Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Justice Department charges four Michigan hospital systems with limiting competition for healthcare services, (Jun 26, 2015)

By Linda O’Brien, J.D., LL.M.

Four Michigan hospital systems have been charged with unlawfully agreeing to allocate territories for marketing to consumers and physicians and depriving consumers and physicians of important information about competing providers and other benefits of limited competition, the Department of Justice Antitrust Division announced yesterday. Three of the systems—Hillsdale Community Health Center, Community Health Center of Branch County, Michigan, and ProMedica Health System Inc. – agreed to settle the charges. The Justice Department will continue to litigate against a fourth, W.A. Foote Memorial Hospital, doing business as Allegiance Health, and is seeking to prohibit agreements that unlawfully allocate territories for marketing of competing healthcare services (U.S. v. Hillsdale Community Health Center, Case No. 2:15-cv-12311, June 25, 2015).

The Antitrust Division, along with the Michigan Attorney General’s Office, filed the civil antitrust lawsuit in the federal district court in Ann Arbor, Michigan on June 25, while simultaneously filing a proposed settlement that, if approved by the court, would resolve the lawsuit with respect to the three settling systems.

According to the complaint, hospitals compete to attract patients through advertising, direct mailings to patients, outreach to physicians and employers, health fairs, and free health screenings. Hillsdale, Allegiance, Branch, and ProMedica’s Bixby and Herrick Hospitals—the only hospitals in their respective counties—each competed through marketing to attract patients. The complaint alleges that Hillsdale curtailed this competition for years by entering into agreements with Allegiance, Branch and ProMedica to limit the marketing of competing healthcare services.

According to the complaint, the defendants’ agreements deprived patients and physicians of information needed to make informed healthcare decisions. Patients in Hillsdale County, Michigan, were also prevented from receiving free medical services—such as health screenings and physician seminars—that they would have received from Allegiance in the absence of its unlawful agreement with Hillsdale.

The proposed final judgment prohibits Hillsdale, Branch, and ProMedica from agreeing with other healthcare providers, including hospitals and physicians, to limit marketing or to divide any geographic market or territory. The proposed settlement also prohibits communications among the defendants about their marketing activities, subject to limited exceptions. The settling hospitals also will implement compliance measures tailored to prevent the recurrence of these types of anticompetitive practices in the future.

In a competitive impact statement relating to the proposed final judgment, the department noted that the defendants’ agreements disrupted the competitive process and harmed patients, physicians, and employers. The proposed final judgment will prevent the continuation and recurrence of the violations and restore competition, and sets forth various provisions to ensure the defendants’ compliance.

Hillsdale Community Health Center is a Michigan corporation headquartered in Hillsdale, Michigan, with a general acute-care hospital located in Hillsdale County, Michigan, that has 47 beds and a medical staff of over 90 physicians.

Allegiance is a Michigan corporation headquartered in Jackson, Michigan, with a general acute-care hospital located in Jackson County, Michigan, that has 480 beds and a medical staff of over 400 physicians.

Community Health Center of Branch County is a Michigan corporation headquartered in Coldwater, Michigan, with a general acute-care hospital located in Branch County, Michigan, that has 87 beds and a medical staff of over 100 physicians.

ProMedica is an Ohio corporation headquartered in Toledo, Ohio, with locations in northwest Ohio and southern Michigan, including Bixby and Herrick Hospitals in Lenawee County, Michigan. Bixby is a general acute-care hospital that has 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.

“These hospitals conspired to deprive consumers and physicians of important health information and education,” said Bill Baer, Assistant Attorney General in charge of the Justice Department's Antitrust Division. “Instead of putting patients first, these hospitals secretly agreed not to compete. This action will terminate the agreements limiting marketing and make sure the citizens of south-central Michigan will have access to the facts they need to make informed healthcare choices.”

Companies: Hillsdale Community Health Center; Community Health Center of Branch County; ProMedica Health System, Inc.; W.A. Foote Memorial Hospital

News: Antitrust AntitrustDivisionNews