[Federal Register Volume 72, Number 106 (Monday, June 4, 2007)]
[Notices]
[Pages 30832-30845]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-2686]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States of America, et al. v. Arizona Hospital and 
Healthcare Association, et al.; Proposed Final Judgment and Competitive 
Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Section 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 District of the 
District of Arizona in United States of America, et al. v. Arizona 
Hospital and Healthcare Association, et al., Civil Action No. 2:07-cv-
1030. On May 22, 2007, the United States filed a

[[Page 30833]]

Complaint alleging the Arizona Hospital and Healthcare Association and 
its subsidiary, the AzHHA Service Corporation, violated Section 1 of 
the Sherman Act, 15 U.S.C. Sec.  1. The proposed Final Judgment, filed 
the same time as the Complaint, requires the Defendants to terminate 
their illegal agreements and to end their illegal rate-setting and 
information-sharing activities, and to create a program to monitor 
their compliance with the antitrust laws. Copies of the Complaint, 
proposed Final Judgment and Competitive Impact Statement are available 
for inspection at the Department of Justice in Washington, DC in Room 
215, 325 Seventh Street, NW., at the Office of the Clerk of the United 
States District Court for the District of Arizona, in Phoenix, and via 
the internet at http://www.usdoj.gov/atr/cases.html.
    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 Joseph M. Miller, Acting Chief, Litigation I Section, United States 
Department of Justice, Suite 4000, 1401 H Street, NW., Washington, DC 
20530, (telephone: 202-307-0001).

J. Robert Kramer, II,
Director of Operations, Antitrust Division.
Ryan Danks, Steven Kramer, Seth Grossman, Rebecca Perlmutter
U.S. Department of Justice Antitrust Division, 1401 H Street, NW., 
Suite 4000, Washington, DC 20530, (202) 305-0128

Attorneys for the United States

Terry Goddard, Attorney General, Nancy Bonnell, Antitrust Unit 
Chief, ID #016382, Consumer Protection and Advocacy Section, 
Department of Law Building, Room #259, 1275 West Washington Street, 
Phoenix, AZ 85007-2997, (602) 542-7728

Attorneys for the State of Arizona

United States District Court

District of Arizona

United States of America and the State of Arizona, Plaintiffs, v. 
Arizona Hospital and Healthcare, Association and AzHHA Service, 
Corporation, Defendants.
[Case No. CV07-1030-PHX]

Complaint

    1. The United States of America, acting under the direction of the 
Attorney General of the United States, and the State of Arizona, acting 
under the direction of the Attorney General of the State of Arizona, 
bring this civil actio to obtain equitable and other relief against 
Defendants Arizona Hospital and Healthcare Association (``AzHHA'') and 
its subsidiary the AzHHA Service Corporation to restrain Defendants' 
violation of Section 1 of the Sherman Act, 15 U.S.C. Sec.  1, and the 
State of Arizona seeks relief also under Section 44-1402 of Arizona's 
Uniform State Antitrust Act, A.R.S. Sec.  44-1402.

I. Introduction

    2. AzHHA, through its subsidiary the AzHHA Service Corporation, 
runs the AzHHA Registry Program (``AzHHA Registry''), a group 
purchasing organization, which contracts with nursing agencies to 
provide temporary nursing services for most Arizona hospitals. Through 
the Registry, AzHHA and its participation member hospitals have jointly 
set prices and other terms governing the hospitals' purchases of per 
diem and travel nursing services.
    3. For nearly ten years after AzHHA started the Registry in 1988, 
it focused on setting uniform quality standards for per diem and travel 
nursing personnel, and enforcing those standards through regular 
audits. During this time, AzHHA allowed each participating agency that 
employed per diem and travel nurses to set its own bill rates, provided 
that the agency offered the same rates to every hospital participating 
in the Registry. Since 1997, however, AzHHA has imposed the same bill 
rates on each participating agency, which the agency must offer each 
participating hospital.
    4. Acting collectively on behalf of most of the hospitals in 
Arizona, AzHHA has set bill rates below the levels its member hospitals 
could otherwise have achieved by negotiating independently with each 
agency. AzHHA also has imposed other noncompetitive contractual terms 
on participating agencies.
    5. Efficiencies do not explain or justify the Registry's conduct. 
Agencies have not obtained significant transactional efficiencies or 
scale economies as a result of the imposition of uniform bill rates by 
the Registry. The Registry's practice of imposing uniform bill rates 
has not been reasonably necessary to achieve any benefits, such as 
greater quality assurance. Neither agencies nor hospitals have acted as 
though the Registry's rate setting creates efficiences.
    6. Through this suit, the United States and the State of Arizona 
ask this Court to declare the Defendant's conduct illegal and enter 
injunctive relief to prevent further violations of the antitrust laws.

II. Defendants

    7. AzHHA is a nonprofit corporation existing under the laws of the 
State of Arizona and headquartered in Phoenix. The association 
describes itself as dedicated to providing leadership on issues 
affecting the delivery, quality, accessibility, and cost effectiveness 
of healthcare. Active members of AzHHA include more than 100 hospitals 
and health systems in Arizona. Executives from member hospitals control 
the AzHHA Board of Directors.
    8. The AzHHA Service Corporation is a for-profit corporation 
existing under the laws of the State of Arizona and is a wholly owned 
subsidiary of AzHHA; it is also headquartered in Phoenix. The AzHHA 
Service Corporation runs the AzHHA Registry, which helps member 
hospitals purchase the services of temporary healthcare personnel, 
including per diem and travel nurses. Executives from AzHHA member 
hospitals control the AzHHA Service Corporation Board of Directors.

III. Jurisdiction and Venue

    9. The Court has subject-matter jurisdiction over this action under 
15 U.S.C. Sec.  4 and 15 U.S.C. Sec.  26, which authorize the United 
States and the State of Arizona, respectively, to bring actions in 
district courts to prevent and restrain violations of Section 1 of the 
Sherman Act, 15 U.S.C. Sec.  1. Subject matter jurisdiction also exists 
pursuant to 28 U.S.C. Sec. Sec.  1331, 1337.
    10. Venue is proper in the District of Arizona, under Section 12 of 
the Clayton Act, 15 U.S.C. Sec.  22, and 28 U.S.C. Sec.  1391(b) & (c), 
because the defendant corporations reside there.
    11. The Court has jurisdiction over the State of Arizona's claim 
under the Uniform Arizona Antitrust Act, A.R.S. Sec. Sec.  44-1402, et 
seq., under the doctrine of pendent jurisdiction, 28 U.S.C. Sec.  1367.

IV. Conspirators

    12. Various firms and individuals, not named as defendants in this 
Complaint, have knowingly participated as conspirators with Defendants 
in the violation alleged in this Complaint, and have done acts and made 
statements in furtherance of the alleged conspiracy.

V. Trade and Commerce

    13. Arizona hospitals employ various types of nursing personnel to 
treat and care for patients. Hospitals are the primary employers in 
Arizona of registered nurses (RNs), who must graduate from an approved 
professional nursing program to obtain a license in Arizona. Specialty 
RNs are RNs who receive additional education and training and become 
certified to practice in a specialty unit, such as critical care, 
neonatal intensive care, or telemetry. Specialty RNs and RNs account 
for most of the nursing staff employed by

[[Page 30834]]

Arizona hospitals. Besides RNs and specialty RNs, Arizona hospitals 
employ several other types of nursing personnel, including licensed 
practical nurses (LPNs), certified nursing assistants (CNAs), operating 
room technicians, behavioral health technicians, and sitters.
    14. Arizona hospitals frequently cannot meet their nursing needs 
with their own regularly employed nurses. Hospitals cannot meet their 
needs because of, for example, temporary absences of the hospitals' 
regularly employed nursing staff, daily variations in hospitals' 
censuses, an influx of visitors to Arizona during the winter months, 
and a rapidly increasing population.
    15. Most Arizona hospitals try to fill their needs for nursing 
services by having their regularly employed nurses work overtime and by 
using internal pools of employees who ``float'' among units as needed 
(and as qualified). Some Arizona hospitals also maintain their own in-
house list of nurses who may be available to work at the hospitals 
temporarily.
    16. These measures do not satisfy the hospitals' demands for 
nursing services. At such times, the hospitals will purchase the 
services of temporary nursing personnel through nurse staffing 
agencies. Temporary nursing personnel fall usually into two categories: 
per diem nurses and travel nurses.
    17. Per diem nurses are typically local nurses who work on short 
notice to fill hospitals' immediate needs on a single shift. In 
contrast, travel nurses contract to work at hospitals for longer 
periods, usually thirteen weeks. Unlike per diem nurses, travel nurses 
generally live outside Arizona and receive short-term housing in 
Arizona while employed there. Arizona hospitals purchase the services 
of travel nurses to satisfy their demand for nursing services, 
including responding to the influx of seasonal residents, and covering 
planned absences of regularly employed nursing staff, such as those on 
maternity leave. Along with California, Florida, and Texas, Arizona 
hospitals have the highest demand for travel nursing services.
    18. Nurse staffing agencies coordinate most placements of per diem 
and travel nurses with Arizona hospitals. Many nurse staffing agencies 
focus on providing either per diem or travel nurses. Arizona hospitals 
pay agencies an hourly bill rate for the work done by the agencies' 
nursing personnel. Agencies pass most of that bill rate directly to 
nursing personnel as wages and benefits, and allocate the balance to 
their overhead and profit. Temporary nurses' compensation is directly 
correlated to the bill rate paid by hospitals to nurse staffing 
agencies, and a decrease in temporary nursing agency bill rates results 
in lower compensation for temporary nurses.
    19. Dozens of nurse staffing agencies work with hospitals in 
Arizona. Before the Registry, Arizona hospitals used to compete on 
price with each other to purchase temporary nursing services from nurse 
staffing agencies.
    20. Some hospitals use third parties to coordinate their 
procurement of temporary nursing personnel from multiple nurse staffing 
agencies. Until 2004, the AzHHA Registry Program was the only major 
provider of such services in Arizona.

