96-11796 Filed 5-9-96; 8:45 am]
BILLING CODE 4410-01-M
