[Federal Register Volume 76, Number 222 (Thursday, November 17, 2011)]
[Notices]
[Pages 71355-71369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-29656]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States et al. v. Blue Cross and Blue Shield of Montana, 
Inc. 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. 16(b)-(h), that a proposed Final Judgment and 
Competitive Impact Statement have been filed with the United States 
District Court for the District of Montana, Billings Division, in 
United States et al. v. Blue Cross and Blue Shield of Montana, Inc. et 
al., Civil Action No. 1:11-cv-00123. On November 8, 2011, the United 
States and the State of Montana filed a Complaint challenging an 
agreement between Blue Cross and five of the six hospital owners of New 
West Health Services, Inc., a competing insurer, to purchase health 
insurance from Blue Cross exclusively for six years. The hospital 
defendants are Billings Clinic, Bozeman Deaconess Health Services, 
Inc., Community Medical Center, Inc., Northern Montana Health Care, 
Inc., and St. Peter's Hospital. The Complaint alleges that the 
agreement unreasonably restrains trade in the sale of commercial health 
insurance in Billings, Bozeman, Helena, and Missoula, Montana, in 
violation of Section 1 of the Sherman Act, 15 U.S.C. 1, and that the 
agreement substantially lessens competition in the sale of commercial 
health insurance in those same areas, and will likely continue to do 
so, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18 and the 
Montana Unfair Trade Practices Act, Mont. Code Ann. Sec.  30-14-205.
    A Competitive Impact Statement filed by the United States describes 
the Complaint, the proposed Final Judgment, the industry, and the 
remedies available to private litigants who may have been injured by 
the alleged violation.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth 
Street NW., Suite 1010, Washington, DC 20530 (telephone: (202) 514-
2481), on the Department of Justice's Web site at http://www.usdoj.gov/atr, and at the Office of the Clerk of the United States District Court 
for the District of Montana, Billings Division. Copies of these 
materials may be obtained from the Antitrust Division upon request and 
payment of the copying fee set by Department of Justice regulations.
    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 Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, 
U.S. Department of Justice, 450 Fifth Street NW., Suite 4100, 
Washington, DC 20530 (telephone: (202) 307-0827).

Patricia A. Brink,
Director of Civil Enforcement.

In the United States District Court for the District of Montana 
Billings Division

    United States of America and State of Montana, Plaintiffs, v. Blue 
Cross and Blue Shield of Montana, Inc., Billings Clinic, Bozeman 
Deaconess Health Services, Inc., Community Medical Center, Inc., New 
West Health Services, Inc., Northern Montana Health Care, Inc., and St. 
Peter's Hospital, Defendants.


Case No. 1:11-cv-00123-RFC

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, and the State of Montana, acting 
under the direction of the Montana Attorney General, bring this civil 
antitrust action to enjoin an anticompetitive agreement (the 
``Agreement'') between defendant Blue Cross and Blue Shield of Montana, 
Inc. (``Blue Cross'') and defendants Billings Clinic; Bozeman Deaconess 
Health Services, Inc.; Community Medical Center, Inc.; Northern Montana 
Health Care, Inc.; and St. Peter's Hospital (collectively, the 
``hospital defendants''), and to remedy the harm to competition that 
the announcement and

[[Page 71356]]

formation of the Agreement have caused and will likely continue to 
cause.
    The hospital defendants are five of the six hospitals that own 
defendant New West Health Services, Inc. (``New West''), a health-
insurance company that has vigorously and effectively competed against 
Blue Cross to provide commercial health insurance to Montana consumers. 
In the Agreement, Blue Cross agreed to pay $26.3 million to the 
hospital defendants in exchange for their agreeing to collectively stop 
purchasing health insurance for their own employees from New West and 
instead buy insurance for their employees from Blue Cross exclusively 
for six years. Blue Cross also agreed to provide the hospital 
defendants with two seats on Blue Cross's board of directors if the 
hospitals do not compete with Blue Cross in the sale of commercial 
health insurance.
    The Agreement will likely cause New West to exit the markets for 
commercial health insurance, eliminating an important competitor to 
Blue Cross and ultimately leading to higher prices and lower-quality 
service for consumers. Consequently, the Agreement unreasonably 
restrains trade in the sale of commercial health insurance in Billings, 
Bozeman, Helena, and Missoula, Montana, in violation of Section 1 of 
the Sherman Act, 15 U.S.C. 1. The Agreement also substantially lessens 
competition in the sale of commercial health insurance in those same 
areas, and will likely continue to do so, in violation of Section 7 of 
the Clayton Act, 15 U.S.C. 18, and the Montana Unfair Trade Practices 
Act, Mont. Code Ann. Sec.  30-14-205.
    Therefore, the United States seeks temporary, preliminary, and 
permanent injunctive and other equitable relief under Section 4 of the 
Sherman Act, 15 U.S.C. 4, and Section 15 of the Clayton Act, 15 U.S.C. 
25, blocking the transaction; and the State of Montana seeks temporary, 
preliminary, and permanent injunctive and other equitable relief under 
Section 16 of the Clayton Act, 15 U.S.C. 26, blocking the transaction.
    Plaintiffs allege as follows:

I. Defendants and the Transaction

    1. Defendant Blue Cross is a nonprofit corporation based in Helena, 
Montana. Blue Cross sells a range of commercial health-insurance 
products, including preferred-provider organization (``PPO'') products, 
health-maintenance organization (``HMO'') products, indemnity products, 
and individual products, and its group products are offered on a fully-
insured and self-insured basis. In 2010, Blue Cross's annual revenues 
were approximately $530 million.
    2. For many years, Blue Cross has dominated the commercial health-
insurance markets in Montana. In the four geographic areas harmed by 
the Agreement, Blue Cross is by far the largest commercial health 
insurer, with shares ranging approximately from 43% to 75%. Blue Cross 
has market power in each of these geographic areas.
    3. The hospital defendants are each non-profit corporations 
organized under Montana law:
    a. Billings Clinic is a 370-bed hospital in Billings, Montana;
    b. Bozeman Deaconess Health Services, Inc. is an 86-bed hospital in 
Bozeman, Montana;
    c. Community Medical Center, Inc. is a 143-bed hospital in 
Missoula, Montana;
    d. Northern Montana Health Care, Inc. is a 49-bed hospital in 
Havre, Montana; and
    e. St. Peter's Hospital is a 122-bed hospital in Helena, Montana.
    4. Defendant New West is a nonprofit corporation based in Helena, 
Montana. It was formed in 1998 by four hospitals--Billings Clinic, 
Community Medical Center, Northern Montana Health Care, and St. Peter's 
Hospital--to compete directly against Blue Cross, and to challenge what 
the hospitals described as Blue Cross's ``dominating presence.'' In 
2006, two additional hospitals acquired an ownership interest in New 
West: Bozeman Deaconess (in Bozeman) and Benefis Health System (in 
Great Falls). Like Blue Cross, New West offers PPO products, HMO 
products, indemnity products, and individual products, and its group 
products are offered on a fully-insured and self-insured basis.
    5. By 2011, New West had become the third-largest commercial health 
insurer in the four geographic areas harmed by the Agreement, with 
shares ranging from approximately 7% to 12%. Over the last 13 years, 
New West has offered Montana residents a high-quality option for their 
health insurance, routinely pressuring Blue Cross to offer lower prices 
and better customer service. New West's annual revenues in 2010 were 
approximately $120 million.
    6. On or around August 1, 2011, Blue Cross and the hospital 
defendants entered into the Agreement, a letter of intent in which Blue 
Cross agreed to pay $26.3 million to the hospital defendants in 
exchange for their agreeing to collectively stop purchasing health 
insurance for their own employees from New West and instead buy 
insurance for their employees from Blue Cross exclusively for six 
years, starting January 1, 2012. (The only New West owner that did not 
sign the Agreement was Benefis Health System, which already used Blue 
Cross for its employees and had never used New West.) The hospital 
defendants collectively account for approximately 11,000 enrolled 
lives, or roughly one-third of New West's commercial health-insurance 
business at the time of the Agreement. The Agreement further requires 
that all of the hospital defendants participate for the agreement to be 
effective: if any hospital defendant withdraws, the Agreement is 
terminated. Additionally, Blue Cross agreed to install two 
representatives of the hospital defendants on Blue Cross's board of 
directors if the hospitals do not own or belong to an entity that 
competes with Blue Cross in the sale of commercial health insurance.
    7. The Agreement effectively eliminates New West as a viable 
competitor in the sale of commercial health insurance. News that none 
of New West's owners will buy health insurance for their own employees 
from New West creates a perception that New West is exiting the 
commercial health-insurance market, and will likely cause many existing 
and potential customers to stop purchasing (or decline to purchase) 
insurance from New West. The Agreement also will lead New West and its 
hospital owners to significantly reduce their support for and efforts 
to win commercial health-insurance customers, further hindering its 
ability to compete.
    8. Furthermore, because the hospital defendants agreed to act 
collectively, the Agreement ensures that New West would lose the 
support of all its owners and likely exit the market.
    9. In addition, by agreeing to install two representatives of the 
hospital defendants on Blue Cross's board of directors only if the 
hospitals did not own or belong to an entity that competes against Blue 
Cross, the Agreement further ensures that New West will lose the 
support of its owners and likely exit the market.
    10. As alleged below, by damaging and virtually eliminating New 
West as an effective competitor, the Agreement will significantly 
increase concentration in the markets for commercial health insurance 
in Montana and end the substantial head-to-head competition between 
Blue Cross and New West, likely resulting in higher insurance premiums 
and lower-quality service for Montana consumers in the affected 
markets.