VI. The AzHHA Nurse Registry Program

    21. The AzHHA Registry operates separate registries for per diem 
nursing personnel in Northern Arizona (mainly Phoenix) and Southern 
Arizona (mainly Tucson), together called the ``Per Diem Registry.'' The 
Registry also operates a registry for travel nursing personnel 
throughout Arizona, called the ``Travel Registry.'' These registries 
cover various types of nursing personnel, including RNs, specialty RNs, 
LPNs, CNAs, operating room technicians, behavioral health technicians, 
and sitters.
    22. Since 2000, most of AzHHA's member hospitals have purchased 
services of temporary nursing personnel through the AzHHA Registry. In 
2005, 65 Arizona hospitals participated in at least one part of the 
Registry. The hospitals then participating in the Per Diem Registry 
controlled approximately 80 percent of hospital beds in the Phoenix 
area and approximately 84 percent of hospital beds in the Tucson area. 
Hospitals then participating in the Travel Registry controlled 
approximately 78 percent of all hospital beds in Arizona. From May 2004 
to May 2005, these hospitals purchased approximately 850,000 hours of 
per diem nursing services (worth about $43 million) and approximately 
2.3 million hours of travel nursing services (worth about $116 million) 
through the AzHHA Registry.
    23. The AzHHA Registry began in 1988 with a focus on quality 
assurance. The Registry seeks to provide quality assurance by 
establishing standards for agencies' temporary nursing personnel and 
agencies' personnel recordkeeping requirements. AzHHA employees monitor 
the agencies' quality assurance through annual audits. These audits 
verify that each agency properly maintains files on its nursing 
personnel's education, background, work experience, skill level, and 
references.
    24. Hospitals participating in the AzHHA Registry commit to turn 
first to participating agencies when purchasing temporary nursing 
services. If the participating agencies cannot fill a participating 
hospital's needs promptly, then a hospital may purchase services from a 
nonparticipating agency, provided that its total purchases of per diem 
nursing services remain above 50 percent. Most participating hospitals 
have fulfilled this contractual obligation and have purchased most of 
their temporary nursing services through the Registry. Overall, 
participating hospitals have purchased about 70 percent of their per 
diem nursing services through the Registry. The Travel Registry has 
accounted for about 90 percent of travel nurse agency sales to 
hospitals in Arizona.
    25. The participating hospitals regularly meet to select agencies 
to participate in the AzHHA Registry. In 2005, the participating 
hospitals selected approximately 80 different nurse staffing agencies 
to participate in at least one part of the Registry, out of 
approximately 170 completed applications.
    26. The AzHHA Service Corporation has collected an administrative 
fee from each agency based on the amount that each agency bills 
hospitals through the Registry. For per diem personnel, AzHHA has 
collected a flat 2 percent fee. For travel nurses, AzHHA has collected 
fees based on a tiered structure starting at 2 percent and decreasing 
to 0.5 percent, depending on the total amount an agency bills 
participating hospitals. The fees collected from the agencies fund the 
Registry and other AzHHA activities.
    27. When the AzHHA Registry began, each participating agency 
submitted a set of standard bill rates that the agency agreed to charge 
all participating hospitals. Starting from the bill rates submitted by 
an agency, each hospital could then individually negotiate discounted 
bill rates with each agency.
    28. In 1997, with the support of participating hospitals, AzHHA 
began collectively setting the rates agencies could bill hospitals 
through the Per Diem Registry. To do so, AzHHA began requiring all 
participating agencies to accept a uniform bill rate schedule, set by 
the Registry, for all participating hospitals. In 1998, AzHHA imposed a 
similar, uniform rate schedule for the Travel Registry.
    29. The AzHHA Registry has formulated uniform nurse agency bill 
rates through a three-step process. First,

[[Page 30835]]

AzHHA employees surveyed the bill rates from each participating agency, 
averaged the rates, and forwarded the averaged rate information to 
participating hospitals. Each hospital then provided its own desired 
agency bill rates to AzHHA. Finally, AzHHA set the uniform agency bill 
rates, based only on the average rates submitted by participating 
hospitals.
    30. At the insistence of the CEOs of several participating 
hospitals, AzHHA employees sometimes prepared and circulated usage 
reports detailing hospitals' usage of per diem personnel though the Per 
Diem Registry, and outside it. The reports included estimates of the 
cost of hiring per diem personnel outside the Registry. In May 2002, 
participating hospitals agreed to expel any hospital using 
participating agencies for less than 50 percent of its total per diem 
hours. This new rule affected six hospitals. Four hospitals responded 
by immediately increasing their use of participating agencies to at 
least 50 percent of their total per diem needs. One system, comprising 
two hospitals, chose to leave the Per Diem Registry rather than face 
expulsion.
    31. In 2005, AzHHA altered the Per Diem Registry's rate structure 
by eliminating the bill rate differential between weekday and weekend 
shifts. In addition, AzHHA significantly reduced overtime and holiday 
bill rates. AzHHA made these changes over objections from many 
participating agencies. Several per diem agencies subsequently left the 
Registry.
    32. AzHHA has taken other steps to further coordinate how 
participating hospitals deal with agencies. The AzHHA Registry contract 
requires participating agencies to accept certain competitively 
sensitive contract provisions relating to, among others, payment terms 
between participating hospitals and participating agencies, 
indemnification, and cancellation policies. AzHHA also gathers from and 
shares with participating hospitals competitively sensitive information 
such as bonuses offered to temporary nursing personnel.
    33. In November 2006, while under investigation by the Plaintiffs 
and defending a private antitrust action, AzHHA reverted to its pre-
1997 approach to pricing for the Per Diem Registry. It now requires 
each agency to submit bill rates that it will charge all participating 
hospitals. The revised pricing method applies only to per diem 
agencies, and AzHHA retains the right to reject an agency's rate 
submission. The Travel Registry continues to impose a uniform bill rate 
schedule applicable to all participating hospitals' purchases from 
travel nurse staffing agencies.

VII. Interstate Commerce

    34. The activities of the Defendants that are the subject of this 
Complaint are within the flow of, and have substantially affected, 
interstate trade and commerce.
    The AzHHA Service Corporation has transmitted contracts to nurse 
staffing agencies across state lines and has communicated with nurse 
staffing agencies by mail and telephone across state lines. AzHHA 
employees have traveled across state lines to audit nurse staffing 
agencies.
    36. The Travel Registry contracts with agencies that arrange for 
nurses to travel from outside Arizona to provide temporary nursing 
services in Arizona hospitals.
    37. Many AzHHA member hospitals that purchase services from nurse 
staffing agencies through the AzHHA Registry remit substantial payments 
across state lines to nurse staffing agencies. Nurse staffing agencies 
also remit substantial payments in the form of administrative fees 
across state lines to the AzHHA Service Corporation.

VIII. Relevant Markets

A. Hospitals' Purchases of Per Diem Nursing Services in the Phoenix and 
Tucson Metropolitan Areas

    38. Per diem nursing services is a relevant service market within 
the meaning of the antitrust laws.
    39. Positions as regularly employed RNs at hospitals are generally 
not attractive alternatives for per diem nurses because they do not 
offer the scheduling flexibility or pay attractive to per diem nurses. 
Many per diem nurses work part-time as secondary wage earners for their 
families and highly value flexible work schedules. Per diem nurses 
generally are paid higher hourly wages compared to regularly employed 
nursing staff, but typically do not receive benefits such as health 
insurance or retirement contributions. Although some per diem nurses 
also work full-time at a hospital, many do not.
    40. Nursing positions in non-hospital settings tend to pay even 
lower wages, are generally less prestigious, and usually offer less 
professionally challenging work environments than RN positions in 
hospitals. Thus hospital per diem nurse openings are generally more 
attractive than per diem nurse openings in other settings, such as in-
home nursing visits or care, physician offices, freestanding outpatient 
care facilities, skilled-nursing facilities, schools, and prisons. 
Moreover, there are relatively few employment opportunities for per 
diem nurses in non-hospital settings.
    41. The Per Diem Registry has collectively imposed per diem bill 
rates below competitive levels, and lowered the compensation paid to 
per diem nurses. Those reduced bill rates have not induced per diem 
nurses to stop offering their services in sufficient quantities to make 
the reduction in bill rates unprofitable. Purchases of per diem nursing 
services by hospitals is, therefore, a relevant service market. This 
service market aggregates, for analytic convenience, several relevant 
service markets, including hospitals' purchases of discrete types of 
temporary nursing services, such as per diem medical/surgical RN 
services, various per diem specialty RN services, per diem LPN 
services, and per diem CNA services.
    42. The Phoenix and Tucson metropolitan areas are relevant and 
distinct geographic markets, within the meaning of the antitrust laws, 
for the purchase of per diem nursing services.
    43. Phoenix and Tucson are distinct relevant geographic markets for 
the purchase of per diem nursing services in part because they are 
located about 120 miles from each other. Per diem nurses generally must 
live within a reasonable commute of the hospitals where they work to 
ensure their work is profitable and they are available on short notice. 
In Arizona, per diem nurses generally reside in either Phoenix or 
Tucson and live in the metropolitan area where they work. More distant 
hospitals are not good substitutes for per diem nurses living in the 
Phoenix or Tucson metropolitan areas.
    44. The Per Diem Registry consequently has operated distinct 
purchasing programs centered in Phoenix and Tucson. Participating 
hospitals and per diem nurse staffing agencies have considered the 
Phoenix and Tucson metropolitan areas to be distinct markets for the 
purchase of per diem nursing personnel services, and the Registry has 
priced them differently.
    45. The Per Diem Registry has collectively imposed per diem bill 
rates below competitive levels in Phoenix. Those reduced bill rates 
have not induced per diem nurses in Phoenix to stop offering their per 
diem services in Phoenix in sufficient quantities to make the reduction 
in bill rates unprofitable. Similarly, the reduced bill rates in Tucson 
have not induced per diem nurses to stop offering their per diem 
services in that city in sufficient quantities to make the reduction in 
bill rates there unprofitable.

