[Federal Register: February 24, 2006 (Volume 71, Number 37)]
[Notices]
[Page 9598-9606]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24fe06-111]
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DEPARTMENT OF JUSTICE
Antitrust Division
[Civil Action No. 2:06-0091]
United States v. Charleston Area Medical Center, Inc.; Complaint,
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) through (h), that a proposed Final
Judgment, Stipulation, and Competitive Impact Statement have been filed
with the United States District Court for the Southern District of West
Virginia in United States v. Charleston Area Medical Center, Inc.,
Civil Case No. 2:06-0091. On February 6, 2006, the United States filed
a
[[Page 9599]]
Complaint alleging that, on April 17, 2002, Charleston Area Medical
Center, Inc. (CAMC) entered into an agreement with HCA Inc. (HCA) that
prevented HCA from developing a cardiac-surgery program in Raleigh
County, West Virginia, in violation of Section One of the Sherman Act,
15 U.S.C. 1. The Complaint alleges that the agreement unreasonably
restrained competition by effectively ensuring that no hospital in
Raleigh County, West Virginia, would compete with CAMC to provide
cardiac-surgery services. The proposed Final Judgment filed with the
Complaint annuls the anticompetitive agreement and prohibits CAMC from
entering into other agreements that allocate any cardiac-surgery
service, market, territory, or customer. In addition, the proposed
consent decree prevents CAMC from entering into any agreement that
prohibits or restricts a healthcare facility from developing cardiac-
surgery services unless CAMC receives the prior approval of the United
States.
Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection at the Department of
Justice, Antitrust Division, 325 7th Street, NW., Room 215, Washington,
DC 20530 (telephone: 202/514-2481), on the Department of Justice's Web
site at http://www.usdoj.gov/atr, and at the Office of the Clerk of the
United States District Court for the Southern District of West
Virginia, 300 Virginia Street E., Charleston, WV 25301.
Public comment is invited within 60 days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to Mark J. Botti, Chief, Litigation I Section, Antitrust Division, U.S.
Department of Justice, 1401 H Street, NW., Suite 4000, Washington, DC
20530 (telephone: 202/307-0001).
Dorothy B. Fountain,
Deputy Director of Operations, Antitrust Division.
Complaint
The United States of America, by its attorneys and acting under the
direction of the Attorney General of the United States, brings this
civil antitrust action to obtain equitable relief against Defendant
Charleston Area Medical Center, Inc. (CAMC). The United States alleges
as follows:
I. Introduction
1. CAMC operates the largest cardiac-surgery program in West
Virginia, the sixth largest such program in the United States, through
facilities located in the city of Charleston, Kanawha County, West
Virginia. At all times relevant to the matters alleged in this
complaint, HCA Inc. (HCA) owned and operated Raleigh General Hospital
(Raleigh General), located in the city of Beckley, Raleigh County, West
Virginia. Raleigh General is located about 55 miles south of CAMC's
cardiac-surgery facilities.
2. In an April 17, 2002 memorandum of understanding (the CAMC-HCA
MOU), CAMC persuaded HCA to agree not to develop a competing cardiac-
surgery program at Raleigh General. The CAMC-HCA MOU unreasonably
restrained competition to the detriment of consumers by effectively
ensuring that one of the most significant potential competitors in
southern West Virginia would not compete with CAMC to provide cardiac-
surgery services. The United States, through this suit, asks this court
to enjoin the defendant from enforcing the anticompetitive provisions
of the CAMC-HCA MOU and taking other actions that would restrain
competition and injure consumers in violation of Section 1 of the
Sherman Act, 15 U.S.C. 1.
II. Defendant
3. Charleston Area Medical Center, Inc. (CAMC) is a nonprofit
corporation, organized and existing under the laws of the state of West
Virginia, with its headquarters in Charleston, Kanawha County, West
Virginia. CAMC owns and operates a 913-bed, tertiary, regional
referral, teaching medical center located in Charleston, West Virginia.
CAMC transacts business and offers health-care services to patients
located in the Southern District of West Virginia.
II. Jurisdiction and Venue
4. The United States brings this action to prevent and restrain
Defendant from continuing to violate Section 1 of the Sherman Act, 15
U.S.C. 1. The Court has subject-matter jurisdiction over this action
pursuant to 15 U.S.C. 4 and 28 U.S.C. 1331, 1337, and 1345.
5. Defendant transacts business and has committed the unlawful act
at issue in West Virginia. Consequently, this Court has jurisdiction
over Defendants, and venue is proper in this District pursuant to 28
U.S.C. 1391(c) and 15 U.S.C. 22.
IV. Effects on Interestate Commerce
6. CAMC provides health-care services to individuals who reside
outside of West Virginia. In addition, it contracts with managed-care
and health-insurance providers located outside West Virginia to be
included in their networks. These individuals and businesses remit
substantial payments to CAMC. CAMC is engaged in, and its activities
substantially affect, interstate commerce.
V. West Virginia's Certificate-of-Need Standards
7. The State of West Virginia requires that a hospital obtain a
certificate of need (``CON'') from the West Virginia Health Care
Authority before a hospital may provide cardiac-surgery services. The
West Virginia Health Care Authority was formerly known as the West
Virginia Health Care Cost Review Authoriy (collectively, ``WVHCA'').
