[Federal Register Volume 59, Number 227 (Monday, November 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29182]
[Federal Register: November 28, 1994]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 941 0074]
Charter Medical Corp; Proposed Consent Agreement With Analysis to
Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
-----------------------------------------------------------------------
SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
require, among other things, Charter Medical Corporation (Charter), a
Georgia-based chain of psychiatric hospitals, to modify its agreement
with National Medical Enterprises (NME) to rescind Charter's
acquisitions of NME psychiatric facilities in four specified
localities. In addition, the consent agreement would require, for ten
years, the Commission's prior approval before acquiring or divesting
psychiatric facilities in those localities.
DATES: Comments must be received on or before January 27, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW, Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Robert W. Doyle or Ronald B. Rowe, FTC/S-2105, Washington, DC 20580.
(202) 326-2819 or 326-2610.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the
Commission's rules of practice (16 CFR 2.34), notice is hereby given
that the following consent agreement containing a consent order to
cease and desist, having been filed with accepted, subject to final
approval, by the Commission, has been placed on the public record for a
period of sixty (60) days. Public comment is invited. Such comments or
views will be considered by the Commission and will be available for
inspection and copying at its principal office in accordance with
Sec. 4.9(b)(6)(ii) of the Commission's rules of practice (16 CFR
4.9(b)(6)(ii)).
Agreement Containing Consent Order
The Federal Trade Commission (``Commission''), having initiated an
investigation into the proposed acquisition of certain assets of
National Medical Enterprises, Inc. (``NME'') by Charter Medical
Corporation (``Charter''), and it now appearing that Charter
(``proposed respondent'') is willing to enter into an agreement
containing an order to cease and desist from making certain
acquisitions, and providing for other relief:
It is hereby agreed by and between the proposed respondent by its
duly authorized officer and attorney, and counsel for the Commission
that:
1. Proposed respondent Charter is a corporation organized, existing
and doing business under and by virtue of the laws of the State of
Delaware with its office and principal place of business at 577
Mulberry Street, Macon, Georgia 31298.
2. The proposed respondent admits all the jurisdictional facts set
forth in the draft of complaint here attached.
3. The proposed respondent waives:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement;
and
d. Any claim under the Equal Access to Justice Act.
4. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission it, together with the draft of
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this agreement and so notify the proposed respondent, in which event
it will take such action as it may consider appropriate, or issue and
serve its complaint (in such form as the circumstances may require) and
decision, in disposition of the proceeding.
5. This agreement is for settlement purposes only and does not
constitute an admission by the proposed respondent that the law has
been violated as alleged in the draft of complaint here attached, or
that the facts as alleged in the draft of complaint, other than
jurisdictional facts, are true.
6. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Sec. 2.34 of the Commission's
rules, the Commission may, without further notice to the proposed
respondent, (1) issue its complaint corresponding in form and substance
with the draft of complaint here attached and its decision containing
the following order to cease and desist, and other relief in
disposition of the proceeding, and (2) make information public with
respect thereto. When so entered, the order shall have the same force
and effect and may be altered, modified, or set aside in the same
manner and within the same time provided by statute for other orders.
The order shall become final upon service. Delivery by the United
States Postal Service of the complaint and decision containing the
agreed-to order to proposed respondent's address as stated in this
agreement shall constitute service. The proposed respondent waives any
right it may have to any other manner of service. The complaint may be
used in construing the terms of the order, and no agreement,
understanding, representation, or interpretation not contained in the
order or this agreement may be used to vary or contradict the terms of
the order.
7. The proposed respondent has read the proposed complaint and
order contemplated hereby. The proposed respondent understands that
once the order has been issued, it will be required to file one or more
compliance reports showing that it has fully complied with the order.
The proposed respondent further understands that it may be liable for
civil penalties in the amount provided by law for each violation of the
order after it becomes final.
Order
I
It is ordered that as used in this order, the following definitions
shall apply:
A. ``Respondent'' or ``Charter'' means Charter Medical Corporation,
its partnerships, joint ventures, companies, subsidiaries, divisions,
groups and affiliates controlled by respondent, and their respective
directors, officers, employees, agents, and representatives, and their
respective successors and assigns.