[[Page 30836]]

B. Hospitals' Purchases of Travel Nursing Services in Arizona

    46. Travel nursing services is a relevant service market within the 
meaning of the antitrust laws.
    47. No other nursing position offers the benefits that travel 
nursing provides: temporary residence in a new or attractive are of the 
country, the ability to work near friends or relatives in the area, and 
the chance to try out a hospital for future long-term employment. 
Travel nurses usually earn a higher hourly rate than regularly employed 
nurses, and often receive health benefits and paid vacation from their 
agency. Many hospitals in Arizona also pay travel nurses through their 
agencies bonuses upon completion of their assignments.
    48. The Travel Registry has collectively imposed travel bill rates 
below competitive levels and lowered the compensation to travel nurses. 
Those reduced bill rates have not induced travel nurses to stop 
offering their services in sufficient quantities to make the reduction 
in bill rates unprofitable. Purchases of travel nursing services by 
hospitals in Arizona is, therefore, a relevant service market. This 
service market aggregates, for analytic convenience, several relevant 
service markets, including hospitals' purchases of discrete types of 
travel nursing services, such as medical/surgical RN services, and 
various specialty RN services.
    49. Arizona is a relevant geographic market, within the meaning of 
the antitrust laws, for the purchase of travel nursing services.
    50. Most of the thousands of travel nurses throughout the country 
have strong preferences for assignments in a particular location at any 
given time. A substantial number of travel nurses prefer Arizona over 
other warm-weather locations with high demands for travel nurses, such 
as Southern California, Texas, and Florida. Nurses prefer Arizona for 
any number of reasons, including previous work experience, preferred 
recreational opportunities, and proximity to friends and relatives. 
Also, Arizona, unlike California and Florida, is a member of the 
multistate Nurse Licensure Compact. This means that nurses licensed in 
Compact states face lower transaction costs to provide services in 
Arizona, and incur higher costs when choosing Florida or California 
instead of Arizona for their thirteen-week travel assignments.
    51. Travel nurse agencies' experiences in Arizona further 
corroborate that Arizona is a relevant market for travel nurses. 
Starting in 1998, the Travel Registry collectively imposed bill rates 
in Arizona lower than they would have been absent the Registry, while 
hospitals in comparable states continued to pay relatively higher bill 
rates. That change has had a significant negative effect on the margins 
of the travel nurse agencies and reduced somewhat the hourly wages 
those agencies paid to travel nurses working in Arizona. Despite the 
travel Registry's adverse effects, travel nurse agencies have not been 
able to steer a sufficient number of travel nurses to other states to 
defeat the small but significant nontransitory decrease imposed by the 
Travel Registry on travel nurse billing rates in Arizona.
    52. For instance, in 1998, one of the nation's largest travel nurse 
agencies, which provided a substantial number of travel nurses to AzHHA 
participating hospitals, withdrew from the Travel Registry in response 
to the collectively imposed bill rates. Because about 90 percent of 
travel nursing services sold by travel nurse agencies in Arizona are 
purchased by hospitals through the Travel Registry, the travel nurse 
agency was effectively shut out of Arizona hospitals. The agency found 
that it could not redirect nurses with a preference for Arizona in 
sufficient numbers to other states, and so lost business to other 
agencies. The travel nurse agency was ultimately forced to rejoin the 
travel Registry and accept its collectively imposed bill rats.
    53. The Travel Registry has collectively imposed travel bill rates 
below the competitive levels in Arizona. Those reduced bill rates have 
not induced travel nurses to stop offering their travel nursing 
services in Arizona in sufficient quantities to make the reduction in 
bill rates unprofitable.

IX. Market Power

    54. As of 2005, the Arizona hospitals that participated in the Per 
Diem Registry controlled approximately 80 percent of all hospital beds 
in the area in and around Phoenix and approximately 84 percent of all 
hospital beds in the area in and around Tucson. (The number of hospital 
beds serves as a proxy for the demand for nursing services.) As the 
dominant purchasers of per diem nursing services in the areas in and 
around both Phoenix and Tucson, the hospitals participating in the 
Registry possessed market power in those relevant markets.
    55. As of 2005, the Arizona hospitals that participated in the 
Travel Registry controlled approximately 78 percent of all hospital 
beds in Arizona. As the dominant purchasers of travel nursing services 
in Arizona, the hospitals participating in the Registry possessed 
market power in that relevant market.
    56. The high percentage of Arizona hospitals that participate in 
the AzHHA Registry has allowed the Registry to impose uniform rates and 
noncompetitive contract terms, despite objections from many large nurse 
staffing agencies in Arizona, because there are not enough alternative 
purchasers of per diem and travel nursing services to thwart AzHHA's 
exercise of market power. Indeed, the managers of the Registry have 
recognized that the ``more [hospitals they] can bring into the program 
the more purchasing power [the hospitals] can have as a group.'' In 
communications to its member hospitals, AzHHA executives have 
``emphasize[d] the importance of functioning as a group,'' and stressed 
that the Registry's ``strength lies in the group's ability to stay 
consistent in [its] purchasing decisions when contracting for agency 
nurses, including travelers.''

X. Anticompetitive Effects

    57. Through the Registry, AzHHA and its participating hospitals 
have decreased prevailing wages for temporary nursing personnel below 
competitive levels.
    58. By AzHHa's own estimate, the AzHHA Registry has forced agency 
bill rates below competitive levels. In communications to other state 
hospital associations and to its own member hospitals, AzHHA has 
admitted that participating hospitals paid much lower bill rates for 
temporary nursing services than they would have paid absent the 
Registry. In advertising materials, AzHHA has estimated the bill rates 
its member hospitals paid agencies were as much as 12 percent lower 
than they would have been if agencies had been able to negotiate 
competitively with hospitals. AzHHA has reported to participating 
hospitals that the bill rates paid through the Per Diem Registry were 9 
percent to 16 percent lower than they otherwise would have been. (The 
elimination of shift differentials and reduced overtime and holiday 
rates imposed since 2005 further lowered the effective per diem agency 
bill rates.) In its communications, AzHHA has reported similar savings, 
7 percent or more, in the bill rate paid through the Travel Registry. 
In sum, AzHHA has estimated that participating hospitals lowered 
payments to nurse staffing agencies by 10 to 12.7 million dollars per 
year through the reduced bill rates provided by the AzHHA Registry. 
Notably, AzHHA has attributed these savings to its collective price-
setting and

[[Page 30837]]

not to any administrative or transactional efficiencies.
    59. Hospitals have recognized that the AzHHA Registry forced agency 
bill rates below competitive levels. Indeed, multiple hospitals, 
including two of the largest hospital systems in Arizona, concluded 
that leaving the Registry would have forced them to pay much higher 
rates for temporary nursing personnel. Instances where participating 
hospitals have left the Registry confirm that hospitals usually have 
paid higher bills rates outside it. In the last two years, several 
hospitals have left the Registry and signed contracts with AzHHA 
competitors; the new contracts generally have included higher bill 
rates for agencies.
    60. Temporary nurse staffing agencies in Arizona have observed that 
AzHHA forced bill rates below competitive levels. Agencies that were 
not part of the Registry, including several former participating 
agencies, have received higher bill rates from the hospitals through 
arrangements outside the Registry. A comparison of per diem rates done 
several years ago by AzHHA showed that the bill rates paid by AzHHA 
hospitals to agencies operating outside the Per Diem Registry ranged 
from 5 percent to 40 percent higher than the Registry's rates. Still, 
many agencies have continued to participate in the Registry because 
they feared that failure to do so would effectively exclude them from 
the Arizona market, namely, the more than 3 million temporary nursing 
hours paticipating hospitals purchase through the Registry each year. 
Agencies that left the Registry Program have reported sharp declines in 
their overall sales.
    61. To maintain agency bill rates below competitive levels, AzHHA 
has monitored participating hospitals' use of nonparticipating nurse 
staffing agencies and directed hospitals to increase their purchases of 
temporary nursing services through the Registry using the collectively 
determined, depressed bill rates. For instance, in March 2000, an AzHHA 
representative warned hospitals that ``[t]he more that non-contract 
agency usage increase, the less powerful our contract becomes because 
agencies will drop and follow suit with `higher bill rate' agencies. 
The final result would be the Registry Program ceasing to exist.''
    62. As a result of the Registry's lowering bill rates paid to nurse 
staffing agencies, those agencies have paid temporary nurses lower 
wages. Thus temporary nurses hired through the Registry have earned a 
lower hourly wage rate than temporary nurses not hired through the 
Registry.
    63. The low agency bill rates imposed by AzHHA and resulting lower 
wages have reduced agencies' ability to recruit temporary nurses. The 
Registry's reduced agency bill rates and the resulting lower temporary 
nurse wages likely have distorted the incentives of hospitals and 
nurses, with significant long-run adverse consequences to the overall 
supply and mix of nursing services in Arizona.
    64. The AzHHA Registry's downward effect on agency bill rates and 
nursing personnel wages has not resulted from efficiency-enhancinig 
behavior.
    65. The transactional efficiencies and scale economies AzHHA claims 
the Registry has generated do not account for, nor are they produced 
by, the lower bill rates the Registry has imposed on participating 
agencies. Some transactional efficiencies may have accrued to 
participating agencies because they can deal with most of the market 
through a single contact. But the anticompetitive effects of the AzHHA 
Registry have substantially outweighed any potential transactional 
efficiencies that have accrued to the temporary nursing agencies.
    66. The Registry also has not created significant economies of 
scale accruing to agencies because those agencies have not obtained 
appreciable per unit reductions in cost because of their participation 
in the AzHHA Registry, much less as a result of the Registry's 
collective rate setting. The Registry has not resulted in an increase 
in the supply of temporary nurses in Arizona.
    67. AzHHA's imposition of uniform rate schedules and other 
competitively sensitive contract terms was not reasonably necessary to 
achieve any efficiencies that may have resulted from the Registry's 
credentialing and quality-assurance activities. AzHHA conducted its 
quality-assurance activities for nearly a decade before it began 
setting uniform bill rates. Its adoption of uniform rate schedules 
starting in 1997 did not relate to the Registry's quality-assurance 
process. In November 2006, AzHHA ceased imposing uniform agency bill 
rates through the Per Diem Registry while maintaining the same quality-
assurance activities, which reconfirmed that uniform pricing is not 
reasonably necessary to achieve the Registry's quality-assurance goals.