8. On February 22, 2002, West Virginia revised the state standards
for qualifying for a cardiac-surgery CON. These new standards (the
``February 2002 standards'') made it easier for hospitals to qualify
for a cardiac-surgery CON by lowering the minimum number of medical
procedures that a hospital needed to demonstrate that it had perfomed
or would perform.
9. The February 2002 standards were structured in a way such that
the WVHCA would most likely approve only one location for a cardiac-
surgery program in a ``Southern West Virginia region'' defined to
conist of six counties: McDowell, Mercer, Monroe, Raleigh, Summers, and
Wyoming Counties. In February 2002, no hospital from this region
competed against CAMC in offering cardiac-surgery services.
10. Under the February 2002 standards, the likely location of a new
cardiac-surgery program in the Southern West Virginia region was one of
Raleigh General, Princeton Community Hospital Association, Inc.
(``Princeton Community Hospital''), or Bluefield Regional Medical
Center, Inc. (``BRMC''). Princeton Community Hospital is located in
Princeton, Mercer County, West Virginia, about 95 miles south of CAMC.
BRMC is located in Bluefield, Mercer County, West Virginia about 105
miles south of CAMC.
VI. CAMC Persuades HCA Not To Compete
A. CAMC Acted To Prevent Raleigh General From Developing a Competing
Cardiac-Surgery Program
11. After the February 2002 standards were issued, CAMC recognized
that the WVHCA would likely approve a new cardiac-surgery program to be
located either in Raleigh County at Raleigh General or in Mercer County
at BRMC or Princeton Community Hospital.
12. CAMC wanted the new cardiac-surgery program to be located in
Mercer County because a program in nearby Raleigh County would compete
with
[[Page 9600]]
and take revenue away from CAMC to a much greater extent than a program
in more distant Mercer County. CAMC's cardiac program was its most
profitable program, contributing about $20 million in net profits per
year, and the counties south of Charleston accounted for a large
percentage of CAMC's cardiac-surgery business. In an April 2002
strategic plan, CAMC estimated that a cardiac-surgery program in
Raleigh County would lower CAMC's net profits from $7 million to $12
million more per year than would a similar program in Mercer County.
The same strategic plan estimated that a cardiac-surgery program in
Raleigh County would draw 935 to 1780 patient procedures per year away
from CAMC. Due to this potential loss in patients and profits, a 2001
CAMC strategic plan concluded that CAMC should ``fight aggressively''
to prevent a cardiac-surgery program in Raleigh County.
13. Preventing a competing cardiac-surgery program at Raleigh
General was one of CAMC's key objectives. A June 7, 2001 presentation
entitled ``Cardiovascular Network Project Executive Steering Group
Meeting 1'' said that a possible CAMC market strategy for the
Beckley area was to ``[f]ocus efforts on obtaining [an] open-heart CON
for Bluefield/Princeton, and averting [a] CON for Raleigh General
Hospital.'' A June 22, 2001 document entitled ``Open Heart Strategy
Meeting'' said that one of CAMC's goals was to ``[p]revent open heart
programs as our first priority; delay (except for Mercer County);
maintain; then have the configuration we want for open heart services.
If Parkersburg becomes inevitable, support Bluefield; absolutely not
Beckley.'' (emphasis in original). Similarly, an August 2001 document
entitled ``Cardiovascular Network Project Draft Report'' said that a
possible market strategy for the ``Close-in South'' area was to ``fight
[a] Beckley CON * * * [and] support [a] Princeton/Bluefield CON as a
blocking strategy.''
14. If Raleigh General did obtain a cardiac-surgery CON, CAMC
planned to compete more aggressively for cardiac-surgery patients in
the Raleigh County area. One CAMC document says that CAMC planned to
respond with ``aggressive strategies'' to compete with a Raleigh
General cardiac-surgery program including placing CAMC cardiologists in
Berkley. A CAMC executive has said that if Raleigh General ``were
granted a certificate of need, we would be down there--it's only an
hour away--we would be down there advertising and facilitating and
probably even putting physicians down there to ensure that those
patients came to Charleston instead of going to Raleigh General.'' CAMC
did not plan to take similar measures in response to a new cardiac-
surgery program in Mercer County.
15. In February 2002, CAMC initiated talks with HCA about a
possible agreement relating to cardiac-surgery services in West
Virginia. CAMC pursued an agreement with HCA to ensure that HCA would
not develop a cardiac-surgery program at Raleigh General.
16. During these talks, HCA told CAMC that it desired CAMC's help
to develop a cardiac-surgery program at HCA's St. Joseph's Hospital in
Parkersburg, West Virginia and a therapeutic cardiac-catherization
program at HCA's St. Francis Hospital in Charleston, West Virginia.
17. HCA's desire to obtain CAMC's support for the St. Joseph's and
St. Francis programs presented CAMC with a strategic opportunity. CAMC
realized that its support for the HCA St. Joseph's and St.Francis
programs would make it significantly more likely that HCA would be able
to attain the necessary CONs for those programs from the WVHCA. In
negotiating the MOU, CAMC was able to induce HCA to agree not to
develop a cardiac-surgery program at Raleigh General by making that
non-competition agreement a condition for its support of HCA's St.