[[Page 71357]]

II. Jurisdiction, Venue, and Interstate Commerce

    11. Plaintiff United States brings this action under Section 4 of 
the Sherman Act, 15 U.S.C. 4, and Section 15 of the Clayton Act, 15 
U.S.C. 25, and plaintiff State of Montana brings this action under 
Section 16 of the Clayton Act, 15 U.S.C. 26, seeking injunctive and 
other equitable relief from the defendants' violations of Section 1 of 
the Sherman Act and Section 7 of the Clayton Act, 15 U.S.C. 1 and 18; 
and Mont. Code Ann. Sec.  30-14-205.
    12. The defendants are engaged in interstate commerce and in 
activities substantially affecting interstate commerce. They sell 
insurance that covers residents when they travel across state lines; 
purchase health-care services from providers located outside of 
Montana; and receive payments from customers outside of Montana. The 
defendants also purchase health-care products and services, such as 
pharmaceuticals, in interstate commerce. Further, the availability of 
health insurance at affordable prices can attract businesses and jobs 
to a state or region, and higher health-insurance prices can affect 
interstate commerce by causing employers to exit the state. The 
Agreement, therefore, affects interstate commerce.
    13. The State of Montana brings this action on its own behalf and 
in its sovereign capacity as parens patriae on behalf of the citizens, 
general welfare, and economy of the State. The State of Montana 
purchases group health insurance for approximately 16,000 employees in 
Montana, and it purchases from only two insurers: Blue Cross and New 
West. The State is likely to be injured in its business and property as 
a result of this agreement.
    14. The Court has subject-matter jurisdiction over this action 
under Section 4 of the Sherman Act, 15 U.S.C. 4, and Section 15 of the 
Clayton Act, 15 U.S.C. 25 (as to claims by the United States); Section 
16 of the Clayton Act, 15 U.S.C. 26, and 28 U.S.C. 1367 (as to claims 
by the State of Montana); and 28 U.S.C. 1331, 1337(a), and 1345.
    15. The Court has personal jurisdiction over the defendants under 
Section 12 of the Clayton Act, 15 U.S.C. 22.
    16. Venue is proper in this District under Section 12 of the 
Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391. Each defendant is a 
corporation that transacts business and is found in this District. The 
acquisition was negotiated in substantial part in this District. 
Therefore, a substantial part of the events giving rise to plaintiffs' 
claim occurred in this District.

III. The Relevant Markets

A. Background on Commercial Health Insurance

    17. In Montana, as throughout the United States, individuals who 
are not eligible for government programs such as Medicare or Medicaid 
typically obtain health insurance from commercial health-insurance 
companies. Most employees obtain commercial health insurance through 
their employers. Commercial health insurance obtained through an 
employer or another group is known as ``group health insurance.'' 
Commercial health insurance that individuals purchase directly from an 
insurer is known as ``individual health insurance.'' In 2009, 
approximately 50% of Montana residents obtained group health insurance, 
and about 15% obtained individual health insurance from commercial 
health insurers, including Blue Cross and New West.
    18. Commercial health insurers compete to be selected by employers, 
their employees, and individuals on a number of factors, including 
price; the breadth of their health-care provider networks; out-of-
pocket costs, such as deductibles, co-payments, and coinsurance; 
customer service; and reputation. Insurers also compete by developing 
programs to improve the health of their members and reduce medical-care 
costs. For group health insurance, employers and other groups typically 
select the insurance plan or plans that they offer to their employees 
or group members, who then choose whether to enroll in the one or more 
plans offered.
    19. Group health insurance can either be ``fully-insured'' or 
``self-insured.'' Under fully-insured plans, the insurer bears the risk 
that health-care claims will exceed anticipated losses. Under self-
insured plans, the employer itself pays a large portion of medical 
costs and bears a large portion of the risk of unanticipated losses. 
Self-insurance is a viable option primarily for large employers only.

B. Relevant Product Markets

    20. The relevant product markets affected by the proposed 
transaction are (1) The sale of commercial group health insurance and 
(2) the sale of commercial individual health insurance, collectively 
referred to in this Complaint as ``commercial health insurance.'' Group 
health insurance and individual health insurance are each lines of 
commerce for purposes of analyzing the effects of the Agreement within 
the meaning of Section 7 of the Clayton Act.
(1) Group Health Insurance
    21. The sale of commercial group health insurance, including access 
to a provider network, is a relevant product market. Group health 
insurance sold in Montana usually includes access to a provider 
network, and most employers and their employees consider an insurer's 
provider network to be an important element of a health-insurance 
product because the network specifies the physicians and hospitals to 
which patients can turn for service with substantially lower costs to 
themselves.
    22. There are no reasonable alternatives to group health insurance, 
including access to a provider network, for employers or for most 
employees. Individual health insurance is typically much more expensive 
than group health insurance, in part because employer contributions to 
group health-insurance premiums are not taxable to the employee and are 
tax deductible by the employer. Virtually all individual health 
insurance is purchased by persons who do not have access to employer-
sponsored group health insurance.
    23. Furthermore, purchasing hospital services directly (i.e., 
without insurance), rather than through a commercial insurer, is 
typically prohibitively expensive and is not a viable substitute for 
group health insurance. Employers without health insurance almost never 
purchase hospital services directly from hospitals at prices comparable 
to prices paid by Blue Cross or New West.
    24. Thus, a small but significant increase in the price of group 
health insurance in the geographic markets alleged in paragraph 28 
would not cause a sufficient number of groups to switch to other 
health-insurance products such that the price increase would be 
unprofitable.
(2) Individual Health Insurance
    25. The sale of commercial individual health insurance, including 
access to a provider network, is also a relevant product market. 
Individual health insurance is the only product available to 
individuals without access to group coverage or government programs 
that allows them to (1) reduce the financial risk of adverse health 
conditions and (2) access health care at the discounted prices 
negotiated by commercial health insurers.
    26. There are no reasonable alternatives to individual health 
insurance for individuals who lack access to group health insurance or

[[Page 71358]]

government programs such as Medicare and Medicaid. As with group 
insurance, purchasing hospital services directly, rather than through a 
commercial insurer, is typically prohibitively expensive and is not a 
viable substitute for individual health insurance. Thus, a small but 
significant increase in the price of individual health insurance in the 
geographic markets alleged in paragraph 28 would not cause a sufficient 
number of individuals to switch to other health-insurance products such 
that the price increase would be unprofitable.

C. Relevant Geographic Markets

    27. The markets for commercial health insurance, including access 
to a provider network, are local. Patients typically seek medical care 
close to their homes or workplaces. As a result, consumers strongly 
prefer health-insurance plans with networks of hospitals and physicians 
that are close to their homes and workplaces.
    28. The following areas are relevant geographic markets for the 
sale of group and individual commercial health insurance:
    a. The Billings Metropolitan Statistical Area (``MSA'') 
(Yellowstone and Carbon Counties);
    b. The Bozeman Micropolitan Statistical Area (``MiSA'') (Gallatin 
County);
    c. The Helena MiSA (Lewis and Clark County and Jefferson County); 
and
    d. The Missoula MSA (Missoula County).
    29. Consumers in these areas cannot practicably turn to commercial 
health insurers that do not have a network of providers in these areas. 
Consequently, a small but significant increase in the price of 
commercial health insurance in these areas would not cause a sufficient 
number of consumers to switch to insurers outside of these areas to 
make such a price increase unprofitable. These areas are, therefore, 
the relevant geographic markets within which to assess the likely 
effects of the Agreement, and they qualify as a ``section of the 
country'' within the meaning of Section 7 of the Clayton Act.

IV. Likely Anticompetitive Effects

    30. Blue Cross and New West are two of only three significant 
competitors for the sale of commercial health insurance in Billings, 
Bozeman, Helena, and Missoula. Besides Blue Cross and New West, the 
only other significant competitor in these areas is Allegiance, which 
is owned by CIGNA.
    31. Blue Cross has market power in the sale of commercial health 
insurance in the relevant geographic areas. As the table below shows, 
Blue Cross's shares of commercial health insurance ranged from 
approximately 43% to 75% in the four relevant areas at the time the 
Agreement was signed, as measured by covered lives. New West's shares 
of commercial health insurance ranged from 7% to 12% in those four 
areas at the time the Agreement was signed.