XI. Violations Alleged

    68. AzHHA, the AzHHA Service Corporation, and AzHHA's participating 
member hospitals, acting through the AzHHA Registry Program, agreed to 
fix certain terms and conditions relating to the purchase of temporary 
nursing personnel, including temporary nurse staffing agency bill 
rates.
    69. The agreement among AzHHA, the AzHHA Service Corporation, and 
AzHHA's participating member hospitals, acting through the AzHHA 
Registry Program, has caused and continues to cause:
    i. A reduction in competition for hospitals' purchases of per diem 
nursing services in and around Phoenix, Arizona, and accompanying 
reductions in bill rates paid to temporary nursing agencies and wages 
paid to per diem nurses in that area;
    ii. A reduction in competition for hospitals' purchases of per diem 
nursing services in and around Tucson, Arizona, and accompanying 
reductions in bill rates paid to temporary nursing agencies and wages 
paid to per diem nurses in that area;
    iii. A reduction in competition for Arizona hospitals' purchases of 
services provided by travel nurses, and accompanying reductions in bill 
rates paid to temporary nursing agencies and wages paid to travel 
nurses in that state; and, in view of these effects, Defendants' 
actions have violated Section 1 of the Sherman Act, 15 U.S.C. Sec.  1, 
and Section 44-1402 of Arizona's Uniform State Antitrust Act, A.R.S. 
Sec.  44-1402.

XII. Request for Relief

    70. To remedy the violations of Section 1 of the Sherman Act, 15 
U.S.C. Sec.  1, and Section 44-1402 of Arizona's Uniform State 
Antitrust Act, A.R.S. Sec.  44-1402, alleged herein, the United States 
and the State of Arizona request that the Court:
    i. Adjudge the Defendants AzHHA and AzHHA Service Corporation as 
constituting and having engaged in an unlawful combination, or 
conspiracy in unreasonable restraint of trade in violation of Section 1 
of the Sherman Act, 15 U.S.C. Sec.  1, and Section 44-1402 of Arizona's 
Uniform State Antitrust Act, A.R.S. Sec.  44-1402;
    ii. Order that the Defendants AzHHA and AzHHA Service Corporation, 
their officers, directors, agents, employees, and successors, and all 
others acting or claiming to act on their behalf, be permanently 
enjoined from engaging in, carrying out, renewing, or attempting to 
engage in, carry out, or renew the combination and conspiracy alleged 
herein or any other combination or conspiracy having a similar purpose 
or effect in violation of Section 1 of the Sherman Act, 15 U.S.C. Sec.  
1, and Section 44-1402 of Arizona's Uniform State Antitrust Act, A.R.S. 
Sec.  44-1402,
    iii. Award costs of this action; and

[[Page 30838]]

    iv. Such other and further relief as may be required and the Court 
may deem just and proper.

    Dated: May 22, 2007.

Thomas O. Barnett, Assistant Attorney General, Antitrust Division.
J. Robert Kramer II, Director of Operations, Antitrust Division.
Joseph M. Miller, Acting Chief, Litigation 1 Section, Antitrust 
Division.
Ryan Danks, Steven Kramer, Seth A. Grossman, Rebecca Perlmutter,
Attorneys, Litigation I Section,
United States Department of Justice, Antitrust Division, 1401 H 
Street, NW., Suite 4000, Washington, DC 20530, Telephone: (202) 305-
0128, Facsimile: (202) 307-5802.
Terry Goddard, Attorney General, Nancy Bonnell, Antitrust Unit Chief 
(Arizona Bar 016382),
Consumer Protection and Advocacy Section, Department of Law 
Building, Room #259, 1275 West Washington Street, Phoenix, AZ 85007, 
Telephone: (602) 542-7728, Facsimile (602) 542-9088.
Certificate of Service
    I hereby certify that on May 22, 2007, I electronically transmitted 
the attached document to the Clerk's Office using the CM/ECF System for 
filing and transmittal of a Notice of Electronic Filing to the 
following CM/ECF registrants:

Nancy Bonnell, Antitrust Unit Chief, ID 016382, Consumer 
Protection and Advocacy Section, Department of Law Building, Room 
259, 1275 West Washington Street, Phoenix, AZ 85007-2997, 
(602) 542-7728.
Attorney for the State of Arizona
Andrew S. Gordon, Coopersmith Gordon Schermer & Brockelman PLC, 2800 
North Central Avenue, Suite 1000, Phoenix, AZ 85004, (602) 381-5460, 
Facsimile: (602) 224-6020,
Attorney for the Defendants.
Ryan Danks, United States Department of Justice, Antitrust Division.
United States of America and the State of Arizona, Plaintiffs, v. 
Arizona Hospital and Healthcare Association and AzHHA Service 
Corporation, Defendants

[Case No. CV07-1030-PHX]

Final Judgment

Exhibit A

    Whereas, Plaintiffs, United States of America and the State of 
Arizona, filed their Complaint on May 22, 2007, alleging Defendants' 
violation of Section I of the Sherman Act, 15 U.S.C. Sec.  1, and the 
State of Arizona has also alleged Defendants' violated Section 44-1402 
of Arizona's Uniform State Antitrust Act, A.R.S. Sec.  44-1402, and 
Plaintiffs and Defendants, 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 admission by Defendants, 
or any other entity, as to any issue of fact or law;
    And whereas, the essence of this Final Judgment is the prohibition 
of certain agreements on bill rates and competitively sensitive 
contract terms, and actions coordinating and supporting those 
agreements, by the Arizona Hospital and Healthcare Association, its 
subsidiary the AzHHA Service Corporation, and their participating 
member hospitals;
    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 subject matter of and the 
parties to this action. Defendants stipulate that the Complaint states 
a claim upon which relief may be granted against Defendants under 
Section I of the Sherman Act, as amended, 15 U.S.C. Sec.  1, and A.R.S. 
Sec.  44-1402.

II. Definitions

    As used in this Final Judgment,
    A. ``AzHHA'' means the Arizona Hospital and Healthcare Association, 
its successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their directors, 
officers, managers, agents, and employees.
    B. ``AzHHA Service Corporation'' means the AzHHA Service 
Corporation, its successors and assigns, and its subsidiaries, 
divisions, groups, affiliates, partnerships, and joint ventures, and 
their directors, officers, managers, agents, and employees.
    C. ``Competitively Sensitive Contract Terms'' means those 
contractual terms, and any information related to those terms, that, as 
specified in Section IV(A) of this Final Judgment, cannot be included 
in the Program Contract and must be negotiated independently between 
each Participating Hospitals and each Participating Agency.
    D. ``Defendants'' means AzHHA and the AzHHA Service Corporation, 
jointly or individually.
    E. ``Non-Participating Agencies'' means temporary staffing agencies 
that sell services to Participating Hospitals or other AzHHA members 
outside the Registry Program.
    F. ``Participating Agencies'' means temporary staffing agencies 
that sell services to Participating Hospitals through the Registry 
Program.
    G. ``Participating Hospitals'' means hospitals or hospitals systems 
that are members of AzHHA that use the Registry Program to purchase 
Temporary Nursing Personnel.
    H. ``Per Diem Registry'' means the Registry Program used by 
Participating Hospitals for the purchase of Temporary Nursing Personnel 
on an ad hoc or as needed basis, including both the Northern and 
Southern regions of the Registry Program.
    I. ``Program Contract'' means any contract used by the Defendants 
to set the terms and conditions of the contractual relationship between 
Participating Hospitals and Participating Agencies for the Per Diem 
Registry and the Travel Registry.
    J. ``Registry Program'' means the program for the purchase of 
Temporary Nursing Personnel through the Per Diem Registry or the Travel 
Registry operated by the AzHHA Service Corporation, or any such program 
operated by AzHHA or the AzHHA Service Corporation in the future.
    K. ``Temporary Nursing Personnel'' means registered nurses, 
licensed practical nurses, certified nurse assistants, operating room 
technicians, behavioral health technicians, and sitters whom offer 
their services on a temporary basis.
     ``Travel Registry'' means the Registry Program used by 
Participating Hospitals for the purchase of Temporary Nursing Personnel 
for thirteen weeks or longer.