Joseph's and St. Francis programs.
18. During the MOU negotiations, CAMC also rejected proposed
language that would have reduced the time period during which Raleigh
General could not develop a cardiac-surgery program.
19. CAMC's and HCA's talks resulted in the CAMC-HCA MOU, section 3
of which prevented HCA from developing a cardiac-surgery program at
Raleigh General by committing HCA to develop a single cardiac surgery
program in the Southern West Virginia region at either Princeton
Community Hospital or BRMC for a period of three years. In exchange for
HCA's agreement not to compete in Raleigh County, CAMC agreed to
provide valuable support for HCA's efforts to provide cardiac-surgery
services at HCA's St. Joseph's Hospital in Parkersburg and therapeutic
cardiac-catheterization services at HCA's St. Francis Hospital in
Charleston. CAMC did not need HCA's agreement not to compete in Raleigh
County in order to agree to support HCA's programs at St. Joseph's and
St. Francis.
20. CAMC wanted a program at Bluefield rather than Raleigh General
because, as one CAMC executive stated, ``Raleigh General would pull
more patients from Charleston Area Medical Center than a program in
Bluefield.'' Another CAMC executive testified that the basic reason why
CAMC obtained HCA's agreement not to apply for a CON at Raleigh General
was because of the threat to CAMC of losing open-heart surgery patients
coming from southern West Virginia.
B. Raleigh General Has Been a Significant Potential Competitor in
Cardiac-Surgery Services
21. As discussed below, until Raleigh General signed the CAMC-HCA
MOU, Raleigh General had been a significant potential competitor to
CAMC in the market for cardiac-surgery services. Raleigh General has
maintained a consistent and active interest in pursuing, and taken
steps to secure, a cardiac-surgery program.
22. Hospitals often provide diagnostic cardiac-catherization
services as a precursor to providing cardiac-surgery services. Raleigh
General received a CON to provide diagnostic cardiac-catheterization
services in January 1987 and has provided those services at all times
relevant to the anticompetitive conduct alleged in this Complaint.
23. Raleigh General sought to offer cardiac-surgery services as
early as July 1992, when it applied for a cardiac-surgery CON with the
WVHCA. The WVHCA denied that application in July 1995 because Raleigh
General was unable to show that it would perform the minimum number of
procedures required by the then-existing state standards for granting
cardiac-surgery CONs.
24. In 1999, representatives from Raleigh General continued their
pursuit of a cardiac-surgery program by exploring the possibility of a
joint venture with Princeton Community Hospital to provide cardiac-
surgery services.
25. Raleigh General and Princeton Community Hospital engaged a
consultant to determine whether Raleigh General or Princeton Community
Hospital was a better location for a cardiac-surgery program. In a
January 2000 report, the consultant concluded that ``[based upon the
market, geographical location, physician support and referral patterns
and clinical infrastructure and culture, Raleigh General Hospital is
the recommended location for the cardiovascular surgical program.'' The
two hospitals were ultimately unable to finalize a strategy for jointly
pursuing a cardiac-surgery CON.
26. In the period leading up to the February 2002 changes to the
state cardiac-surgery standards, Raleigh General remained interested in
pursuing
[[Page 9601]]
a cardiac-surgery program and actively lobbied state officials to
change the standards in such a way as to enable it to qualify for a
cardiac-surgery CON.
27. After the February 2002 standards were revised to make it
easier to obtain a cardiac-surgery CON, Raleigh General did not apply
for a cardiac-surgery CON--despite its earlier active pursuit of such a
CON--but instead entered into the CAMC-HCA MOU, which precluded Raleigh
General from applying for a CON for three years.
28. In January 2003, BRMC and Princeton Community Hospital entered
into two agreements that allocated cardiac surgery and cancer programs
between themselves in violation of Section 1 of the Sherman Act, 15
U.S.C. 1. Also in January 2003, BRMC applied for a cardiac-surgery CON
with CAMC and Princeton Community Hospital as joint applicants. The
WVHCA approved BRMC's application in August 2003. Despite receiving a
CON to offer cardiac-surgery services, BRMC has yet to begin offering
cardiac-surgery services.
29. The United States challenged the BRMC and Princeton Community
Hospital agreements in United States v. Bluefield Regional Medical
Center, Inc., Civil Action No. 1:05-0234 (S.D.W.V.) (Chief Judge
Faber). The Final Judgment in that matter, entered on September 12,
2005, annulled BRMC's and Princeton Community Hospital's market-
allocation agreements and enjoined the hospitals from agreeing to
allocate any cancer or cardiac-surgery service, market, territory, or
customer.
C. Future Anticompetitive Effects
30. The incentives that led CAMC to seek HCA's agreement not to
compete at Raleigh General continue to exist today and may motivate
CAMC to pursue similar anticompetitive agreements that would restrict
or prevent potential or actual competition from area hospitals. CAMC
remains the dominant provider of cardiac-surgery services for Kanawha,
Raleigh, and other nearby counties and stands to lose significant
patient revenue if area hospitals develop cardiac-surgery programs or
expand existing programs. To protect this revenue, CAMC will likely
oppose any future efforts of nearby hospitals to develop competing
cardiac-surgery programs.