                Commercial Health Insurance Market Share
------------------------------------------------------------------------
                                                 Blue Cross    New West
                                                 (percent)    (percent)
------------------------------------------------------------------------
Billings......................................           43            9
Missoula......................................           49            7
Bozeman.......................................           65           12
Helena........................................           75            9
------------------------------------------------------------------------

    32. The Agreement will cause Blue Cross's market share to increase 
in two ways. First, the transfer of the hospitals' accounts to Blue 
Cross will directly increase Blue Cross's market share. Second, because 
the Agreement effectively eliminates New West as a viable competitor, 
New West's remaining customers are likely to switch insurers, with most 
moving to Blue Cross because it is the market leader.
    33. Thus, using the Herfindahl-Hirschman Index (``HHI''), a measure 
of concentration commonly relied on by the courts and antitrust 
agencies to measure market concentration (defined and explained in 
Appendix A), the transaction would significantly increase 
concentration. Assuming that all of the hospital defendants' business 
transfers to Blue Cross per the terms of the Agreement and that New 
West's other commercial business is lost to the remaining competitors 
in proportion to their current shares, the HHIs would increase by 640 
in Billings to 2,290; by 1,277 in Bozeman to 5,870; by 1,100 in Helena 
to 6,900; and by 512 in Missoula to 3,690. These HHI levels far exceed 
concentration levels that many courts have found create a presumption 
that an acquisition likely would substantially lessen competition in 
violation of the Clayton Act.
    34. In addition to harming competition by substantially increasing 
concentration in the relevant markets, the Agreement is likely to harm 
consumers by eliminating the vigorous head-to-head competition between 
Blue Cross and New West. For the past several years, New West has been 
one of only two significant alternatives to Blue Cross for commercial 
health insurance in the relevant areas. Many consumers view Blue Cross 
and New West as the two most significant insurers in the relevant 
markets and each other's main competitor.
    35. Blue Cross and New West have a long history of competing 
against each other in the relevant areas to attract and retain 
customers by offering better products and services and lower prices. 
New West has competed effectively with Blue Cross because New West has 
low rates with hospitals and physicians throughout Montana, including, 
notably, its own hospitals and hospital-owned physician practices; a 
broad network of hospitals and physicians; and a strong reputation for 
high-quality customer service.
    36. Since the Agreement was announced in August 2011, many 
employers in Montana have chosen not to purchase health insurance from 
New West, likely because they were unsure whether New West would 
continue to exist. Some of those employers have already switched their 
business to Blue Cross, and many more likely will.
    37. The Agreement has eliminated and will continue to substantially 
eliminate competition between Blue Cross and New West. Without New West 
as an effective competitor, Blue Cross will likely increase prices and 
reduce the quality and service of commercial health-insurance plans to 
employers and individuals in the relevant areas.

V. Absence of Countervailing Factors

A. Entry

    38. Entry of new health insurers or expansion of existing health 
insurers is unlikely to prevent the harm to competition that the 
Agreement has caused and likely will continue to cause. Most health 
insurers that have attempted to enter or expand into the four alleged 
geographic markets in recent years have been unsuccessful.

B. Efficiencies

    39. The Agreement has not generated and likely will not generate 
verifiable, agreement-specific efficiencies sufficient to reverse or 
outweigh the anticompetitive effects that it has already caused and is 
likely to cause.

VI. Violations Alleged

Count One: Unlawful Agreement in Violation of Sherman Act Sec.  1

    40. Plaintiffs repeat and reallege the allegations of paragraphs 1 
through 39.
    41. The Agreement to enter into the transaction is a contract, 
combination, and conspiracy that unreasonably restrains interstate 
trade or commerce, in violation of Section 1 of the Sherman Act, 15 
U.S.C. 1.

[[Page 71359]]

Count Two: Unlawful Acquisition in Violation of Clayton Act Sec.  7

    42. Plaintiffs repeat and reallege the allegations of paragraphs 1 
through 39.
    43. The acquisition has substantially lessened competition in the 
sale of commercial health insurance in the relevant areas, and will 
likely continue to do so, in violation of Section 7 of the Clayton Act, 
15 U.S.C. 18, in that (1) Actual and potential competition between Blue 
Cross and New West in the alleged geographic markets has been and will 
be eliminated; and (2) competition in the alleged geographic markets 
for the sale of commercial health insurance has been and likely will 
continue to be substantially lessened.

Count Three: Unlawful Restraint of Trade in Violation of Montana Unfair 
Trade Practices Act

    44. Plaintiffs repeat and reallege the allegations of paragraphs 1 
through 39.
    45. The Agreement to enter into the transaction is an unlawful 
agreement for the purpose of regulating the production of an article of 
commerce, in violation of Mont. Code Ann. Sec.  30-14-205(1).

VII. Requested Relief

    46. Plaintiffs request that this Court:
    a. Adjudge and decree that the Agreement violates Section 1 of the 
Sherman Act, 15 U.S.C. 1; Section 7 of the Clayton Act, 15 U.S.C. 18; 
and Mont. Code Ann. Sec.  30-14-205(1);
    b. Preliminarily and permanently enjoin the defendants from 
carrying out the Agreement;
    c. Provide equitable relief sufficient to restore the competition 
lost due to the Agreement;
    d. Award plaintiffs their costs in this action; and
    e. Award plaintiffs such other relief as may be just and proper.

Dated: November 8, 2011.

Respectfully submitted,

FOR PLAINTIFF UNITED STATES OF AMERICA:

Sharis A. Pozen,
Acting Assistant Attorney General.

Leslie C. Overton,
Special Advisor.

Patricia A. Brink,
Director of Civil Enforcement.

Joshua H. Soven,
Chief, Litigation I Section.

Leif M. Johnson,
Civil Chief, Office of the U.S. Attorney, District of Montana.

Peter J. Mucchetti* (DC Bar 463202),
Assistant Chief, Litigation I Section.

Claudia H. Dulmage,
Scott I. Fitzgerald,
Barry J. Joyce,
Attorneys for the United States, U.S. Department of Justice, 
Antitrust Division, Litigation I Section, 450 Fifth Street NW., 
Suite 4100, Washington, DC 20530, Tel.: (202) 353-4211, Fax: (202) 
307-5802.

*Attorney of Record.

FOR PLAINTIFF STATE OF MONTANA:

Steve Bullock,
Attorney General of Montana.

James P. Molloy,
Chief of Consumer Protection.

Chuck Munson,
Assistant Attorney General, 215 N. Sanders, P.O. Box 201401, Helena, 
MT 59620, Tel.: (406) 444-2026.

Certificate of Service

    I hereby certify that, on November 8, 2011, a copy of the 
foregoing document was served on the following persons by the 
following means:
1 CM/ECF
---- Hand Delivery
---- U.S. Mail
---- Overnight Delivery Service
---- Fax
2.3 E-Mail
    1. Clerk, U.S. District Court.
    2. Counsel for Defendant Blue Cross and Blue Shield of Montana: 
David C. Lundsgaard, Graham & Dunn PC, Pier 70, 2801 Alaskan Way 
Suite 300, Seattle, WA 98121-1128. [email protected].
    3. Counsel for Billings Clinic; Bozeman Deaconess Health 
Services, Inc.; Community Medical Center, Inc.; New West Health 
Services, Inc.; Northern Montana Health Care, Inc.; and St. Peter's 
Hospital: Kevin P. Heaney, Crowley Fleck PLLP, Transwestern Plaza 
II, 490 N. 31st St., Suite 500, Billings, MT 59101. 
[email protected].

Peter J. Mucchetti,
Antitrust Division, U.S. Department of Justice, 450 Fifth Street 
NW., Suite 4100, Washington, DC 20530. Tel.: (202) 353-4211. 
[email protected].

In the United States District Court for the District of Montana 
Billings Division

    United States of America and State of Montana, Plaintiffs, v. Blue 
Cross and Blue Shield of Montana, Inc., Billings Clinic, Bozeman 
Deaconess Health Services, Inc., Community Medical Center, Inc., New 
West Health Services, Inc., Northern Montana Health Care, Inc., and St. 
Peter's Hospital, Defendants.

Case No.1:11-cv-00123-RFC

Competitive Impact Statement

    Plaintiff United States of America (``United States''), pursuant to 
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or 
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact 
Statement relating to the proposed Final Judgment submitted for entry 
in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On November 8, 2011, the United States and the State of Montana 
filed a civil antitrust lawsuit challenging an agreement (the 
``Agreement'') between defendant Blue Cross and Blue Shield of Montana, 
Inc. (``Blue Cross'') and defendants Billings Clinic; Bozeman Deaconess 
Health Services, Inc.; Community Medical Center, Inc.; Northern Montana 
Health Care, Inc.; and St. Peter's Hospital (collectively, the 
``hospital defendants'').
    The hospital defendants are five of the six hospitals that own 
defendant New West Health Services, Inc. (``New West''), a health 
insurer that competes against Blue Cross to provide commercial health 
insurance to Montana consumers. In the Agreement, Blue Cross agreed to 
pay $26.3 million to the hospital defendants in exchange for their 
agreeing to collectively stop purchasing health insurance for their own 
employees from New West and instead buy insurance for their employees 
from Blue Cross exclusively for six years. Blue Cross also agreed to 
provide the hospital defendants with two seats on Blue Cross's board of 
directors if the hospitals do not compete with Blue Cross in the sale 
of commercial health insurance.
    The Complaint alleges that the Agreement will likely cause New West 
to exit the markets for commercial health insurance, eliminating an 
important competitor to Blue Cross and ultimately leading to higher 
prices and lower-quality service for consumers. Consequently, the 
Complaint alleges that the Agreement unreasonably restrains trade in 
the sale of commercial health insurance within Montana in the Billings 
Metropolitan Statistical Area (``MSA''), Bozeman Micropolitan 
Statistical Area (``MiSA''), Helena MiSA, and Missoula MSA, in 
violation of Section 1 of the Sherman Act, 15 U.S.C. 1; and that the 
Agreement has substantially lessened competition in the sale of 
commercial health insurance in those same areas, and will likely 
continue to do so, in violation of Section 7 of the Clayton Act, 15 
U.S.C. 18, and the Montana Unfair Trade Practices Act, Mont. Code Ann. 
Sec.  30-14-205.
    With the Complaint, the United States and the State of Montana 
filed an Asset Preservation Stipulation and Order and proposed Final 
Judgment which are designed to eliminate the anticompetitive effects of 
the Agreement. The proposed Final Judgment, which is explained more 
fully below, would permit Blue Cross and the hospital defendants to 
proceed