III. Applicability

    This Final Judgment applies to AzHHA, the AzHHA Service 
Corporation, 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. The Defendants shall not include in any Program Contract any 
provision setting, prescribing, or imposing, directly or indirectly:
    1. Rates paid by Participating Hospitals to Participating Agencies, 
including the process or manner by which Participating Agencies submit, 
negotiate, or contract for rates with Participating Hospitals;
    2. A common rate structure, including shift differentials;
    3. Payment terms between Participating Hospitals and Participating 
Agencies;
    4. Any cancellation policy or penalty for cancellation by 
Participating Hospitals or Participating Agencies;
    5. The payment of bonuses by Participating Hospitals or 
Participating Agencies; or,
    6. Any requirement or encouragement of Participating Hospitals to 
give

[[Page 30839]]

priority to or deal with Participating Agencies, including any minimum 
usage requirements of Participating Hospitals or Participating 
Agencies.
    B. The Defendants shall not:
    1. Impose on, encourage, facilitate, induce, or require, directly 
or indirectly, Participating Hospitals to (a) use any Registry Program 
or Participating Agencies exclusively, or grant right of first refusal 
to any Registry Program or Participating Agencies, (b) boycott, 
exclude, refuse to deal with, or discriminate against Non-Participating 
Agencies, or (c) meet any minimum requirements for use of Participating 
Agencies, or (c) meet any minimum requirements for use of Participating 
Agencies; except that the Defendants may promote features of the 
Registry Program to Participating Hospitals, Participating Agencies, 
and other persons, provided such promotion does not include rebates or 
other financial incentives for participation;
    2. Require, encourage, or induce Participating Agencies to deal 
with Participating Hospitals through the Registry Program;
    3. Encourage, facilitate, induce, participate in, or undertake any 
understanding or agreement among AzHHA members or Participating 
Hospitals (a) to adopt the Program Contract or participate in the 
Registry Program, or (b) regarding Competitively Sensitive Contract 
Terms;
    4. Provide any rebates or other direct financial incentives to 
Participating Hospitals to encourage or increase their participation in 
the Registry Program or use of Participating Agencies, except that, if 
the Defendants change the Registry Program so that fees are paid by 
Participating Hospitals rather than by Participating Agencies, then the 
fee structure may recognize Participating Hospitals' volume of usage of 
the Register Program;
    5. Receive, gather, or collect Competitively Sensitive Contract 
Terms, except for such Competitively Sensitive Contract Terms as are 
necessary to operate the Register Program, provided access to the 
Competitively Sensitive Contract Terms obtained is restricted to those 
AzHHA employees performing ministerial tasks for the Register Program;
    6. Communicate, convey, announce, share, or disseminate to any 
AzHHA member, Participating Hospital, or Participating Agency; the 
Competitively Sensitive Contract Terms of any other AzHHA member, 
Participating Hospital Participating Agency;
    7. Select, or consider selection of, agencies for participation in 
the Registry Program, directly or indirectly, on the basis of 
Competitively Sensitive Contract Terms;
    8. Select, or consider selection of, agencies for participation in 
the Registry Program based on the amount of hours provided to 
Participating Hospitals through Registry Program before or after the 
entry of this Final Judgment, except that the Defendants may establish 
a required annual minimum volume of commerce, measured by the aggregate 
fees paid to the Defendants by a Participating Agency, which agencies 
must meet to continue their participation in the Registry Program, 
provided that those requirements are uniformly applied to all 
Participating Agencies and are based on the objective costs of 
operating the Registry Program; or,
    9. Communicate, convey, announce, share, or disseminate information 
regarding Registry Program usage by Participating Hospitals or 
Participating Agencies, except that the Defendants may tabulate and 
disseminate the total annual usage of the Registry Program by all 
Participating Hospitals.

V. Mandated Conduct

    The Final Judgment is effective upon entry, except that the 
Defendants shall have ninety days (90) days from entry to amend the 
Program Contract to comply with Section IV(A)(1)-(6) of this Final 
Judgment.

VI. Permitted Conduct

    A. Subject to Sections IV and V of this Final Judgment, the Program 
Contract may:
    1. Establish definitions of nurse types, e.g., ``specialty'' and 
``non-specialty'';
    2. Establish payment terms between the Registry Program and 
Participating Agencies, including any participation fees;
    3. Establish a credentialing program, including auditing and file 
retention requirements required of Participating Agencies;
    4. Establish requirements for personnel hired from Participating 
Agencies, including background checks, drug panel screens, and prior 
experience;
    5. Establish insurance and indemnification requirements to be met 
by Participating Agencies; and
    6. Allow Participating Hospitals and Participating Agencies to 
independently and individually negotiate and reach agreement on 
Competitively Sensitive Contract Terms.
    B. The Defendants may:
    1. Solicit information and views from Participating Hospitals about 
the Registry Program or the Program Contract, so long as the Defendants 
do so consistently with Sections IV and V of this Final Judgment, and 
do not share any Participating Hospital's information or views about 
any Competitively Sensitive Contract Terms with any other Participating 
Hospital;
    2. Establish the terms of the Program Contract, and create 
mechanisms for its administration, consistently with Sections IV, V and 
VI(A) of this Final Judgment;
    3. Meet with Participating Hospitals to choose criteria for 
selecting Participating Agencies, provided those criteria conform with 
the requirements given in Section IV(A) of this Final Judgment and the 
meetings are conducted in accordance with the prohibitions found in 
Section IV(B) of this Final Judgment;
    4. Communicate with Participating Hospitals the results of audits 
of file reviews performed on Participating Agencies; and
    5. Communicate to Participating Hospitals or Participating Agencies 
any information or message from a Participating Hospital or 
Participating Agency, provided that the communication does not 
otherwise violate Section IV of this Final Judgment.
    C. Nothing in this Final Judgment shall prohibit AzHHA or its 
members, the AzHHA Service Corporation, Participating Agencies, or 
Participating Hospitals, from advocating or discussing, in accordance 
with the doctrine established in Eastern Railroad Presidents Conference 
v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), United Mine Workers 
v. Pennington, 381 U.S. 657 (1965), and their progeny, any legislative, 
judicial, or regulatory actions, or other governmental policies or 
actions.

VII. Antitrust Compliance and Notification

    A. AzHHA shall establish an Antitrust Compliance Office, including 
appointment of an Antitrust Compliance Officer (``Antitrust Compliance 
Officer'') within thirty (30) days of entry of this Final Judgment, and 
a successor within thirty (30) days of entry of this Final Judgment, 
and a successor within thirty (30) days of a predecessor's vacating the 
appointment. Each Antitrust Compliance Officer appointed shall not have 
had previous involvement with the Registry Program prior to the entry 
of this Final Judgment.
    B. Each Antitrust Compliance Officer appointed pursuant to Section 
VII(A) shall be responsible for establishing and implementing an 
antitrust compliance program for the Defendants and ensuring the 
Defendants' compliance

[[Page 30840]]

with this Final Judgment, including the following:
    1. The Defendants shall furnish a copy of this Final Judgment (a) 
within thirty (30) days of entry of this Final Judgment to each of 
Defendants' directors and officers, and each employee of the Defendants 
who is involved in the Registry Program, and (b) within thirty (30) 
days of their appointment to each person who succeeds to any such 
position.
    2. Within thirty (30) days of furnishing a copy of this Final 
Judgment to any person pursuant to Section VII(B)(1), the Defendants 
shall obtain from such person a signed certification that the person 
has read, understands, and agrees to comply with the provisions of this 
Final Judgment, to the best of his/her knowledge at the time the 
certification is made is not aware of any violations of this Final 
Judgment by Defendants that has not already been reported to the 
Antitrust Compliance Officer, and understands that failure to comply 
with this Final Judgment may result in conviction for criminal contempt 
of court.
    3. Upon learning of any potential violation of any provision of 
this Final Judgment, the Antitrust Compliance Officer shall forthwith 
take appropriate action to terminate or modify the activity so as to 
comply with this Final Judgment. Any such action shall be reported in 
the annual compliance report required by Section VII(B)(4) of this 
Final Judgment.
    4. For each year during the term of this Final Judgment, on or 
before the anniversary date of this Final Judgment, the Antitrust 
Compliance Officer shall file with the Plaintiffs a report as to the 
fact and manner of its compliance with the provisions of this Final 
Judgment.
    5. The defendants shall furnish a copy of this Final Judgment to 
each current Participating Hospital and current Participating Agency, 
and shall in the future furnish a copy of this Final Judgment to new 
Participating Hospitals or Participating Agencies within thirty (30) 
days of their agreement to the Program Contract. The Defendants shall 
require all Participating Hospitals to furnish a copy of this Final 
Judgment to managerial employees involved in hiring or contracting 
Temporary Nursing Personnel within thirty (30) days of entry of this 
Final Judgment or of succeeding to the position. Within forty-five (45) 
days of entry of this Final Judgment, the Defendants shall require each 
Participating Hospital to certify that it has received copy of this 
Final Judgment and has furnished a copy of this Final Judgment to 
managerial employees then involved in temporary nurse hiring or 
contracting.