31. In particular, CAMC could again seek an agreement with HCA not
to pursue a CON for cardiac surgery at Raleigh General. Raleigh General
has retained an active interest in developing cardiac-surgery services
in Beckley and continues to believe that Beckley is a better location
for a cardiac-surgery center than Mercer County because Beckley is more
accessible for the greatest number of patients. In the event that BRMC
does not pursue its cardiac-surgery program or the State of West
Virginia again amends its CON standards to permit another cardiac-
surgery program in southern West Virginia, Raleigh General would again
be a significant potential competitor for such a program. Fearing the
loss of revenue from such a competing program, CAMC could again seek to
prevent HCA from establishing a cardiac-surgery program at Raleigh
General.
32. CAMC's use of the CAMC-HAC MOU to eliminate Raleigh General as
a potential competitor prevented benefits that would have resulted from
a cardiac-surgery program at Raleigh General. Those potential benefits
to patients, managed-care plans, and employers include increased price
competition resulting in lower prices, improved quality of cardiac-
surgery services, the ability to choose Raleigh General as a provider
of cardiac-surgery services, and increased innovation in cardiac-
surgery services.
VII. Violation Alleged
33. The United States incorporates paragraphs 1 through 32.
34. The agreement between CAMC and HCA, embodied in the CAMC-HCA-
MOU, constituted an agreement not to compete between an existing
competitor and the most significant potential competitor after the
February 2002 revisions to West Virginia's CON laws. The agreement
unreasonably and unlawfully restrained trade and commerce in violation
of Section 1 of the Sherman, Act 15 U.S.C. Sec. 1.
VIII. Request for Relief
35. The United States requests that:
(a) The Court declare that section 3 of the CAMC-HCA-MOU violates
Section 1 of the Sherman Act, 15 U.S.C. 1;
(b) The Court enter an order enjoining the Defendant from
(1) Enforcing section 3 of the CAMC-HCA-MOU;
(2) Entering into, continuing, maintaining, or enforcing any
agreement to allocate any cardiac-surgery service, market, territory,
or customer; and
(3) Entering into, continuing, maintaining, or enforcing any
agreement that
(i) Prohibits or restricts a health-care facility from obtaining a
certificate of need relating to cardiac surgery or
(ii) Otherwise prohibits or restricts a health-care facility from
taking actions related to providing cardiac surgery;
(c) The United States recover the cost of this action; and
(d) The United States have such other relief as the Court may deem
just and proper to redress, and prevent recurrence of, the alleged
violation and to dissipate the anticompetitive effects of the
Defendant's actions.
Dated: February 6, 2006.
For the Plaintiff United States of America
Thomas O. Barnett,
Acting Assistant Attorney General.
J. Bruce McDonald,
Deputy Assistant Attorney General.
Dorothy B. Fountain,
Deputy Director of Operations.
Mark J. Botti,
Chief, Litigation I Section.
Peter J. Mucchetti, Mitchell H. Glende,
Attorneys for the United States, Antitrust Division, United States
Department of Justice, 1401 H Street, NW., Suite 4000. Washington,
DC 20530. Telephone: (202) 353-4211. Facsimile: (202) 307-5802.
Charles T. Miller,
Acting United States Attorney.
By: Kelly R. Curry,
Assistant United States Attorney.
Certificate of Service
I hereby certify that I served a copy of the foregoing Complaint,
Competitive Impact Statement, Explanation of Consent Decree Procedures,
Stipulation, and Proposed Final Judgment via first class, United States
mail on February 6, 2006.
For Defendant Charleston Area Medical center, Inc.,
Robert McCann, Esq.
Gardner Carton & Douglas, LLP, 1301 K Street, NW., Suite 900, East
Tower, Washington, DC 20005.
Kelly R. Curry,
Assistant United States Attorney.
Final Judgment
Whereas, Plaintiff, the United States of America, filed its
Complaint on February 6, 2006 alleging that Defendant, Charleston Area
Medical Center, Inc. entered into an agreement with HCA Inc. in
violation of Section I of the Sherman Act, 15 U.S.C. 1, and Plaintiff
and Defendant, by their respective attorneys, have 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 any admission by, any party regarding any such
issue of fact or law;
And Whereas, Defendant agrees to be bound by this Final Judgment
pending its approval by this Court;
And Whereas, the essence of this Final Judgment is to enjoin the
Defendant from entering into
[[Page 9602]]
agreements that prevent actual or potential competitors from providing
certain medical services;
And Whereas, the United States requires Defendant to agree to
certain procedures and prohibitions for the purpose of preventing the
loss of competition alleged in the Complaint;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is Ordered, Adjudged and Decreed:
I. Jurisdiction
This Court has jurisdiction over the Defendant and subject matter
of this action. The Complaint states a claim upon which relief may be
granted against Defendant under Section 1 of the Sherman Act, as
amended (15 U.S.C. 1).
II. Definitions
As used in this Final Judgment (whether or not such terms are
capitalized herein):
A. ``Agreement'' means any kind of formal or informal agreement,
arrangement, contract, understanding, memorandum of understanding,
interim contract, contract appendix, addendum, attachment, amendment,
waiver, or modification. Agreements that solely concern patient-
treatment protocols or the transfer of patients as necessary to obtain
patient care that is unavailable at the transferring health-care
facility shall not be deemed an agreement within the scope of this
Final Judgment.