B. ``NME'' means National Medical Enterprises, Inc., a corporation
organized, existing and doing business under and by virtue of the laws
of the State of Nevada with its office and principal place of business
at 2700 Colorado Avenue, Santa Monica, California 90404.
C. ``Commission'' means the Federal Trade Commission.
D. ``Hospital'' means a health care facility, licensed as a
hospital, other than a federally-owned facility (such as a military or
Veterans Administration hospital), having a duly organized governing
body with overall administrative and professional responsibility, and
an organized professional staff that provides 24-hour inpatient care,
and that may also provide outpatient services.
E. ``General acute care hospital'' means a health care facility
licensed as a hospital, having as a primary function the provision of
inpatient services for medical diagnosis, treatment, and care of
physically injured or sick persons with short-term or episodic health
problems or infirmities.
F. ``Psychiatric hospital'' means a hospital licensed or certified
as a psychiatric hospital (except for a license or certificate that
limits service to residential treatment facility services only), other
than a federal, state or county psychiatric hospital that primarily
provides long-term, i.e., 30 days or more, treatment of chronic mental
illness or short term court ordered detentions and involuntary
treatment, that provides 24-hour inpatient services for psychiatric
diagnosis, treatment, and care of persons suffering from acute mental
illness or emotional disturbance, and may also provide treatment for
alcohol or drug abuse.
G. ``Psychiatric unit'' means a department, unit, or other
organizational subdivision of a general acute care hospital licensed or
certified as a provider of inpatient psychiatric care (except for a
license or certificate that limits service to residential treatment
facility services only), other than a federal, state or county
psychiatric unit that primarily provides long-term, i.e., 30 days or
more, treatment of chronic mental illness or short term court ordered
detentions and involuntary treatment, that provides 24-hour inpatient
services for psychiatric diagnosis, treatment and care of persons
suffering from acute mental illness or emotional disturbance, and may
also provide treatment for alcohol or drug abuse.
H. ``Psychiatric facility'' means either a psychiatric hospital, a
general acute care hospital with a psychiatric unit, or a psychiatric
unit.
I. ``Psychiatric service'' means the provision of inpatient
services for psychiatric diagnosis, treatment and care of persons
suffering from mental illness, emotional disturbance, or alcohol or
drug abuse at a psychiatric facility.
J. To ``operate'' a psychiatric facility means to own, lease,
manage, or otherwise control or direct operations of a psychiatric
facility, directly or indirectly.
K. To ``acquire'' a psychiatric facility means to directly or
indirectly, through subsidiaries, partnerships, or otherwise:
(1) Acquire the whole or any part of assets used or previously used
within the last two years (and still suitable for use) for operating a
psychiatric facility from any person presently engaged in, or within
the two years preceding such acquisition engaged in, operating a
psychiatric facility;
(2) Acquire the whole or any part of the stock, share capital,
equity, or other interest in any person engaged in, or within the two
years preceding such acquisition engaged in, operating a psychiatric
facility;
(3) Acquire or otherwise obtain the right to designate directly or
indirectly directors or trustees of a psychiatric facility; or
(4) Enter into any other arrangement to obtain direct or indirect
ownership, management or control of a psychiatric facility or any part
thereof, including but not limited to, a lease of or management
contract for a psychiatric facility.
L. ``Residential treatment center'' means a treatment center that
provides long-term (length of stay of 30 days or more) care in a non-
psychiatric facility setting to patients that require long term care
for psychiatric diagnosis and treatment for mental illness, emotional
disturbance, or alcohol or drug abuse.
M. ``Outpatient facility'' means a facility that is not licensed as
a psychiatric facility and has a primary function of providing
outpatient treatment for psychiatric diagnosis, treatment and care of
persons suffering from mental illness, emotional disturbance, or
alcohol or drug abuse, for patients that do not require inpatient
psychiatric services.
N. ``Affiliate'' means any entity whose management and policies are
controlled in any way, directly or indirectly, by the person with which
it is affiliated.
O. ``Person'' means any natural person, partnership, corporation,
company, association, trust, joint venture or other business or legal
entity, including any governmental agency.