VIII. Compliance Inspection

    A. For purposes of determining or securing compliance with this 
Final Judgment, or of determining whether this Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time authorized representatives of the Plaintiffs, 
including consultants and other persons retained by the United States 
or the State of Arizona, shall, upon written request of an authorized 
representative of the Assistant Attorney General in charge of the 
Antitrust Division, or the Attorney General of the State of Arizona, 
and on reasonable notice to the Defendants be permitted:
    1. Access during the Defendants' office hours to inspect and copy, 
or at the option of the Plaintiffs, to require the Defendants to 
provide copies of all documents, as defined by Rule 34 of the Federal 
Rules of Civil Procedure, in the possession, custody, or control of the 
Defendants, relating to any matters contained in this Final Judgment; 
and
    2. To interview, either informally or on the record, the 
Defendants' officers, employees, agents, or other representatives, who 
may have their individual counsel present, regarding such matters. Any 
interview shall be subject to the reasonable convenience of the 
interviewee and without restraint or interference by the Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the antitrust Division, or the 
Attorney General of the State of Arizona, the Defendants 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 the United States 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. No information or documents obtained by the means provided in 
this section shall be divulged by the State of Arizona to any person 
other than an authorized representative of the executive branch of the 
State of Arizona, except in the course of legal proceedings to which 
the State of Arizona is a party (including grand jury proceedings), or 
for the purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    E. When information or documents are furnished by the Defendants to 
the Plaintiffs, if the Defendants represent and identify 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 the Defendants mark 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 Plaintiffs shall give 
Defendants ten (10) calendar days notice prior to divulging such 
material in any legal proceeding other than a grand jury proceeding.

IX. 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 this provisions.

X. Term

    This Final Judgment shall expire ten (10) years after the date of 
its entry.

XI. Public Interest Determination

    The parties have complied with the requirements of the Antitrust 
Procedures and Penalties Act, 15 U.S.C. Sec.  16, including making 
copies available to the public of this Final Judgment, the Competitive 
Impact Statement, and any comments thereon and the United States' 
response to comments. Based upon the record before this Court, which 
includes the Competitive Impact Statement and any comments and response 
to comments filed with this Court, entry of this Final Judgment is in 
the public interest.

Dated: --------

    Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16.

United States District Judge
Ryan Danks, Steven Kramer, Seth Grossman, Rebecca Perlmutter,
U.S. Department of Justice Antitrust Division, 1401 H Street, NW., 
Suite 4000, Washington, DC 20530, (202) 307-0001,
Attorneys for the United States.

[[Page 30841]]

United States of America and the State of Arizona, Plaintiffs, v. 
Arizona Hospital and Healthcare Association and AzHHA Service 
Corporation, Defendants.

[Case No. CV07-1030-PHX]

Competitive Impact Statement

    Plaintiff United States of America, pursuant to Section 2(b) of the 
Antitrust Procedures and Penalties Act (``APPA''), 15 U.S.C. Sec.  
16(b)-(h), files this Competitive Impact Statement relating to the 
proposed Final Judgment submitted for entry in this civil antitrust 
proceeding. The Plaintiffs in this case lodged the proposed Final 
Judgment with this Court on May 22, 2007, for eventual entry in this 
civil antitrust proceeding, following the parties' compliance with the 
APPA, and if this Court determines, pursuant to the APPA, that the 
proposed Final Judgment is in the public interest.

I. Nature and Purpose of the Proceeding

    The United States, accompanied by the State of Arizona, filed a 
civil antitrust complaint on May 22, 2007, alleging that Defendants 
Arizona Hospital and Healthcare Association and AzHHA Service 
Corporation (collectively ``AzHHA''), by operation of their Registry 
for hospitals' purchases of temporary nursing services, violated 
Section 1 of the Sherman Act, 15 U.S.C. Sec.  1. The State of Arizona 
has also alleged that the Defendants violated Section 44-1402 of 
Arizona's Uniform State Antitrust Act, A.R.S. Sec.  44-1402. Through 
the Registry, AzHHA and participating member hospitals agreed to set 
uniform bill rates and other competitively sensitive contract terms for 
the purchase of temporary nursing services from nurse staffing 
agencies.
    The United States, the State of Arizona, and AzHHA have stipulated 
that this court may enter the proposed Final Judgment after compliance 
with the APPA. Entry of the proposed Final Judgement would terminate 
the action, except that this Court would retain jurisdiction to 
construe, modify, or enforce the provisions of the proposed Final 
Judgment and to punish violations of it.

II. Description of Events Giving Rise to the Alleged Violation

A. The Market for Temporary Nursing Services in Arizona

    Nurses providing services on a temporary basis generally fall into 
two categories, per diem nurses and travel nurses. Per diem nurses are 
local nurses who typically work on short notice to fill the immediate 
needs of nearby hospitals. Travel nurses work for hospitals for longer 
periods, usually thirteen weeks, and generally live outside Arizona. 
They usually receive short-term housing near the hospital where they 
work. Although all hospitals use temporary nursing services to cover 
needs created by illness, census fluctuations, and planned absences, 
Arizona hospitals have a particular need for temporary nursing services 
because of an annual influx of wintertime tourists and residents into 
the state.
    Hospitals purchase temporary nursing services through nurse 
staffing agencies, which are the per diem and travel nurses' direct 
employers. A hospital will convey its needs for temporary nurse 
staffing to agencies, which in turn try to fill those needs with 
available nurses.
    Besides acting as clearinghouses, agencies recruit nurses, conduct 
background checks, maintain administrative and employment-related 
records, and compensate nurses.
    Agencies bill hospitals hourly for work done by the agencies' 
nurses. Agencies pass most of the bill rates directly to their nursing 
personnel as wages and benefits, and use the remainder for overhead and 
profit.There is a direct correlation between bill rates and nurse 
wages: when bill rates change, so do wages.

B. The Formation and Operation of the AzHHA Registry

    AzHHA started the AzHHA Registry in 1988 to help member hospitals 
impose minimum quality standards on temporary nursing personnel hired 
from nurse staffing agencies. AzHHA began with the Per Diem Registry, 
which focused on credentialing per diem nursing personnel in two 
distinct regions: Northern Arizona (for participating hospitals around 
Phoenix) and Southern Arizona (for participating hospitals around 
Tucson). The next year AzHHA began the Travel Registry, which focused 
on credentialing travel nursing personnel and worked with participating 
hospitals throughout Arizona.
    Hospitals that participate in the AzHHA Registry met once a year or 
more to discuss its operation and select which nurse staffing agencies 
would participate. In addition, AzHHA staff have talked with employees 
of participating hospitals about bill rates and other competitively 
sensitive contract terms, and shared the results of those conversations 
with employees of other hospitals. AzHHA employees sought agreement 
among participating hospitals before changing the Registry's operations 
or its contract terms.
    The Registry focused on quality-assurance and credentialing 
activities for its first ten years. It required nurse staffing agencies 
to, among other things, keep updated records of nurses' certifications, 
perform drug tests, and conduct background checks. AzHHA monitored the 
agencies' compliance through annual audits performed by AzHHA 
employees. To pay for these activities, AzHHA has charged agencies 
participating in the Per Diem Registry a fee of two percent of their 
sales to participating hospitals. (The Travel Registry has charged a 
similar fee, but allows for discounts depending on the amount of sales 
agencies make to participating hospitals.)
    Between 1988 and 1997, the AzHHA Registry allowed participating 
agencies to set their own bill rates, provided that they agreed to 
offer the same bill rates to every hospital. In 1997, with the approval 
of participating hospitals, AzHHA restructured the Per Diem Registry to 
further coordinate bill rates and other contract terms with its member 
hospitals. Under the new system, the Per Diem Registry and its 
participating hospitals agreed to require all participating agencies to 
accept the same maximum bill rate from all participating hospitals, 
which it established through an annual three-step process. First, AzHHA 
surveyed the participating agencies' desired rates and averaged their 
responses. AzHHA then forwarded those averages to the participating 
hospitals and asked what prices they were willing to pay. Finally, 
AzHHA averaged the hospitals' responses and imposed those averages as 
the new bill rates for the Per Diem Registry. In 1998, AzHHA and the 
participating hospitals extended this new pricing scheme to the Travel 
Registry.
    Between 1998 and 2005, AzHHA attempted to keep participating 
hospitals and participating agencies from negotiating deals outside the 
Registry or abandoning the Registry entirely. AzHHA always required 
participating hospitals to try to purchase nursing services first from 
participating agencies, and deal with other agencies only after 
participating agencies failed to meet their needs. But this requirement 
did not stop some participating hospitals from reaching agreements with 
agencies outside the Registry; and in 2002, to prevent the Registry's 
collapse, AzHHA and its participating hospitals agreed to expel any 
participating hospital that did not use the Per Diem Registry for at 
least 50 percent of its per diem nursing services needs. At the 
participating hospitals' request, AzHHA monitored compliance

[[Page 30842]]

with this rule, including gathering and distributing reports detailing 
each member hospital's usage. These reports revealed that after 2002 
participating hospitals purchased 70 percent of their per diem nursing 
needs through the Per Diem Registry.
    AzHHA's member hospitals may choose to participate in the Per Diem 
Registry, the Travel Registry, or both. Over time, more hospitals 
joined the AzHHA Registry: By 2005, 65 hospitals participated in either 
the Travel or Per Diem Registry, or both. The hospitals participating 
in the Per Diem Registry that year controlled about 80 percent of the 
hospital beds in the Phoenix area and about 84 percent of the hospital 
beds in the Tucson Area. Hospitals participating in the Travel Registry 
that year controlled about 78 percent of hospital beds statewide. 
Through the Per Diem Registry, hospitals purchased about 850,000 
nursing hours annually, totaling approximately $43 million; through the 
Travel Registry, hospitals purchased about 2.3 million nursing hours 
annually, totaling approximately $116 million.
    In 2005, after AzHHA and participating hospitals imposed new bill 
rate structures on agencies participating in the Per Diem Registry, 
including reduced overtime and weekend shift pay, many of the largest 
participating agencies left the Per Diem Registry. Finally, in 2006, 
while under investigation by the United States and the State of 
Arizona, and facing a private antitrust lawsuit, AzHHA returned the Per 
Diem Registry to its pre-1997 pricing model. To date, AzHHA has not 
revised the Travel Registry's pricing model. The Per Diem Registry's 
current pricing system, like the one in effect until 1997, has allowed 
some price comeptition among agencies, but it still has reduced price 
competition among participating hospitals purchasing temporary nursing 
services.