B. ``CAMC'' means Defendant, Charleston Area Medical Center, Inc.,
a non-profit corporation organized and existing under the laws of the
State of West Virginia with its headquarters in Charleston, Virginia,
its successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
C. ``CAMC-HCA MOU'' means the document dated April 17, 2002 between
CAMC and HCA entitled ``Memorandum of Understanding.''
D. ``Cardiac Surgery'' means surgery on the heart or major blood
vessels of the heart (including both open and closed heart surgery )
and therapeutic cardiac catheterization. This term includes any
service, equipment, technology, or modality relating to the provision
of cardiac surgery, but does not include any diagnostic cardiac service
(including diagnostic cardiac catheterization). This term does not
include any service, equipment, technology, or modality generally
provided to hospital patients, such as laboratory, nursing, or social
services.
E. ``Certificate of Need'' means certificate of need as recognized
by the State of West Virginia (W. Va. Code Sec. 16-2D-1 et seq.).
F. ``HCA'' means HCA Inc., a for-profit corporation organized and
existing under the laws of the State of Delaware with its headquarters
in Nashville, Tennessee, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships and joint
ventures, and their directors, officers, managers, agents, and
employees.
G. ``Health-Care Facility'' means any facility providing health-
care services, including hospitals, hospital-owned or managed physician
practices, ambulatory-care centers, clinics, urgent-care centers, free-
standing emergency-care centers, and ambulatory-surgery centers.
H. ``Right of First Offer'' means an agreement in which a health-
care facility grants CAMC the exclusive right, for a period not
exceeding ninety days in duration, to make and negotiate an offer to
provide cardiac-surgery services under a joint venture or other
cooperative arrangement with such facility, provided that the health-
care facility is not (a) obligated to accept any offer from CAMC and
(b) prohibited from providing cardiac-surgery services in the event it
declines an offer from CAMC.
I. The terms ``and'' and ``or'' have both conjunctive and
disjunctive meanings.
III. Applicability
This Final Judgment applies to CAMC, as defined above, and all
other persons in active concert or participation with any of them who
receive actual notice of this Final Judgment by personal service or
otherwise.
IV. Prohibited Conduct
A. CAMC is enjoined from enforcing all or any part of section 3 of
the CAMC-HCA MOU, which section is entitled ``Cooperative Development
of Cardiac Surgery in the Southern West Virginia Region.'' CAMC's
obligations under this Final Judgment supersede its obligations under
section 3 of the CAMC-HCA MOU, and CAMC shall not object to the
performance of its obligations under this Final Judgment on the grounds
that those obligations would cause it to breach section 3 of the MOU.
B. Without prior notice to and prior written approval of the United
States, which approval will not be withheld or delayed unreasonably,
CAMC is enjoined from, in any manner, directly or indirectly, entering
into, continuing, maintaining, or enforcing any agreement with a
health-care facility that (1) Allocates any cardiac-surgery service,
market, territory, or customer; (2) prohibits or restricts such health-
care facility from applying for a certificate of need to offer,
maintain, or expand cardiac-surgery services; or (3) otherwise
prohibits or restricts such health-care facility from providing cardiac
surgery. Nothing in this Final Judgment, however, shall require CAMC to
provide separate notice with respect to any agreement for which notice
is given to the United States pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, 15 U.S.C. 18a.
V. Permitted Conduct
Nothing in this Final Judgment shall prohibit CAMC from:
A. Entering into, continuing, maintaining, or enforcing an
agreement for a right of first offer;
B. Agreeing to collaborate with a health-care facility to enable
such facility to provide therapeutic cardiac catherization services
pursuant to a Demonstration Pilot Project, as authorized by and
approved under the certificate of need standards of the State of West
Virginia;
C. Lobbying petitioning, or otherwise seeking to influence the
decisions or actions of any member or agency of the legislative or
executive branches of the government of the State of West Virginia or
the United States;
D. Opposing the certificate of need application or rate filing of
another health-care facility relating to the provision of cardiac-
surgery services or formally challenging the decision to approve such a
certificate of need or rate filing; or
E. Making public or private statements about the provision of
cardiac-surgery services.
VI. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time duly authorized representatives of the United States
Department of Justice, including consultants and other persons retained
or designated thereby, shall, upon written request of a duly authorized
representative of the Assistant Attorney General in charge of the
Antitrust Division and on reasonable notice to Defendant, be permitted:
1. Access during Defendant's office hours to inspect and copy, or
at the United States' option, to require that
[[Page 9603]]
Defendant provide copies of, all books, ledgers, accounts, records and
documents in their possession, custody, or control relating to any
matters contained in this Final Judgment; and
2. To interview, either informally or on the record, Defendant's
officers, employees, or agents, who may have their individual counsel
present, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by Defendant.
B. Upon the written request of a duly authorized representative of
the Assistant Attorney General in charge of the Antitrust Division,
Defendant shall submit written reports and interrogatory responses,
under oath if requested, relating to any of the matters contained in
this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by Plaintiff to any person other than an
authorized representative of the executive branch of the United States
except in the course of legal proceedings to which the United States is
a party (including grand jury proceedings), or for the purpose of
securing compliance with this Final Judgment, or as otherwise required
by law.