[[Page 71360]]

with the Agreement but would require the divestiture of New West's 
commercial health-insurance business (the ``Divestiture Assets'') and 
other injunctive relief sufficient to preserve competition in the sale 
of commercial health insurance in Billings, Bozeman, Helena, and 
Missoula.
    Until the divestiture has been accomplished, the Asset Preservation 
Stipulation and Order requires New West and the hospital defendants to 
take all steps necessary to ensure that New West's commercial health-
insurance business will be maintained and operated as an ongoing, 
economically viable, and active line of business; that competition 
between New West and Blue Cross in the sale of commercial health 
insurance is maintained during the pendency of the ordered divestiture; 
and that New West and the hospital defendants preserve and maintain the 
Divestiture Assets. The Asset Preservation Stipulation and Order thus 
ensures that that competition is protected pending completion of the 
required divestiture and that the assets are preserved so that relief 
will be effective.
    The United States, the State of Montana, and the defendants have 
stipulated that the proposed Final Judgment may be entered after 
compliance with the APPA, unless the United States withdraws its 
consent. Entry of the proposed Final Judgment would terminate this 
action, except that the Court would retain jurisdiction to construe, 
modify, or enforce the provisions of the proposed Final Judgment and to 
punish violations thereof.

II. Events Giving Rise to the Alleged Violation

A. The Defendants and the Agreement

    Blue Cross is a nonprofit corporation based in Helena, Montana. It 
sells a range of commercial health-insurance products, including PPOs, 
HMOs, indemnity products, and individual products, and its group 
products are offered on a fully-insured and self-insured basis. (Under 
fully-insured plans, the insurer bears the risk that health-care claims 
will exceed anticipated losses; under self-insured plans, the employer 
itself pays a large portion of medical costs and bears a large portion 
of the risk of unanticipated losses.) In 2010, Blue Cross's annual 
revenues were approximately $530 million. For many years, Blue Cross 
has dominated the commercial health-insurance markets in Montana.
    New West is a nonprofit corporation, also based in Helena. Four of 
the hospital defendants--Billings Clinic, Community Medical Center, 
Northern Montana Health Care, and St. Peter's Hospital--formed New West 
in 1998 to compete directly against Blue Cross. In 2006, two additional 
hospitals acquired an ownership interest in New West: defendant Bozeman 
Deaconess and Benefis Health System (in Great Falls). Like Blue Cross, 
New West offers PPO products, HMO products, indemnity products, and 
individual products, and its group products are offered on a fully-
insured and self-insured basis. As the Complaint alleges, New West has 
offered Montana residents a high-quality option for their health 
insurance, routinely pressuring Blue Cross to offer lower prices and 
better customer service. New West's annual revenues in 2010 were 
approximately $120 million.
    On or around August 1, 2011, Blue Cross and the hospital defendants 
entered into the Agreement, a letter of intent in which Blue Cross 
agreed to pay $26.3 million to the hospital defendants in exchange for 
their agreeing to collectively stop purchasing health insurance for 
their own employees from New West and instead buy insurance for their 
employees from Blue Cross exclusively for six years, starting January 
1, 2012. (The only New West owner that did not sign the Agreement was 
Benefis Health System, which already used Blue Cross for its employees 
and had never used New West.) The hospital defendants collectively 
account for approximately 11,000 enrolled lives, or roughly one-third 
of New West's commercial health-insurance business at the time of the 
Agreement.
    The Agreement further requires that all of the hospital defendants 
participate for the agreement to be effective: if any hospital 
defendant withdraws, the Agreement is terminated. Additionally, Blue 
Cross agreed to install two representatives of the hospital defendants 
on Blue Cross's board of directors if the hospitals do not own or 
belong to an entity that competes with Blue Cross in the sale of 
commercial health insurance.

B. The Relevant Markets

1. Product Markets
    The Complaint alleges two relevant product markets: (1) The sale of 
commercial group health insurance, and (2) the sale of commercial 
individual health insurance. These products are collectively referred 
to as ``commercial health insurance.''
(a) Group Health Insurance
    As the Complaint explains, most employees obtain commercial health 
insurance through their employers, which is called ``group health 
insurance.'' There are no reasonable alternatives to group health 
insurance for employers, or for most employees. The closest 
alternative--individual health insurance--is typically much more 
expensive than group health insurance, in part because while group 
health insurance is purchased using pre-tax dollars, individual health 
insurance is not. Furthermore, purchasing hospital services directly 
(i.e., without insurance), rather than through a commercial insurer, is 
typically prohibitively expensive and is not a viable substitute for 
group health insurance.
    Thus, a small but significant increase in the price of group health 
insurance in the relevant geographic markets would not cause a 
sufficient number of groups to switch to other health-insurance 
products, such that the price increase would be unprofitable.
(b) Individual Health Insurance
    Individual health insurance is the only health-insurance product 
available to individuals without access to group coverage or government 
programs, such as Medicare or Medicaid. As with group insurance, 
purchasing hospital services directly, rather than through a commercial 
insurer, is typically prohibitively expensive and is not a viable 
substitute for individual health insurance. Thus, as the Complaint 
alleges, a small but significant increase in the price of individual 
health insurance in the relevant geographic markets would not cause a 
sufficient number of individuals to switch to other health-insurance 
products, such that the price increase would be unprofitable.
2. Geographic Markets
    Because patients typically seek medical care close to their homes 
or workplaces, consumers strongly prefer health-insurance plans with 
local networks of hospital and physicians. Thus, employers that offer 
group health insurance to their employees demand insurance products 
that provide access to health-care provider networks, including 
primary- and tertiary-care hospitals, in the areas in which substantial 
numbers of their employees live and work. Likewise, individuals who 
purchase individual health insurance demand insurance products that 
provide access to health-care provider networks, including hospitals,

[[Page 71361]]

in the areas in which they live and work.
    The following local areas are relevant geographic markets for the 
sale of group and individual commercial health insurance:
     The Billings MSA (Yellowstone and Carbon Counties);
     The Bozeman MiSA (Gallatin County);
     The Helena MiSA (Lewis and Clark County and Jefferson 
County); and
     The Missoula MSA (Missoula County).
    As the Complaint alleges, a small but significant increase in the 
price of commercial health insurance in these areas would not cause a 
sufficient number of consumers to switch to insurers outside of these 
areas to make such a price increase unprofitable.

C. Anticompetitive Effects of the Agreement

    According to the Complaint, the Agreement effectively eliminates 
New West as a viable competitor in the sale of commercial health 
insurance. First, news that none of New West's owners will buy health 
insurance for their own employees from New West creates a perception 
that New West is exiting the commercial health-insurance market, and 
will likely cause many existing and potential customers to stop 
purchasing (or decline to purchase) insurance from New West. Second, 
the Agreement will lead New West and its hospital owners to 
significantly reduce their support for and efforts to win commercial 
health-insurance customers, further hindering its ability to compete. 
Furthermore, because the hospital defendants agreed to act 
collectively, the Agreement with Blue Cross ensures that New West would 
lose the support of all its owners and likely exit the market. And the 
Agreement further deters the hospitals from supporting New West by 
granting them two positions on Blue Cross's board of directors, but 
only if the hospitals do not own or belong to a competing insurer.
    The Complaint alleges that by eliminating New West as an effective 
competitor, the Agreement would significantly increase concentration in 
the markets for commercial health insurance in Montana. In the four 
relevant areas, Blue Cross's share of commercial health insurance 
ranged from approximately 43% to 75% at the time the Agreement was 
signed, and New West's share ranged from 7% to 12%. The Agreement 
increases Blue Cross's share directly through the transfer of the 
hospital defendants' accounts from New West, and indirectly because New 
West's remaining customers are likely to switch insurers, with most 
moving to Blue Cross because it is the market leader.
    Using the Herfindahl-Hirschman Index (``HHI''), a standard measure 
of market concentration, and assuming that (1) All of the hospital 
defendants' business transfers to Blue Cross per the terms of the 
Agreement and (2) that New West's other commercial business is lost to 
the remaining competitors in proportion to their current shares, the 
HHIs would increase by 640 in Billings to 2,290; by 1,277 in Bozeman to 
5,870; by 1,100 in Helena to 6,900; and by 512 in Missoula to 3,690. 
These HHI levels far exceed concentration levels that many courts have 
found create a presumption that an acquisition likely would 
substantially lessen competition in violation of the Clayton Act.
    The Agreement also eliminates vigorous head-to-head competition 
between Blue Cross and New West. For the past several years, New West 
has been one of only two significant alternatives to Blue Cross for 
commercial health insurance in the relevant areas. Many consumers view 
Blue Cross and New West as the two most significant insurers in the 
relevant areas and each other's main competitor. Without New West as an 
effective competitor, Blue Cross will likely increase prices and reduce 
the quality and service of commercial health-insurance plans to 
employers and individuals in the relevant areas.