P. ``Relevant area(s)'' means:
(1) The ``Orlando area,'' consisting of the Florida counties of
Orange, Osceola and Seminole;
(2) The ``Atlanta area,'' consisting of the Georgia counties of
Fulton, Paulding, Fayette, Clayton, Henry, Rockdale, De Kalb, Gwinnett,
Cobb, Cherokee, Forsyth and Douglas;
(3) The ``Memphis area,'' consisting of the Tennessee countries of
Shelby, Tipton and Fayette, the Arkansas county of Crittenden, and the
Mississippi county of De Soto;
(4) The ``Richmond area,'' consisting of the Virginia city of
Richmond and the Virginia counties of Henrico, Hanover, Goochland,
Powhatan, Chesterfield, Charles City, and New Kent.
Q. ``Relevant facilities'' means the following NME psychiatric
hospitals, including, without limitation, all related assets and
businesses, successors and assigns and all improvements, additions and
enhancements made to such assets: MidSouth Hospital, Memphis,
Tennessee; Psychiatric Institute of Richmond, Richmond Virginia;
Brawner North Medical Health System; Smyrna, Georgia; Crescent Pines
Hospital, Stockbridge, Georgia; Laurel Oaks Hospital and Residential
Treatment Center, Orlando, Florida.
II
It is further ordered that respondent forthwith modify its Asset
Sale Agreement with NME, dated March 29, 1994, to rescind respondent's
agreement to acquire the relevant facilities.
III
It is further ordered that, for a period of ten (10) years from the
date this order becomes final, respondent shall not, without the prior
approval of the Commission:
A. Acquire any psychiatric facility in any of the relevant areas,
including the relevant facilities;
B. Permit any psychiatric facility it operates in the relevant
areas to be acquired by any person that operates, or will operate
immediately following such acquisition, any other psychiatric facility
in the relevant areas, including the relevant facilities.
Provided, however, that such prior approval shall not be required
for:
1. The acquisition of a facility that is (a) solely licensed as a
residential treatment center and not licensed as a psychiatric
facility, or (b) solely operated as an outpatient facility and not
licensed as a psychiatric facility;
2. Any acquisition that does not involve psychiatric services; or
3. Any acquisition otherwise subject to this Paragraph III of this
order if the fair market value of (or, in case of an asset acquisition,
the consideration to be paid for) the psychiatric facility or part
thereof to be acquired, including assumption by respondent of any
liabilities, does not exceed five hundred thousand dollars ($500,000).
IV
It is further ordered that, for a period of ten (10) years from the
date this order becomes final, respondent shall not directly or
indirectly, through subsidiaries, partnerships or otherwise, without
providing advance written notification to the Commission, consummate
any joint venture or other arrangement with any other psychiatric
facility in the relevant areas, for the joint establishment or
operation of any new psychiatric facility, psychiatric service or part
thereof, in the relevant areas, including the relevant facilities. Such
advance notification shall be filed immediately upon respondent's
issuance of a letter of intent for, or execution of an agreement to
enter into, such a transaction, whichever is earlier.
Said notification required by this Paragraph IV of this order shall
be given on the Notification and Report Form set forth in the appendix
to part 803 of title 16 of the Code of Federal Regulations (as
amended), and shall be prepared and transmitted in accordance with the
requirements of that part, except that no filing fee will be required
for any such notification, notification need not be made to the United
States Department of Justice, and notification is required only of
respondent and not of any other party to the transaction. Respondent is
not required to observe any waiting period for said notification
required by this Paragraph IV.
Respondent shall comply with reasonable requests by the Commission
staff for additional information concerning any transaction subject to
this Paragraph IV of this order, within fifteen (15) days of service of
such requests.
Provided, however, that no transaction shall be subject to this
Paragraph IV of this order if:
1. The fair market value of the assets to be contributed to the
joint venture or other arrangement by the psychiatric facility not
operated by respondent does not exceed five hundred thousand dollars
($500,000);
2. The transaction does not involve psychiatric services; or
3. Notification is required to be made, and has been made, pursuant
to Section 7A of the Clayton Act, 15 U.S.C. 18a, or prior approval by
the Commission is required, and has been requested, pursuant to
Paragraph III of this order.