D. If at the time Defendant furnishes information or documents to
the United States, Defendant represents and identifies in writing the
material in any such information or documents to which a claim of
protection may be asserted under Rule 26(c)(7) of the Federal Rules of
Civil Procedure, and marks each pertinent page of such material,
``Subject to claim of protection under Rule 26(c)(7) of the Federal
Rules of civil Procedure,'' then the United States shall give Defendant
ten calendar days notice prior to divulging such material in any legal
proceeding (other than a grand jury proceeding).
VII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party 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 any of its provisions, to enforce
compliance, and to punish violations of its provisions.
VIII. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
IX. Correspondence
CAMC shall provide notice and seek prior written approval as
contemplated by this Final Judgment by sending correspondence to Chief,
Litigation I, Antitrust Division, United States Department of Justice,
1401 H Street, NW., Suite 4000, Washington, DC 20530, or such other
address as the United States shall designate.
X. Public Interest Determination
Entry of this Final Judgment is in the public interest.
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16
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United States District Judge
Competitive Impact Statement
The United States of America, pursuant to Section 2(b) of the
Antitrust Procedures and Penalties Act, (``APPA''), 15 U.S.C. 16(b)(-
(h), files this Competitive Impact Statement relating to the proposed
Final Judgment submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
On February 6, 2006, the United States field a civil antitrust
Complaint alleging that Charleston Area Medical Center, Inc. (CAMC) had
violated Section 1 of the Sherman Act, 15 U.S.C. 1. CAMC operates the
largest cardiac-surgery program in West Virginia, and the sixth largest
such program in the United States, through facilities located in
Charleston, West Virginia. HCA Inc. (HCA) owns and operates Raleigh
General Hospital (Raleigh General), located in the city of Beckley,
Raleigh County, West Virginia. Raleigh General is located about 55
miles south of CAMC's cardiac-surgery facilities.
The Complaint alleges that, in an April 17, 2002 memorandum of
understanding (the CAMC-HCA MOU), CAMC persuaded HCa to agree not to
develop a competing cardiac-surgery program at Raleigh General. The
CAMC-HCA MOU unreasonably restrained competition to the detriment of
consumers by effectively ensuring that no hospital in Raleigh County,
West Virginia would compete with CAMC to provide cardiac-surgery
services. With the Complaint, the United States and CAMC filed an
agreed-upon proposed Final Judgment that prohibits CAMC from enforcing
the anticompetitive portion of the CAMC-HCA MOU and forming new
agreements that would reduce competition in cardiac-surgery services.
The United States and CAMC have agreed that the proposed Final
Judgment may be entered after compliance with the APPA, provided that
the United States has not withdrawn its consent. Entry of the Final
Judgment would terminate the action, except that the Court would retain
jurisdiction to construe, modify, or enforce the Final Judgment's
provisions and to punish violations thereof.
II. Description of Practices and Events Giving Rise to the Alleged
Violations of the Antitrust Laws
A. West Virginia's Certificate-of-Need Standards
The State of West Virginia requires that a hospital obtain a
certificate of need (``CON'') from the West Virginia Health Care
Authority before a hospital may provide cardiac-surgery services. The
West Virginia Health Care Authority was formerly known as the West
Virginia Health Care Cost Review Authority (collectively, ``WVHCA)''.
On February 22, 2002, West Virginia revised the state standards for
qualifying for a cardiac-surgery CON. The4se new standards (the
February 2002 standards) made it easier for hospitals to qualify for a
cardiac-surgery CON by lowering the minimum number of medical
procedures that a hospital needed to demonstrate that it had performed
or would perform.
The February 2002 standards were structured in a way such that the
WVHCA would most likely approve one and only one location for a
cardiac-surgery program in a ``''Southern Western Virginia region''
defined to consist of six counties. At this time, no hospital from this
region competed against CAMC in offering cardiac surgery services.
Under the February 202 standards, the only likely location of a new
cardiac-surgery program in the Southern West Virginia region was at
eigther Raleigh General, Princeton Community Hospital Association, Inc.
(Princeton Community Hospital), or Bluefield Regional Medical Center,
Inc. (BRMC). Princeton Community Hospital is located in Princeton,
Mercer County, West Virginia, about 40 miles south of Raleigh General.
BRMC is located in Bluefield, Mercer County, West Virginia, abuot 50
miles south of Raleigh General.
B. CAMC Acted To Prevent Raleigh Genearl From Developing a Competing
Cardiac-Surgery Program
After the February 2002 standards were issued, CAMC recognized that
the WVHCA would likely approve a new
[[Page 9604]]
cardiac-surgery program to be located either in Raleigh County at
Raleigh General or in Mercer Cuonty at BRMC or Princeton Community
Hospital. CAMC wated the new cardiac-surgery program to be located in
Mercer County and not at Raleigh General because a program in Raleigh
County wuold compete with and take revenue away from CAMC to a much
greater extent than a program in Mercer County.
In February 2002, CAMC initiated talks with HCA about a possible
agreement relating to cardiac-surgery services in West Virginia. A
significant reason why CAMC pursued an agreement with HCA was to ensure
that HCA would not develop a Cardiac-surgery program at Raleigh
General. During the MOU negotiations with HCA, CAMC insisted on
including language in the CAMC-HCA MOU that was designed to prevent
Raleigh General from developing a cardiac-surgery program. CAMC also
rejected proposed language that would have reduced the time period
during which Raleigh General could not develop a cardiac-surgery
program.