C. The Relevant Markets for Temporary Nursing Personnel

    ``Per diem nursing'' is a relevant service market. Per diem work 
offered to nurses by nurse staffing agencies is distinct from work 
offered directly to nurses by hospitals. Because of the distinctive 
appeal of per diem work, when the Per Diem Registry caused bill rates 
to be lower, per diem nurses in Phoenix and tucson accepted the 
resulting stagnant or lower wages and did not switch to other types of 
work in sufficient quantities to render such a reduction in wages 
unprofitable.
    There are at least two relevant geographic markets for per diem 
nursing services in Arizona. Phoenix and Tucson are the center of two 
separate geographic markets for per diem nursing services because 
nurses selling per diem services are commonly hired on short notice, 
for one or perhaps several days of work, and so will not commute more 
than about 75 miles.
    ``Travel nursing'' is a relevant service market. Travel work 
offered to nurses is distinct from all other types of work available. 
Because of the distinctive nature of travel work, when the Travel 
Registry caused bill rates to be lower, travel nurses in Arizona 
accepted the resulting stagnant or lower wages and did not switch to 
other types of work in sufficient quantities to render such a reduction 
in wages unprofitable.
    Arizona is the relevant geographic market for travel nursing 
services. Travel nurse agencies have not been able to defeat AzHHA's 
collectively imposed bill rates because of the number of travel nurses 
who strongly prefer Arizona hospitals, whether due to climate, location 
of friends and family, previous work experience, or other factors. In 
addition, Arizona, unlike the two other states with the largest demand 
for travel nurses, California and Florida, is a member of a multistate 
nurse licensing compact. This compact allows nurses licensed in compact 
states to accept a thirteen week assignment in Arizona without the 
licensure hurdles imposed by California and Florida. Travel nurse 
agencies incur lower margins to contract with participating hospitals 
through the Travel Registry, and have not been able to steer travel 
nurses to other states in sufficient numbers to defeat AzHHA's 
collectively imposed bill rates. One of the nation's largest travel 
nurse agencies left the Travel Registry in 1998, but was unable over 
the following two years to redirect sufficient numbers of nurses to 
assignments outside Arizona to sustain the withdrawal.

D. The Competitive Effects of the AzHHA Registry

    Because most Arizona hospitals participated in the AzHHA Registry, 
it has been able, by acting collectively, to exercise market power in 
both the per diem and travel nurse markets. The Per Diem Registry has 
accounted for about 70 percent of participating hospitals' purchases of 
per diem nursing services, and the Travel Registry has accounted for 
about 90 percent of travel nurse agency sales of travel nursing 
services to hospitals in Arizona. The Registry and its participating 
hospitals have imposed on nurse staffing agencies contract terms, 
including but not limited to lower bill rates, that those agencies 
would otherwise have been able to successfully resist.
    AzHHA has lowered bill rates for temporary nursing services below 
competitive levels and allowed participating hospitals to impose lower 
bill rates on participating agencies than the hospitals would have been 
able to negotiate on their own. AzHHA has recognized and promoted these 
reduced bill rates as a benefit of participating in the Registry. 
Participating hospitals have recognized and viewed these reduced bill 
rates as a reason to join or stay in the Registry, in addition to the 
benefits they claim to receive from the Registry's quality-assurance 
process. As an immediate consequence of reducing bill rates below the 
competitive level, AzHHA has also caused the wages paid to temporary 
nurses to decrease below competitive levels.
    AzHHA has enforced participation in the price-setting function of 
the Registry. It tried initially to do so through its ``first use'' 
policy, which required participating hospitals to deal with 
participating agencies before non-participating ones. This met with 
limited success, but ultimately proved inadequate to restrain some 
participating hospitals' purchases outside the Per Diem Registry. As a 
result, the Registry then adopted a rule that each participating 
hospital had to use the Per Diem Registry for at least 50 percent of 
its per diem nurse purchases. Thus, hospitals cannot freely make 
additional purchases outside the Registry because they must maintain a 
50-percent usage rate--for every purchase outside the Registry they 
must make another purchase within it. Finally, AzHHA expels hospitals 
that fail to meet and maintain the 50-percent usage level, thus 
depriving the hospitals of access to the reduced rates negotiated with 
the agencies and also of participation in the Registry's quality-
assurance process, which the hospitals assert they value. Two years 
after one of the nation's largest travel nurse agencies left the Travel 
Registry in 1998, it rejoined the Travel Registry when it found that it 
lost significant market share in Arizona and was hurt in its national 
efforts to recruit travel nurses because it could not offer sufficient 
opportunities for those nurses to work in Arizona.
    The absence of efficiencies corroborates the anticompetitive nature 
of this suppression of bill rates for temporary nursing services. 
``Volume discounts'' do not explain the lower prices the AzHHA Registry 
has commanded because it has not created any substantial volume-related 
efficiencies that allow agencies to

[[Page 30843]]

significantly reduce their per unit (or per nurse-hour) costs. 
Participating agencies have not generated significant cost savings 
related to the volume of services they have provided through the 
Registry.
    Nor do the efficiencies AzHHA has claimed for the AzHHA Registry 
generally explain or justify the rate reductions it has imposed on 
agencies. To the extent there are savings from negotiating and 
administering contract terms that are not competitively sensitive, such 
savings are minor. Moreover, any savings agencies have accrued from 
their participation in AzHHA's quality-assurance process do not justify 
the anticompetitive rate agreements: AzHHA's operations in both the Per 
Diem and Travel Registry before 1997, and the Per Diem Registry since 
November 2006, have demonstrated that agreements on competitively 
sensitive terms, including bill rates, are not reasonably necessary for 
AzHHA, participating hospitals, or participating agencies to create 
quality assurance savings. In addition to evidence showing that these 
various specific efficiencies do not justify the reduction in bill 
rates, there is generally no evidence of any increase in the 
availability of temporary nurse services in the relevant markets as a 
result of the Registry. All relevant evidence has pointed in the 
opposite direction.
    In short, the cost savings accruing to participating agencies have 
not accounted for the reduction in bill rates imposed by the concerted 
action of the Registry and its participating hospitals, nor for the 
reduction in the wages paid to temporary nurses.

E. The Antitrust Laws Apply to Agreements Among Buyers

    Buyers as well as sellers may violate the antitrust laws. 
``Conceptually, monopsony power is the mirror image of monopoly 
power.'' Department of Justice Antitrust Division & Federal Trade 
Commission, Improving Health Care: A Dose of Competition, ch. 6, at 13 
(2004). As Judge Posner has explained, ``[j]ust as a sellers' cartel 
enables the charging of monopoly prices, a buyers' cartel enables the 
charging of monopsony prices; and monopoly and monopsony are 
symmetrical distortions of competition from an economic standpoint.'' 
Vogel v. American Soc. of Appraisers, 744 F.2d 598, 601 (7th Cir. 
1984). And as the Supreme Court has recently recognized, similar legal 
standards apply to these same basic economic principles. Weyerhaeuser 
Co. v. Ross-Simmons Hardwood Lumber Co., 549 U.S. --, 127 S.Ct. 1069, 
1076 (2007) (noting the ``close theoretical connection between monopoly 
and monopsony'' and that ``[t]he kinship between monopoly and monopsony 
suggests that similar legal standards should apply to claims of 
monopolization and to claims of monopsonization''); see also North 
Jackson Pharmacy, Inc. v. Caremark RX, Inc., 385 F. Supp. 2d 740, 747 
(N.D. III. 2005); Blair & Harrison, Antitrust Policy and Monopsony, 76 
Cornell Law Rev. 297, 300 (1991).
    The Supreme Court has also recognized that agreements among buyers 
do not necessarily violate the antitrust laws, and, in some cases, they 
may promote consumer welfare. In Northwest Wholesale Stationers, in the 
context of reviewing a non-price agreement among buyers, the Court 
recognized that the agreement could help create economies of scale in 
purchasing and logistics, and help smaller buyers compete more 
effectively with larger stores by ensuring access to inventory that 
otherwise might not be available when it was needed Northwest Wholesale 
Stationers, Inc. v. Pacific Stationery and Printing Co., 472 U.S. 284, 
295 (1985).
    Some group purchasing agreements may lower the price participating 
buyers pay for goods and services without creating deadweight losses. 
For example, the purchasing agreement may guarantee a specific volume 
of purchases that allows sellers to realize economies of scale and 
lower their average cost of production. Because the sellers' costs are 
lower, they can accept a lower price from the buyers taking part in the 
group purchasing agreement without reducing production. Thus both the 
buyers and sellers may benefit from the buyers' agreement, or at least 
be no wore off than they were previously. Cf. Broadcast Music, Inc. v. 
Columbia Broadcasting System, Inc., 441 U.S. 1, 21 (1979) (noting that 
the substantially lowered costs created by blanket licensing is 
``potentially beneficial to both buyers and sellers''); see also Blair 
& Harrison, Public Policy: Cooperative Buying, Monopsony Power, and 
Antitrust Policy, 86 Nw. U. Law Rev. 331, 338 (1992) (concluding that 
both buyers and sellers should benefit from an efficiency-enhancing 
buying cooperative).
    On the other hand, a buyers' cartel forces sellers to accept prices 
below that those sellers would receive in a competitive market, or are 
otherwise not explained by sellers' efficiencies, because the cartel 
members collectively exercise market power. See, e.g., Telcor 
Communications, Inc. v. Southwestern Bell Telephone Co., 305 F.3d 1124, 
11347-36 (10th Cir. 2002). Just as the collective exercise of seller-
side market power absent sufficient countervailing efficiencies will 
violate section 1 of the Sherman Act, the Act prohibits the collective 
exercise of buyer-side monopsony power.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment will prohibit AzHHA and persons with 
notice of the Final Judgment acting in concert with AzHHA, including 
hospitals, from reaching agreement on bill rates and other 
competitively sensitive contract terms. It will also prohibit AzHHA and 
such persons acting in concert with AzHHA from boycotting, 
discriminating against, or excluding hospitals or agencies that choose 
not to participate in the Registry, or from boycotting or 
discriminating against hospitals based on the extent of their 
participation in the Registry. While accomplishing these goals, the 
proposed Final Judgment will allow AzHHA to continue is quality-
assurance activities.
    Sections III-VII of the proposed Final Judgment prescribe what 
conduct by AzHHA and others is prohibited, and what is permitted.
    Section III applies the proposed Final Judgment, when entered, to 
AzHHA and the AzHHA Service Corporation. The language found in Section 
III tracks that found in Federal Rule of Civil Procedure 65(d), which 
governs the scope of injunctions entered by this Court. It confirms 
that the applicability of the proposed Final Judgment extends to the 
limits of this Court's jurisdiction, and includes in its reach any 
person or company not a party, with notice of the Final Judgement, who 
acts in concert with AzHHA to violate the terms of the proposed Final 
Judgment.
    Section IV(A) prohibits AzHHA from including in the Registry 
contracts any competitively sensitive contract terms, including those 
relating to bill rates, rate structures, payment terms between 
hospitals and agencies, cancellation policies, bonuses paid to nurses, 
and ``first use'' policies. These prohibitions will prevent AzHHA and 
its participating hospitals from jointly negotiating bill rates or 
other competitively sensitive contract terms.
    Section IV(B) prohibits AzHHA and those acting in concert with 
AzHHA from circumventing the proposed Final Judgment, engaging in other 
anticompetitive activity, or exercising market power through the 
Registry. Section IV(B) prohibits exclusionary behavior or boycotts and 
stops AzHHA from establishing minimum usage levels for the Registry. It 
also prohibits AzHHA from collecting competitively sensitive