III. Explanation of the Proposed Final Judgment

A. The Divestiture Assets

    The proposed Final Judgment will eliminate the anticompetitive 
effects identified in the Complaint by requiring New West and the 
hospital defendants to divest New West's commercial health-insurance 
business, including its administrative-services-only contracts and its 
fully-insured business, but excluding the contracts that cover the 
hospital defendants' employees and their dependents. This divestiture 
will allow the acquirer to compete vigorously in the relevant 
geographic markets.
    New West and the hospital defendants must divest New West's fully-
insured commercial health-insurance business to the acquirer through a 
bulk-reinsurance agreement, as provided by Mont. Code Ann. Sec.  33-2-
1212. At the same time, they must also divest the remainder of New 
West's commercial health-insurance business, including its 
administrative-services-only contracts. This divestiture structure 
ensures that all of New West's rights and obligations relating to its 
commercial health-insurance business immediately transfer to the 
acquirer. The Final Judgment does not require New West to divest its 
Medicare Advantage business, and New West plans to continue selling 
this health-insurance product to the Medicare-eligible population.
    New West and the hospital defendants have proposed to sell the 
Divestiture Assets to PacificSource Health Plans, and the United 
States, after consulting with the State of Montana, has tentatively 
approved PacificSource as the acquirer. Consequently, Section IV(F) of 
the proposed Final Judgment requires New West and the hospital 
defendants first to attempt to sell the Divestiture Assets to 
PacificSource.
    Under the proposed Final Judgment, the United States and the State 
of Montana must be satisfied that none of the terms in any agreement 
between New West and the hospital defendants and the acquirer enable 
New West or the hospital defendants to interfere with the acquirer's 
ability to compete effectively.
    Although the proposed Final Judgment does not require New West and 
the hospital defendants to divest the New West health-insurance 
contracts that covered the hospital defendants' employees and 
dependents, the proposed Final Judgment does require New West and the 
hospital defendants to use their best efforts to maintain New West's 
contracts for coverage of at least 14,600 enrollees in its fully- or 
self-insured plans until the Divestiture Assets are transferred to the 
acquirer. To ensure that New West's management will work aggressively 
to meet this membership target, New West and the hospital defendants 
will fund an incentive pool of at least $50,000, which will be 
available to New West's management if they meet the membership target 
as of the closing date for the sale of the Divestiture Assets. This 
will allow the acquirer to obtain sufficient enrollees to preserve 
existing levels of competition.
    Section IV(A) of the proposed Final Judgment requires New West and 
the hospital defendants to divest the Divestiture Assets as a viable, 
ongoing business within 30 days after the filing of the Complaint. The 
quick divestiture will help preserve the existing level of competition 
because it will convey to the market that a new competitor will rapidly 
replace New West, and it will help to reduce the possibility that the 
Divestiture Assets will lose their value.

[[Page 71362]]

B. Selected Provisions of the Proposed Final Judgment

    Other provisions of the proposed Final Judgment will enable the 
acquirer to promptly and effectively compete in the market for 
commercial health insurance. Most importantly, Sections IV(G)-(I) 
ensure that the acquirer has a cost-competitive health-care provider 
network. To compete effectively in the sale of commercial health 
insurance, insurers need a network of health-care providers at 
competitive rates because hospital and physician expenses constitute 
the large majority of an insurer's costs. By requiring New West and the 
hospital defendants to help to provide the acquirer with a cost-
competitive provider network, Sections IV(G)-(I) help ensure that the 
acquirer will be able to compete as effectively as New West before the 
parties entered the Agreement.
    Specifically, Section IV(G) requires the hospital defendants to 
sign three-year contracts with the acquirer on terms that are 
substantially similar to their existing contractual terms with New 
West. This requirement is vital because three of the hospital 
defendants (Bozeman Deaconess, St. Peter's, and Northern Montana 
Hospital) are the only hospitals in their respective geographic 
markets, while Billings Clinic and Community Medical Center each only 
compete with one other hospital. Because these three-year contracts 
provide the acquirer with a cost structure comparable to New West's 
costs, they position the acquirer to be competitive selling commercial 
health insurance in all four geographic markets.
    To address health-care provider contracts that are not under the 
hospital defendants' control, Sections IV(H) and IV(I) require New West 
and the hospital defendants--at the acquirer's option--to (1) use their 
best efforts to assign the contracts that are not under their control 
to the acquirer, or (2) lease New West's provider network to the 
acquirer for up to three years, using their best efforts to maintain 
the network, including maintaining contracts with substantially similar 
terms.
    Sections IV(M) and IV(N) also require New West and the hospital 
defendants to provide transitional support services as necessary for 
the acquirer to operate the Divestiture Assets. New West and the 
hospital defendants may not provide these transitional support services 
for more than 12 months without approval from the United States.
    The proposed Final Judgment contains three provisions that address 
Blue Cross's relationships with health-insurance brokers and health-
care providers. First, under Section V(A), Blue Cross must provide 30 
days' written notice to the plaintiffs before entering into exclusive 
contracts with health-insurance brokers. This provision prevents Blue 
Cross from blocking the acquirer's access to brokers. Access to brokers 
is important because many customers purchase health insurance through a 
broker. Second, under Section V(B), Blue Cross must provide 30 days' 
written notice to the plaintiffs before entering into any agreement 
that prohibits a health-care provider from contracting with other 
insurers. Third, under Section V(C), Blue Cross must provide 30 days' 
written notice before entering into any most-favored-nation agreement 
with a health-care provider, which would require the provider to give 
Blue Cross rates that are equal to or better than other insurers. If 
the United States issues a Civil Investigative Demand (``CID'') within 
30 days after Blue Cross notifies the plaintiffs that it intends to 
engage in the practices covered by Sections V(A)-(C), then Blue Cross 
may not adopt the practices until 30 days after certifying compliance 
with the CID. These provisions help ensure that Blue Cross will not 
interfere with the acquirer's ability to compete effectively.
    Finally, if New West and the hospital defendants do not accomplish 
the divestiture within the period prescribed in the proposed Final 
Judgment, the Court will appoint a trustee selected by the United 
States to carry out the divestitures. If a trustee is appointed, New 
West and the hospital defendants must pay the trustee's costs and 
expenses, and the trustee's commission will provide an incentive based 
on the price, terms, and speed of the divestiture. Once the trustee is 
appointed, the trustee will file monthly reports with the Court and the 
United States explaining his or her efforts to accomplish the 
divestiture. At the end of six months, if the divestitures have not 
been accomplished, the trustee and the United States will make 
recommendations to the Court, which will enter such orders as it deems 
appropriate in order to carry out the purpose of the trust. This may 
include extending the trust or the term of the trustee's appointment 
for up to six additional months. However, if at the end of all 
extensions of the trustee's term, the trustee has not accomplished the 
divestiture, then New West and the hospital defendants will have no 
further obligations to preserve the divestiture assets.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages 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. 
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 Montana, and the defendants have 
stipulated that the proposed Final Judgment may be entered by the Court 
after compliance with the provisions of the APPA, provided that the 
United States has not withdrawn its consent. The APPA conditions entry 
upon the Court's determination that the proposed Final Judgment is in 
the public interest.
    The APPA provides a period of at least 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 60 
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 Impact Statement, whichever is later. 
All comments received during this period will be considered by the 
United States Department of Justice, which remains free to withdraw its 
consent to the proposed Final Judgment at any time before the Court's 
entry of judgment. The comments and the response of the United States 
will be filed with the Court and published in the Federal Register.
    Written comments should be submitted to: Joshua H. Soven, Chief, 
Litigation I Section, Antitrust Division, United States Department of 
Justice, 450 Fifth Street NW., Suite 4100, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the

[[Page 71363]]

modification, interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    As an alternative to the proposed Final Judgment, the United States 
considered a full trial on the merits against the defendants. The 
United States is satisfied, however, that the divestiture of the assets 
described in the proposed Final Judgment will fully address the 
competitive concerns set forth in the Complaint. Thus, the proposed 
Final Judgment achieves all or substantially all of the relief the 
United States would have obtained through litigation, but avoids the 
time, expense, and uncertainty of a full trial on the merits of the 
Complaint.