V
It is further ordered that, for a period of ten (10) years from the
date this order becomes final, respondent shall not permit all or any
substantial part of any psychiatric facility it operates in the
relevant areas to be acquired by any other person unless the acquiring
person files with the Commission, prior to the closing of such
acquisition, a written agreement to be bound by the provisions of this
order, which agreement respondent shall require as a condition
precedent to the acquisition.
VI
It is further ordered that, within sixty (60) days after the date
this order becomes final, and annually thereafter for a period of ten
(10) years on the anniversary of the date this order becomes final, and
at other times as the Commission may require, respondent shall file a
verified written report with the Commission setting forth in detail the
manner and form in which it has complied and it is complying with the
requirements of this order.
VII
It is further ordered that, for the purpose of determining or
securing compliance with this order, respondent shall permit any duly
authorized representative of the Commission:
A. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence,
memoranda and other records and documents in the possession or under
the control of respondent relating to any matters contained in this
order; and
B. Upon five days' notice to respondent and without restraint or
interference from it, to interview officers, directors, or employees of
respondent.
VIII
It is further ordered that respondent shall notify the Commission
at least thirty (30) days prior to any proposed change in the corporate
respondent such as dissolution, assignment, sale resulting in the
emergency of a successor corporation, or the creation or dissolution of
subsidiaries or any other change in the corporation that may affect
compliance obligations arising out of the order.
Analysis of Proposed Consent Order to Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted
provisionally an agreement containing a proposed consent order from
Charter Medical Corporation (``Charter''), under which Charter would
agree not to acquire certain psychiatric facilities from National
Medical Enterprises (``NME'').
The proposed Consent Order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received, and will decide whether it should
withdraw from the agreement or make final the agreement's proposed
order.
Charter has proposed to acquire certain assets and businesses from
NME, including 17 psychiatric hospitals, chemical dependency facilities
and residential treatment centers.
The proposed complaint alleges that the proposed acquisition, if
consummated, would constitute a violation of Section 7 of the Clayton
Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as
amended, 15 U.S.C. 45, in the market for psychiatric services in
several geographic areas in the United States. The proposed Consent
Order would remedy the alleged violation by allowing the NME facilities
and those geographic areas to remain as viable competitors or be sold
to a third party other than Charter.
The proposed Consent Order provides that Charter forthwith modify
its Asset Sale Agreement with NME, dated March 29, 1994, to rescind
Charter's agreement to acquire the following facilities: MidSouth
Hospital, Memphis, Tennessee; Psychiatric Institute of Richmond,
Richmond, Virginia; Brawner North Medical Health System, Smyrna,
Georgia; Crescent Pines Hospital, Stockbridge, Georgia; and Laurel Oaks
Hospital and Residential Treatment Center, Orlando, Florida. Under the
terms of a letter of understanding from NME, the Commission will
receive advance written notification of sale of any of these
facilities.
The Order also requires Charter, for a ten-year period, to obtain
prior approval from the Commission before acquiring any psychiatric
facility in any of the following geographic areas, as defined in the
Order: The Orlando area; the Atlanta area; the Memphis area; and the
Richmond area. The Order also requires Charter to obtain prior approval
before permitting any psychiatric facility it operates in the four
geographic areas to be acquired by any person that operates, or will
operate immediately following such acquisition, any other psychiatric
facility in the geographic areas, for a ten-year period.
The Order also requires Charter, for a ten-year period to provide
advance written notification to the Commission before consummating any
joint ventures with any other psychiatric facility in the four
geographic areas specified.
Under the provisions of the Order, Charter is required to provide
to the Commission a report of compliance with the Order within sixty
(60) days following the date the Order becomes final, and annually
thereafter for period of ten years.
The purpose of this analysis is to facilitate public comment on the
proposed Order. and it is not intended to constitute an official
interpretation of the agreement and proposed Order or to modify in any
way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 94-29182 Filed 11-25-94; 8:45 am]
BILLING CODE 6750-01-M