[[Page 30844]]

information, except to the extent that such information is required to 
operate the Registry, and flatly prohibits AzHHA from sharing a 
Registry participant's competitively sensitive information with any 
hospital, agency, or other third party. Finally, Section IV(B) requires 
that AzHHA select participating agencies on the basis of their 
compliance with the quality assurance activities and not on the basis 
of any competitively sensitive information, like bill rates.
    Section V requires AzHHA to comply with the proposed Final Judgment 
upon entry by this Court, except for Section IV(A)(1)-(6). The proposed 
Final Judgment grants AzHHA ninety (90) days from entry of the proposed 
Final Judgment to comply with Section IV(A)(1)-(6) by amending the 
Registry's contract to remove competitively sensitive contract terms. 
The 90-day setback will allow AzHHA to make an orderly transition to a 
compliant contracting system while still enabling relief much more 
reliably, quickly, and inexpensively than would result from litigation.
    Section IV of the proposed Final Judgment clarifies the scope of 
the prohibitions in Sections IV and V by identifying specified 
activities that those sections do not prohibit. Section VI(A) lists 
terms that AzHHA may include in the Registry contracts, and Section 
VI(B) describes actions AzHHA may take to operate the Registry. Section 
VI(A) and (B) are not intended to be exclusive lists of actions 
permitted to AzHHA.
    Section VII of the proposed Final Judgment establishes an antitrust 
compliance and notification scheme. It requires AzHHA to appoint an 
Antitrust Compliance Officer, and ensure that AzHHA's officers and 
employees, as well as participating hospitals and agencies, receive 
copies of the proposed Final Judgment after it has been entered.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act (15 U.S.C. Sec.  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 the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act (15 U.S.C. 
Sec.  16(a)), the proposed Final Judgment has no prima facie effect in 
any subsequent private lawsuit that may be brought against the 
Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States, the State of Arizona, and Defendants have 
stipulated that the proposed Final Judgment may be entered by this 
Court after compliance with the provisions of the APPA, provided that 
the United States has not withdrawn its consent. The APPA conditions 
entry upon this Court's determination that the proposed Final Judgment 
is in the public interest.
    The APPA provides a period of at least sixty (60) 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 Impact 
Statement in the Federal Register, or the last date of publication in a 
newspaper of the summary of this Competitive Impace Statement, 
whichever is later. 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 this 
Court's entry of judgment. The comments and the United States' response 
to them will be filed with this Court and published in the Federal 
Register.
    Written comments should be submitted to: Joseph M. Miller, Acting 
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 this Court retains 
jurisdiction over this action, and the parties may apply to this 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 continuing investigation and potential full trial on 
the merits. The United States could also have sought preliminary and 
permanent injunctions against the operation of the entire Registry. The 
United States is satisfied, however, that the prohibitions and 
requirements required by the proposed Final Judgment will reestablish 
competition in the markets for temporary nursing services.
    The United States also considered, as an alternative to the 
proposed Final Judgment, continuing the investigation and naming the 
participating hospitals as defendants. The United States is satisfied, 
however, that the proposed Final Judgment, including Section III, will 
adequately reestablish competition in the relevant markets for 
temporary nursing services.
    The United States also considered requiring the Defendants comply 
with Section IV(A) of the proposed Final Judgment within sixty (60) 
days. Ultimately, the United States concluded that it was reasonable to 
allow the Defendants 90 days to make an orderly transition to a new 
Program Contract, and that giving immediate effect to the prohibitions 
on cartel maintenance found in Section IV(B) was adequate immediate 
relief.
    Entry of the proposed Final Judgment will avoid the time, expense, 
and uncertainty of litigation or a full trial on the merits.

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 60-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. Sec.  
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. Sec.  16(e)(1)(A) & (B). In 2004, Congress amended the APPA 
to ensure that courts take into account the above-quoted list of 
relevant factors when making a public interest determination. Compare 
15 U.S.C. Sec.  16(e) (2004) with 15 U.S.C. Sec.  16(e)(1) (2006) 
(substituting ``shall'' for ``may'' in directing relevant factors for 
court to consider and amending list of factors to focus on competitive 
considerations and to address potentially ambiguous judgment

[[Page 30845]]

terms). On the points next discussed, the 2004 amendments did not alter 
the substance of the Tunney Act, and the pre-2004 precedents cited 
below remain applicable.
    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, 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).
    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 balancing 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); 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''); United States v. Gillette Co., 406 F. Supp. 713, 716 (D. 
Mass. 1975) (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' ''). In making its 
public interest determination, a district court must accord due respect 
to the government's prediction as to the effect of proposed remedies, 
its perception of the market structure, and its views of the nature of 
the case. United States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 
1, 6 (D.D.C. 2003).
    Court approval of a final judgment requries 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. Am. Tel. & Tel. Co., 552 F. Supp. 
131, 151 (D.D.C. 1982) (citations omitted) (quoting United States v. 
Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), 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, and 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.
    In its 2004 amendments to the Tunney Act, Congress made clear its 
intent to preserve the practical benefits of utilizing consent decrees 
in antitrust enforcement, adding the unambiguous instruction 
``[n]othing 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. Sec.  16(e)(2). This language codified the 
intent of the original 1974 statute, expressed by Senator Tunney in the 
legislative history: ``[t]he court is nowhere compelled to go to trail 
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). Rather:

[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); see also United States v. 
SBC Commc'ns, Inc., Nos. 05-2102 and 05-2103, 2007 WL 1020746, at *9 
(D.D.C. Mar. 29, 2007) (confirming that 2004 amendments to the APPA 
``effected minimal changes[ ] and that th[e] Court's scope of review 
remains sharply proscribed by precedent and the nature of [APPA] 
proceedings.'').

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

    Dated: May 22, 2007.

     Respectfully submitted,
Ryan Danks,
Steven Kramer,
Seth Grossman,
Rebecca Perlmutter,
Attorneys, Litigation I Section,
United States Department of Justice, Antitrust Division, 1401 H 
Street, NW., Suite 4000, Washington, DC 20530, (202) 307-0001.
Certificate of Service
    I hereby certify that on May 22, 2007, I electronically transmitted 
the attached document to the Clerk's Office using the CM/ECF System for 
filing and transmittal of a Notice of Electronic Filing to the 
following CM/ECF registrants:

Nancy Bonnell, Antitrust Unit Chief, ID #016382, Consumer Protection 
and Advocacy Section, Department of Law Building, Room #259, 1275 
West Washington Street, Phoenix, AZ 85007-2997, (602) 542-7728, 
Attorney for the State of Arizona.
Andrew S. Gordon, Coppersmith Gordon Schermer & Brockelman PLC, 2800 
North Central Avenue, Suite 1000, Phoenix, AZ 85004, (602) 381-5460, 
Facsimile: (602) 224-6020, Attorney for the Defendants.

Ryan Danks,
United States Department of Justice, Antitrust Division.
[FR Doc. 07-2686 Filed 6-1-07; 8:45 am]
BILLING CODE 4410-11-M