VII. Standard of Review Under the APPA for the Proposed Final Judgment

    The Clayton Act, as amended by 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. 16(e)(1). In making that determination, 
the court, in accordance with the statute as amended in 2004, is 
required to consider:
    (A) The competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) The impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.
    15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory 
factors, the court's inquiry is necessarily a limited one as the 
government is entitled to ``broad discretion to settle with the 
defendant within the reaches of the public interest.'' United States v. 
Microsoft Corp., 56 F.3d 1448, 1461 (DC Cir. 1995); see also United 
States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) 
(assessing public-interest standard under the Tunney Act); United 
States v. InBev N.V./S.A., No. 08-1965 (JR), 2009 U.S. Dist. LEXIS 
84787, at *3 (D.D.C. Aug. 11, 2009) (noting that the court's review of 
a consent judgment is limited and only inquires ``into whether the 
government's determination that the proposed remedies will cure the 
antitrust violations alleged in the complaint was reasonable, and 
whether the mechanisms to enforce the final judgment are clear and 
manageable.'').\1\
---------------------------------------------------------------------------

    \1\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for courts to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    Under the APPA, a court considers, among other things, the 
relationship between the remedy secured and the specific allegations 
set forth in the United States' complaint, whether the decree is 
sufficiently clear, whether enforcement mechanisms are sufficient, and 
whether the decree may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. 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; InBev, 2009 U.S. Dist. LEXIS 84787, at *3; United States v. 
Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001). 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).\2\ 
In determining whether a proposed settlement is in the public interest, 
a district court ``must accord deference to the government's 
predictions about the efficacy of its remedies, and may not require 
that the remedies perfectly match the alleged violations.'' SBC 
Commc'ns, 489 F. Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461 
(noting the need for courts to be ``deferential to the government's 
predictions as to the effect of the proposed remedies''); United States 
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) 
(noting that the court should grant due respect to the United States' 
``prediction as to the effect of proposed remedies, its perception of 
the market structure, and its views of the nature of the case'').
---------------------------------------------------------------------------

    \2\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); 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''').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[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). To meet this standard, the United States 
``need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'' SBC Commc'ns, 
489 F. Supp. 2d at 17.
    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; see also InBev, 2009 
U.S. Dist. LEXIS 84787, at *20 (``the `public interest' is not to be 
measured by comparing the violations alleged in the complaint against 
those the court believes could have, or even should have, been 
alleged''). 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

[[Page 71364]]

that the United States did not pursue. Microsoft, 56 F.3d at 1459-60. A 
court ``cannot look beyond the complaint in making the public interest 
determination unless the complaint is drafted so narrowly as to make a 
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of using consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[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. 16(e)(2). This language effectuates what 
Congress intended when it enacted the Tunney Act in 1974. As Senator 
Tunney explained: ``[t]he court is nowhere compelled to go to trial or 
to engage in extended proceedings which might have the effect of 
vitiating the benefits of prompt and less costly settlement through the 
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of 
Senator Tunney). Rather, the procedure for the public-interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\3\
---------------------------------------------------------------------------

    \3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977) (``Absent 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.''); S. Rep. No. 93-298 at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.'').
---------------------------------------------------------------------------

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.
    Respectfully submitted,

Scott I. Fitzgerald (WA Bar 39716),
Peter J. Mucchetti,
Claudia H. Dulmage,
Barry J. Joyce,

Attorneys for the United States, U.S. Department of Justice, 
Antitrust Division, Litigation I Section, 450 Fifth Street, NW., 
Suite 4100, Washington, DC 20530.
Dated: November 8, 2011.

Certificate of Service

    I hereby certify that, on November 8, 2011, a copy of the foregoing 
document was served on the following persons by the following means:

----1 CM/ECF
---- Hand Delivery
----U.S. Mail
---- Overnight Delivery Service
---- Fax
---- 2,3 E-Mail

    1. Clerk, U.S. District Court.
    2. Counsel for Defendant Blue Cross and Blue Shield of Montana: 
David C. Lundsgaard, Graham & Dunn PC, Pier 70, 2801 Alaskan Way Suite 
300, Seattle, WA 98121-1128. [email protected].
    3. Counsel for Billings Clinic; Bozeman Deaconess Health Services, 
Inc.; Community Medical Center, Inc.; New West Health Services, Inc.; 
Northern Montana Health Care, Inc.; and St. Peter's Hospital: Kevin P. 
Heaney, Crowley Fleck PLLP, Transwestern Plaza II, 490 N. 31st St., 
Suite 500, Billings, MT 59101. [email protected].

Scott I. Fitzgerald,
Antitrust Division, U.S. Department of Justice, 450 Fifth Street, 
NW., Suite 4100, Washington, DC 20530. (202) 353-3863. 
[email protected].

In the United States District Court for the District of Montana 
Billings Division

    United States of America and State of Montana, Plaintiffs, v. Blue 
Cross and Blue Shield of Montana, Inc., Billings Clinic, Bozeman 
Deaconess Health Services, Inc., Community Medical Center, Inc., New 
West Health Services, Inc., Northern Montana Health Care, Inc., and St. 
Peter's Hospital, Defendants.

Case No.1:11-cv-00123-RFC

[Proposed] Final Judgment

    Whereas, Plaintiffs, the United States of America and the State of 
Montana, filed their Complaint on November 8, 2011, alleging that 
Defendants Blue Cross, New West, Billings Clinic, Bozeman Deaconess, 
Community Medical Center, Northern Montana Health Care, and St. 
Peter's, 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 any party regarding any issue of fact or law;
    And whereas, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And whereas, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights and assets by New West and the 
Hospital Defendants to ensure that competition is not substantially 
lessened by the Agreement;
    And whereas, the United States and the State of Montana require 
Defendants to make certain divestitures for the purpose of remedying 
the loss of competition alleged in the Complaint;
    And whereas, New West and the Hospital Defendants have represented 
to the United States and the State of Montana that the divestiture 
required by this Final Judgment can and will be made, and that they 
will not later raise any claim of hardship or difficulty as grounds for 
asking the Court to modify any of the provisions of this Final 
Judgment;
    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 each of 
the parties to, this action. The Complaint states a claim upon which 
relief may be granted against Defendants under Section 1 of the Sherman 
Act, 15 U.S.C. 1; Section 7 of the Clayton Act, as amended, 15 U.S.C. 
18; and the Montana Unfair Trade Practices Act, Mont. Code Ann. Sec.  
30-14-205.

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the entity to whom the Divestiture Assets are 
divested.
    B. ``Agreement'' means the Letter of Intent dated on or around 
August 1, 2011, by and among Blue Cross and the Hospital Defendants.
    C. ``Billings Clinic'' means Defendant Billings Clinic, a Montana 
non-profit corporation based in Billings, Montana, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their respective directors, 
officers, managers, agents, and employees.
    D. ``Blue Cross'' means Defendant Blue Cross and Blue Shield of 
Montana, Inc., a Montana corporation based in Helena, Montana, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their respective 
directors, officers, managers, agents, and employees.
    E. ``Bozeman Deaconess'' means Defendant Bozeman Deaconess Health

[[Page 71365]]

Services, Inc., a Montana non-profit corporation based in Bozeman, 
Montana, its successors and assigns, and its subsidiaries, divisions, 
groups, affiliates, partnerships, and joint ventures, and their 
respective directors, officers, managers, agents, and employees.
    F. ``Broker'' means any insurance agent, producer, or broker who 
facilitates the sale of health-insurance plans to individuals or 
groups.
    G. ``Community Medical Center'' means Community Medical Center, 
Inc., a Montana non-profit corporation based in Missoula, Montana, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their respective 
directors, officers, managers, agents, and employees.
    H. ``Divestiture Assets'' means:
    (1) New West's Commercial Health Insurance Business;
    (2) all business, financial, and operational books, records, and 
data, both current and historical, that relate to New West's Commercial 
Health Insurance Business.
    I. ``Health-Care Provider'' means any person or entity that 
provides any health-care service, including hospitals, physician 
groups, laboratories, ambulatory surgical centers, nursing facilities, 
and other providers of health-care services.
    J. ``Health Insurer'' means any entity that is responsible for all 
or part of any expense for health-care services provided to any person 
or group. The term includes commercial health-insurance plans, 
including health-maintenance organizations, preferred-provider 
organizations, and indemnity plans; health-care provider rental 
networks, union trust funds, and multiple employer trusts; and self-
insured health plans.
    K. ``Hospital Defendants'' means Billings Clinic, Bozeman 
Deaconess, Community Medical Center, Northern Montana Health Care, and 
St. Peter's.
    L. ``Most-Favored-Nation Provision'' means any most-favored-nation, 
most-favored-discount, or most-favored-pricing provision in any health-
care provider agreement. The term includes any Blue Cross policy, 
practice, or contractual provision that conditions Blue Cross's payment 
rate or discount to any health-care provider on another health 
insurer's payment rate or discount to that provider, regardless of how 
such policy, practice, or contractual provision is denominated.
    M. ``New West'' means New West Health Services, Inc., a Montana 
non-profit corporation based in Helena, Montana, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their respective directors, 
officers, managers, agents, and employees.
    N. ``New West's Commercial Health Insurance Business'' means all of 
New West's health-insurance contracts and policies for products 
providing commercial health insurance, including fully-insured and 
administrative-services-only products, health-maintenance organization 
products, preferred-provider organization products, point-of-service 
products, and indemnity-insurance products, for both groups and 
individuals. The term ``New West's Commercial Health Insurance 
Business'' does not include (1) New West's Medicare Advantage products 
and (2) New West's health-insurance contracts and policies covering 
employees and dependents of the Hospital Defendants.
    O. ``Northern Montana Health Care'' means Northern Montana Health 
Care, Inc., a Montana non-profit corporation based in Havre, Montana, 
its successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their respective 
directors, officers, managers, agents, and employees.
    P. ``PacificSource'' means PacificSource Health Plans, an Oregon 
non-profit corporation based in Springfield, Oregon.
    Q. ``Provider Network'' means all of the health-care providers that 
have contracted with a particular health insurer to provide medical 
services.
    R. ``St. Peter's'' means St. Peter's Hospital, a Montana non-profit 
corporation based in Helena, Montana, its successors and assigns, and 
its subsidiaries, divisions, groups, affiliates, partnerships, and 
joint ventures, and their respective directors, officers, managers, 
agents, and employees.