CAMC's and HCA's discussions resulted in the CAMC-HCA MOU, which
prevented HCA from developing a cardiac-surgery program at Raleigh
General by committing HCA to develop a single cardiac-surgery program
in the Southern West Virginia region at either Princeton Community
Hospital or BRMC for a period of three years. In exchange for HCA's
agreement not to compete in Raleigh County, CAMC agreed to provide
valuable support for HCA's efforts to provide cardiac-surgery services
at HCA's St. Joseph's Hospital in Parkersburg, West Virginia and
therapeutic cardiac-catheterization services at HCA's St. Francis
Hospital in Charleston, West Virginia. CAMC did not need HCA's
agreement not to compete in Raleigh County in order to agree to support
HCA's programs at St. Joseph's and St. Francis.
CAMC wanted a program at BRMC rather than Raleigh General because,
as one CAMC executive stated, ``Raleigh General would pull more
patients from Charleston Area Medical Center than a program in
Bluefield.'' Another CAMC executive testified that the basic reason why
CAMC obtained HCA's agreement not to apply for a CON at Raleigh General
was because of the threat to CAMC of losing open-heart surgery patients
coming from southern West Virginia.
C. Raleigh General Had Been a Significant Potential Competitor in
Cardiac-Surgery Services
Until Raleigh General signed the CAMC-HCA MOU, Raleigh General had
been a significant potential competitor to CAMC in the market for
cardiac-surgery services. Raleigh General had maintained a consistent
and active interest in pursuing, and had taken steps to pursue, a
cardiac-surgery program.
Raleigh General sought to offer cardiac-surgery services as early
as July 1992, when it applied for a cardiac-surgery CON with the WVHCA.
The WVHCA denied that application in July 1995 because Raleigh General
was unable to show that it would perform the minimum number of
procedures required by the then-existing state standards for granting
cardiac-surgery CONs.
Despite the WVHCA's denial of Raleigh General's CON application,
representatives from Raleigh General continued their pursuit of a
cardiac-surgery program by exploring the possibility of a joint venture
with Princeton Community Hospital to provide cardiac-surgery services.
Raleigh General and Princeton Community Hospital engaged a consultant
to determine whether Raleigh General or Princeton Community Hospital
was a better location for a cardiac-surgery program. In a January 2000
report, the consultant concluded that ``[b]ased upon the market,
geographical location, physician support and referral patterns and
clinical infrastructure and culture, Raleigh General Hospital is the
recommended location for the cardiovascular surgical program.'' The two
hospitals were ultimately unable to finalize a strategy for jointly
pursuing a cardiac-surgery CON.
In the period leading up to the February 2002 changes to the state
cardiac-surgery standards, Raleigh General remained interested in
pursuing a cardiac-surgery program and actively lobbied state officials
to change the standards in such a way as to enable it to qualify for a
cardiac-surgery CON. After the February 2002 standards were revised to
make it easier to obtain a cardiac-surgery CON, Raleigh General did not
apply for a cardiac-surgery CON--despite its earlier active pursuit of
such a CON--but instead entered into the CAMC-HCA MOU, which precluded
Raleigh General from applying for a cardiac-surgery CON for three
years.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment would enjoin CAMC from enforcing the
portion of the CAMC-HCA MOU that prevents HCA from developing a
cardiac-surgery program in Raleigh County. Unless CAMC gives prior
notice to and receives the prior written approval of the United States,
CAMC also would be enjoined from entering into, continuing,
maintaining, or enforcing any agreement with a health-care facility
that (1) Allocates any cardiac-surgery service, market, territory, or
customer; (2) prohibits or restricts such health-care facility from
applying for a certificate of need to offer, maintain, or expand
cardiac-surgery services; or (3) otherwise prohibits or restricts such
health-care facility from providing cardiac surgery. The effect of the
proposed Final Judgment would be to restore competition between CAMC
and Raleigh General that the CAMC-HCA MOU eliminated, and to prevent
CAMC from engaging in similar anticompetitive conduct in the future.
IV. Remedies Available to Potential 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 reasonable attorney's fees.
Entry of the proposed Final Judgment will neither impair nor assist the
bringing of such actions. Under the provisions of Section 5(a) of the
Clayton Act, 15 U.S.C. 16(a), the Final Judgment has no prima facie
effect in any subsequent lawsuits that may be brought against the
Defendant.
V. Procedures Available for Modifications of the Proposed Final
Judgment
The United States and the Defendant have stipulated that the
proposed Final Judgment may be entered by the Court after compliance
with the provisions of the APPA, provided that the United States has
not withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty days preceding the
effective date of the proposed Final Judgment within which any person
may submit to the United States written comments regarding the proposed
Final Judgment. Any person who wishes to comment should do so within
sixty days of the date of publication of this Competitive
[[Page 9605]]
Impact Statement in the Federal Register. All comments received during
this period will be considered by the Department of Justice, which
remains free to withdraw its consent to the proposed Final Judgment at
any time prior to the Court's entry of judgment. The comments and the
response of the United States will be filed with the Court and
published in the Federal Register.