III. Applicability

    A. This Final Judgment applies to Blue Cross, New West, and the 
Hospital Defendants, as defined above, and to 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.
    B. If, before complying with Sections IV and VI of this Final 
Judgment, Defendants sell or otherwise dispose of all or substantially 
all of their assets or of lesser business units that include the 
Divestiture Assets, they must require the purchaser to be bound by the 
provisions of this Final Judgment. Defendants do not need to obtain 
such an agreement from the Acquirer of the assets divested pursuant to 
this Final Judgment.

IV. Divestitures

    A. New West and the Hospital Defendants are ordered, within 30 
calendar days after the filing of the Complaint in this matter, to 
divest the Divestiture Assets in a manner consistent with this Final 
Judgment (1) To an Acquirer acceptable to the United States in its sole 
discretion, after consultation with the State of Montana; and (2) on 
terms acceptable to the United States in its sole discretion, after 
consultation with the State of Montana. The United States in its sole 
discretion, after consultation with the State of Montana, may grant one 
extension of this time period not to exceed 30 calendar days in total, 
and shall notify the Court in such circumstances.
    B. New West and the Hospital Defendants must obtain all regulatory 
approvals necessary for such divestitures as expeditiously as possible. 
If applications for approval have been filed with the appropriate 
governmental units within 5 calendar days after the United States has 
provided written notice, pursuant to Section VII(C), that it does not 
object to a proposed divestiture, but these required approvals have not 
been issued before the end of the period permitted for Divestiture in 
Section IV(A), the United States will extend the period for Divestiture 
until five business days after all necessary government approvals have 
been received.
    C. New West and the Hospital Defendants must permit prospective 
Acquirers of the Divestiture Assets to have reasonable access to New 
West personnel and access to any and all financial, operational, or 
other documents and information customarily provided as part of a due-
diligence process.
    D. New West and the Hospital Defendants must divest New West's 
fully-insured Commercial Health Insurance Business to the Acquirer 
through a bulk-reinsurance agreement, as provided by Mont. Code Ann. 
Sec.  33-2-1212. New West and the Hospital Defendants must divest the 
remainder of New West's Commercial Health Insurance Business, including 
its administrative-services-only contracts, to the Acquirer at the same 
time as they divest New West's fully-insured business.
    E. The Divestiture must be accomplished in such a way as to satisfy 
the United States in its sole discretion, after consultation with the 
State of Montana, that the Divestiture Assets can and will be used by 
the Acquirer as part

[[Page 71366]]

of a viable, ongoing business engaged in the sale of commercial health 
insurance, and that the Divestiture will remedy the competitive harm 
alleged in the Complaint. The Divestiture must be:
    (1) made to an Acquirer that, in the United States' sole judgment, 
after consultation with the State of Montana, has the intent and 
capability (including the necessary managerial, operational, technical, 
and financial capability) to compete effectively in the sale of 
commercial health insurance in the Billings Metropolitan Statistical 
Area (``MSA''), Bozeman Micropolitan Statistical Area (``MiSA''), 
Helena MiSA, and Missoula MSA; and
    (2) accomplished so as to satisfy the United States, in its sole 
discretion, after consultation with the State of Montana, that none of 
the terms of any agreement between New West or the Hospital Defendants 
and the Acquirer gives New West and the Hospital Defendants the ability 
unreasonably to raise the Acquirer's costs, to lower the Acquirer's 
efficiency, or otherwise to interfere with the Acquirer's ability to 
compete effectively.
    F. New West and the Hospital Defendants must first attempt to sell 
the Divestiture Assets to PacificSource.
    G. For three years, the Hospital Defendants must contract to 
participate in the Acquirer's provider network on terms that are 
substantially similar to the Hospital Defendants' existing contractual 
terms with New West as determined by the United States in its sole 
discretion, after consultation with the State of Montana.
    H. At the Acquirer's option, New West and the Hospital Defendants 
must use their best efforts to assign to the Acquirer all contracts for 
the provision of medical services that New West has with health-care 
providers that are not controlled by the Hospital Defendants.
    I. For three years, at the Acquirer's option, New West must also 
lease its provider network to the Acquirer. Until the expiration of 
such a lease, New West and the Hospital Defendants must use their best 
efforts to maintain New West's provider network, including maintaining 
contracts, with substantially similar terms, with all health-care 
providers in New West's provider network as of August 1, 2011.
    J. New West and the Hospital Defendants must use their best efforts 
to maintain New West's contracts for coverage of at least 14,600 
enrollees in fully- or self-insured commercial health-insurance plans 
until the Divestiture Assets are transferred to the Acquirer. To 
encourage New West's management to meet this membership target, the 
Hospital Defendants and New West will fund an incentive pool of at 
least $50,000, which will be available to New West's management if they 
meet the membership target as of the closing date for the sale of the 
Divestiture Assets.
    K. New West must provide the plaintiffs with bi-weekly reports on 
total commercial health-insurance membership until the divestitures 
required by this Final Judgment are complete.
    L. New West and the Hospital Defendants must provide the Acquirer, 
the United States, and the State of Montana with information relating 
to the personnel involved in the operation of the Divestiture Assets to 
enable the Acquirer to make offers of employment. For a period of two 
years from the filing of the Complaint in this matter, New West may not 
hire or solicit to hire any such person who was hired by the Acquirer, 
unless the Acquirer has notified such person that the Acquirer does not 
intend to continue to employ the person. Until the divestiture is 
completed, Blue Cross may not solicit to hire any such person who was 
hired by the Acquirer.
    M. At the Acquirer's option, and subject to approval by the United 
States, after consultation with the State of Montana, New West and the 
Hospital Defendants must provide transitional support services that are 
reasonably necessary for the Acquirer to operate the Divestiture 
Assets, including but not limited to medical-claims processing, appeals 
and grievances, call-center support, enrollment and eligibility 
services, access to form templates, pharmacy services, disease 
management, and quality-assurance services, and may charge the Acquirer 
commercially reasonable rates for these services. The Hospital 
Defendants and New West may not provide such transitional support 
services for more than 12 months from the date of the completion of the 
Divestiture unless the United States, after consultation with the State 
of Montana, shall otherwise approve.
    N. To ensure an effective transition of the Divestiture Assets to 
the Acquirer, New West and the Hospital Defendants must cooperate and 
work with the Acquirer in transition planning and implementation of the 
transfer of the Divestiture Assets.
    O. Defendants may not take any action that will impede in any way 
the permitting, operation, or divestiture of the Divestiture Assets.
    P. New West and the Hospital Defendants must communicate and 
cooperate fully with the Acquirer to promptly identify and obtain all 
consents of government agencies necessary to divest the Divestiture 
Assets.

V. Injunctive Relief as to Blue Cross

    A. Blue Cross may not, without providing 30 days' advance written 
notification to the Plaintiffs:
    (1) Condition the right of any broker to sell Blue Cross health-
insurance products based on whether the broker sells non-Blue Cross 
health-insurance products; or
    (2) Require any broker to be, or agree with any broker that it will 
become, an exclusive broker for Blue Cross.
    Provided, however, that this Section does not apply to brokers who 
are employees of Blue Cross or entities wholly or partially owned by 
Blue Cross. Provided, further, that nothing in this Final Judgment 
prohibits Blue Cross from terminating or refusing to appoint any 
broker, or dealing with brokers on any terms, so long as Blue Cross 
does not violate the prohibitions in this Section.
    B. Blue Cross, without providing 30 days' advance written 
notification to the Plaintiffs, may not enter into, adopt, maintain, or 
enforce any term in any agreement that directly or indirectly:
    (1) Prohibits or discourages a health-care provider from (a) 
Participating in another health insurer's provider network or (b) 
negotiating or contracting with another health insurer; or
    (2) Conditions the price that Blue Cross will pay a health-care 
provider, or other contract term, on whether the provider participates 
in another health insurer's provider network.
    C. Blue Cross, without providing 30 days' advance written 
notification to the Plaintiffs, may not enter into, adopt, maintain, or 
enforce any most-favored-nation provision in any agreement with a 
health-care provider.
    D. Within 30 days of receiving the notice required by Sections 
V(A)-(C) of this Final Judgment, representatives of the Antitrust 
Division may issue a Civil Investigative Demand (``CID''), pursuant to 
15 U.S.C. 1311-14, for additional information or documentary material 
relevant to the notification. The Antitrust Division may share the 
information and documentary material produced in response to the CID 
with the State of Montana. If the Antitrust Division issues a CID, Blue 
Cross may not enter into, adopt, maintain, or enforce the notified 
agreement until 30 calendar days after certifying compliance with the 
CID.
    E. Nothing in this Final Judgment prohibits Blue Cross from 
undertaking the actions described in Sections V(A)-(C), provided that 
Blue Cross provides the required notice and, if necessary,

[[Page 71367]]

waits for the expiration of the periods described in Section V(D).
    F. This Section expires six years from the date of entry of the 
Final Judgment.