Written comments should be submitted to: Mark J. Botti, Chief,
Litigation I Section, Antitrust Division, United States Department of
Justice, 1401 H Street, NW., Suite 4000, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against defendant CAMC. The
United States is satisfied, however, that the Final Judgment, with its
prohibition on anticompetitive conduct, will more quickly achieve the
primary objectives of a trial on the merits--reestablishing competition
between CAMC and HCA.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty-day comment
period, after which the Court shall determine whether entry of the
proposed Final Judgment ``is in the public interest.'' 15 U.S.C.
16(e)(1). In making that determination, the Court shall 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 the 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)(A) and (B). As the United States Court of Appeals
for the District of Columbia Circuit has held, the APPA permits a court
to consider, among other things, the relationship between the remedy
secured and the specific allegations set forth in the government's
complaint, whether the decree is sufficiently clear, whether
enforcement mechanisms are sufficient, and whether the decree may
positively harm third parties. See United States v. Microsoft Corp., 56
F.3d 1448, 1458-62 (D.C. Cir. 1995).
``Nothing in this section shall be construed to require the court
to conduct an evidentiary hearing or to require the court to permit
anyone to intervene.'' 15 U.S.C. 16(e)(2). Thus, in conducting this
inquiry, ``[t]he court is nowhere compelled to go to trial or to engage
in extended proceedings which might have the effect of vitiating the
benefits of prompt and less costly settlement through the consent
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Senator
Tunney) \1\ Rather:
---------------------------------------------------------------------------
\1\ See United States v. Gillette Co., 406 F. Supp. 713, 716 (D.
Mass. 1975) (recognizing it was not the court's duty to settle;
rather, the court must only answer ``whether the settlement achieved
[was] within the reaches of the public interest''). A ``public
interest'' determination can be made properly on the basis of the
Competitive Impact Statement and Response to Comments filed by the
Department of Justice pursuant to the APPA. Although the APPA
authorizes the use of additional procedures, 15 U.S.C. 16(f), those
procedures are discretionary. A court need not invoke any of them
unless it believes that the comments have raised significant issues
and that further proceedings would aid the court in resolving those
issues. See H.R. Rep. No. 93-1463, 93rd Cong., 2d Sess. 8-9 (1974),
reprinted in 1974 U.S.C.C.A.N. 6535, 6538.
[a]bsent a showing of corrupt failure of the government to
discharge its duty, the Court, in making its public interest
finding, should * * * carefully consider the explanations of the
government in the competitive impact statement and its responses to
comments in order to determine whether those explanations are
---------------------------------------------------------------------------
reasonable under the circumstances.
United States v. Mid-America Dairymen, Inc. 1977-1 Trade Cas. (CCH) ]
61,508, at 71, 980 (W.D. Mo. 1977).
Accordingly, with respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d
at 1460-62. Courts have held that:
[t]he balance of competing social and political interests
affected by a proposed antitrust consent decree must be left, in the
first instance, to the discretion of the Attorney General. The
court's role in protecting the public interest is one of insuring
that the government has not breached its duty to the public in
consenting to the decree. The court is required to determine not
whether a particular decree is the one that will best serve society,
but whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted) \2\
---------------------------------------------------------------------------
\2\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); Gillette, 406 F. Supp. at 716
(noting that, in this way, the court is constrained to ``look at the
overall picture not hypercritically, nor with a microscope, but with
an artist's reducing glass''). See generally Microsoft, 56 F.3d at
1461 (discussing whether ``the remedies [obtained in the decree are]
so inconsonant with the allegations charged as to fall outside of
the `reaches of the public interest' '').
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The proposed Final Judgment, therefore, should not be reviewed
under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it mandates
certainty of free competition in the future. Court approval of a final
judgment requires a standard more flexible and less strict than the
standard required for a finding of liability. ``[A] proposed decree
must be approved even if it falls short of the remedy the court would
impose on its own, as long as it falls within the range of
acceptability or is `within the reaches of public interest.' '' United
States v. AT&T, 552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted)
(quoting Gillette, 406 F. Supp. at 716), aff'd sub nom. Maryland v.
United States, 460 U.S. 1001 (1983); see also United States v. Alcan
Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving the
consent decree even though the court would have imposed a greater
remedy).
Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint; the APPA does not authorize the Court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459. Because the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing a case in the first
place,'' it follows that ``the court is only authorized to review the
decree itself,'' and not to ``effectively redraft the complaint'' to
inquire into other matters that the United States did not pursue. Id.
at 1459-60.
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the
[[Page 9606]]
APPA that were considered by the United States in formulating the
proposed Final Judgment.
Dated: February 6, 2006.
Respectfully submitted,
Peter J. Mucchetti,
Mitchell H. Glende,
Attorneys for the United States, United States Department of
Justice, 1401 H Street, NW., Suite 4000, Washington, DC 20530.
Telephone: (202) 353-4211. Facsimile: (202) 307-5802.
Charles T. Miller,
Acting United States Attorney.
Kelly R. Curry,
Assistant United States Attorney.
[FR Doc. 06-1696 Filed 2-23-06; 8:45am]
BILLING CODE 4410-11-M