VI. Appointment of Trustee

    A. If New West and the Hospital Defendants have not divested the 
Divestiture Assets within the time period specified in Section IV(A) 
and (B), they must notify the United States of that fact in writing. 
Upon application of the United States, the Court shall appoint a 
trustee selected by the United States and approved by the Court to 
effect the divestiture of the Divestiture Assets.
    B. After the appointment of a trustee becomes effective, only the 
trustee may have the right to sell the Divestiture Assets. The trustee 
will have the power and authority to accomplish the divestiture to an 
Acquirer acceptable to the United States, after consultation with the 
State of Montana, at such price and on such terms as are then 
obtainable upon reasonable effort by the trustee, subject to the 
provisions of Sections IV, VI, and VII of this Final Judgment, and will 
have such other powers as this Court deems appropriate. Subject to 
Section VI(D) of this Final Judgment, the trustee may hire at the cost 
and expense of New West and the Hospital Defendants any investment 
bankers, attorneys, or other agents, who shall be solely accountable to 
the trustee, reasonably necessary in the trustee's judgment to assist 
in the divestiture.
    C. Defendants may not object to a sale by the trustee on any ground 
other than the trustee's malfeasance. Any such objections by Defendants 
must be conveyed in writing to the United States, the State of Montana, 
and the trustee within 10 calendar days after the trustee has provided 
the notice required under Section VII.
    D. The trustee must serve at the cost and expense of New West and 
the Hospital Defendants, on such terms and conditions as the United 
States approves, and must account for all monies derived from the sale 
of the assets sold by the trustee and all costs and expenses so 
incurred. After approval by the Court of the trustee's accounting, 
including fees for its services and those of any professionals and 
agents retained by the trustee, all remaining money shall be paid to 
New West and the trust shall then be terminated. The compensation of 
the trustee and any professionals and agents retained by the trustee 
shall be reasonable in light of the value of the Divestiture Assets and 
based on a fee arrangement providing the trustee with an incentive 
based on the price and terms of the divestiture and the speed with 
which it is accomplished, but timeliness is paramount.
    E. New West and the Hospital Defendants must use their best efforts 
to assist the trustee in accomplishing the required divestiture. The 
trustee and any consultants, accountants, attorneys, and other persons 
retained by the trustee must have full and complete access to the 
personnel, books, records, and facilities relating to the Divestiture 
Assets, and New West and the Hospital Defendants must develop financial 
and other information relevant to such business as the trustee may 
reasonably request, subject to reasonable protection for trade secret 
or other confidential research, development, or commercial information. 
Defendants may not take any action to interfere with or to impede the 
trustee's accomplishment of the divestiture.
    F. After its appointment, the trustee must file monthly reports 
with the United States, the State of Montana, and the Court setting 
forth the trustee's efforts to accomplish the divestiture ordered under 
this Final Judgment. To the extent that such reports contain 
information that the trustee deems confidential, such reports may not 
be filed in the public docket of the Court. Such reports must include 
the name, address, and telephone number of each person who, during the 
preceding month, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring any interest in the Divestiture Assets, 
and must describe in detail each contact with any such person. The 
trustee must maintain full records of all efforts made to divest the 
Divestiture Assets.
    G. If the trustee has not accomplished the divestiture ordered 
under this Final Judgment within six months after its appointment, the 
trustee must promptly file with the Court a report setting forth (1) 
the trustee's efforts to accomplish the required divestiture, (2) the 
reasons, in the trustee's judgment, why the required divestiture has 
not been accomplished, and (3) the trustee's recommendations. To the 
extent that such reports contain information that the trustee deems 
confidential, such reports may not be filed in the public docket of the 
Court. The trustee must at the same time furnish such report to the 
United States, which shall have the right to make additional 
recommendations consistent with the purpose of the trust. The Court 
thereafter shall enter such orders as it deems appropriate to carry out 
the purpose of the Final Judgment. The Court may, if necessary and 
requested by the United States, extend the trust and the term of the 
trustee's appointment by a period no longer than six months. If at the 
end of all extensions of the trustee's term, the trustee has not 
accomplished the divestiture, then New West and the Hospital Defendants 
will have no further obligations to preserve the divestiture assets as 
required by Section V of the Asset Preservation Stipulation and Order 
in this matter.

VII. Notice of Proposed Divestiture

    A. Within two business days following execution of a definitive 
divestiture agreement, New West and the Hospital Defendants, or the 
trustee, whichever is then responsible for effecting the divestiture 
required herein, must notify the United States and the State of Montana 
of any proposed divestiture required by Section IV or VI of this Final 
Judgment. If the trustee is responsible, it must similarly notify 
Defendants. The notice must set forth the details of the proposed 
divestiture and list the name, address, and telephone number of each 
person not previously identified who offered or expressed an interest 
in or desire to acquire any ownership interest in the Divestiture 
Assets, together with full details of the same.
    B. Within five business days of receipt by the United States and 
the State of Montana of such notice, the United States may request from 
Defendants, the proposed Acquirer, any other third party, or the 
trustee, if applicable, additional information concerning the proposed 
divestiture, the proposed Acquirer, and any other potential Acquirer. 
Defendants and the trustee must furnish any additional information 
requested within five business days of the receipt of the request, 
unless the parties shall otherwise agree.
    C. Within 15 calendar days after receipt of the notice or within 10 
calendar days after the United States has been provided the additional 
information requested from Defendants, the proposed Acquirer, any third 
party, and the trustee, whichever is later, the United States must 
provide written notice to Defendants and the trustee, if there is one, 
stating whether or not it objects to the proposed divestiture. If the 
United States provides written notice that it does not object, the 
divestiture may be consummated, subject only to Defendants' limited 
right to object to the sale under Section VI(C) of this Final Judgment. 
Absent written notice that the United States does not object to the 
proposed Acquirer or upon objection by the United States, a

[[Page 71368]]

divestiture proposed under Section IV or Section VI may not be 
consummated. Upon objection by Defendants under Section VI(C), a 
divestiture proposed under Section VI may not be consummated unless 
approved by the Court.

VIII. Financing

    Defendants may not finance all or any part of any Purchase made 
pursuant to Section IV or VI of this Final Judgment.

IX. Asset Preservation

    Until the divestiture required by this Final Judgment has been 
accomplished, Defendants must take all steps necessary to comply with 
the Asset Preservation Stipulation and Order entered by this Court. 
Defendants may not take any action that will jeopardize the divestiture 
ordered by this Court. Provided, however, that nothing in this Final 
Judgment precludes Blue Cross from competing for New West's commercial 
health-insurance customers, before or after the sale of the divestiture 
assets.

X. Affidavits and Records

    A. Within 10 calendar days of the filing of the Complaint in this 
matter, and every 10 calendar days thereafter until the divestiture has 
been completed under Section IV or VI, New West and the Hospital 
Defendants must deliver to the United States and the State of Montana 
an affidavit as to the fact and manner of its compliance with Section 
IV or VI of this Final Judgment. Each such affidavit must include the 
name, address, and telephone number of each person who, during the 
preceding 10 calendar days, made an offer to acquire, expressed an 
interest in acquiring, entered into negotiations to acquire, or was 
contacted or made an inquiry about acquiring, any interest in the 
Divestiture Assets, and must describe in detail each contact with any 
such person during that period. Each such affidavit must also include a 
description of the efforts Defendants have taken to solicit buyers for 
the Divestiture Assets, and to provide required information to 
prospective Acquirers, including the limitations, if any, on such 
information. Assuming that the information set forth in the affidavit 
is true and complete, any objection by the United States, after 
consultation with the State of Montana, to information provided by 
Defendants, including limitation on information, must be made within 14 
calendar days of receipt of such affidavit.
    B. Within 10 calendar days of the filing of the Complaint in this 
matter, Defendants must deliver to the United States and the State of 
Montana an affidavit that describes in reasonable detail all actions 
that Defendants have taken and all steps that Defendants have 
implemented on an ongoing basis to comply with Section IX of this Final 
Judgment. Defendants must deliver to the United States and the State of 
Montana an affidavit describing any changes to the efforts and actions 
outlined in Defendants' earlier affidavits filed pursuant to this 
section within 10 calendar days after the change is implemented.
    C. New West and the Hospital Defendants must keep all records of 
all efforts made to preserve and divest the Divestiture Assets until 
one year after such divestiture has been completed.

XI. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time authorized representatives of the United States 
Department of Justice, including persons retained by the United States, 
must, upon written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, and on 
reasonable notice to Defendants, be permitted:
    (1) Access during Defendants' office hours to inspect and copy, or 
at the option of the United States, to require Defendants to provide 
hard copy and electronic copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control of 
Defendants, relating to any matters contained in this Final Judgment; 
and
    (2) To interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding these matters. The interviews must be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants must submit written reports, or responses to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment.
    C. The United States may share information or documents obtained 
under Section XI with the State of Montana.
    D. No information or documents obtained by the means provided in 
this section may be divulged by the United States or the State of 
Montana 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 or the State of Montana 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. If at the time information or documents are furnished by 
Defendants to the United States, 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)(1)(G) of the 
Federal Rules of Civil Procedure, and Defendants mark each pertinent 
page of such material, ``Subject to claim of protection under Rule 
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United 
States must give Defendants 10 calendar days notice before divulging 
such material in any legal proceeding (other than grand jury 
proceedings).

XII. No Reacquisition

    Defendants may not acquire or reacquire any part of the Divestiture 
Assets during the term of this Final Judgment.

XIII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIV. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire 10 years from the date of its entry.

XV. Public-Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 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 the Court, which includes the Competitive Impact 
Statement and any comments and response to comments filed with the 
Court, entry of this Final Judgment is in the public interest.

Date:------------------------------------------------------------------

Court approval subject to procedures set forth in the Antitrust 
Procedures and Penalties Act, 15 U.S.C. Sec.  16.


[[Page 71369]]


United States District Judge

[FR Doc. 2011-29656 Filed 11-16-11; 8:45 am]
BILLING CODE 4410-11-P