[Federal Register Volume 78, Number 155 (Monday, August 12, 2013)]
[Notices]
[Pages 48904-48907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-19384]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Chiropractic Associates, Ltd. of South Dakota; 
Public Comment and Response on Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes below the comment 
received on the proposed Final Judgment in United States v. 
Chiropractic Associates, Ltd. of South Dakota., Civil Action No. 13-CV-
4030-LLP, which was filed in the United States District Court for the 
Southern Division of South Dakota on August 5, 2013, together with the 
response of the United States to the comment.
    Copies of the comment and the response are available for inspection 
at the Department of Justice, Antitrust Division, 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 
Southern Division of South Dakota, 225 South Pierre Street, Pierre, SD 
57501. Copies of any of these materials may also be obtained upon 
request and payment of a copying fee.

Patricia A. Brink,
Director of Civil Enforcement.

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH DAKOTA 
SOUTHERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

v.

CHIROPRACTIC ASSOCIATES, LTD. OF SOUTH DAKOTA,

Defendant.

CASE NO. CV 13-04030

RESPONSE OF PLAINTIFF UNITED STATES TO PUBLIC COMMENT ON THE PROPOSED 
FINAL JUDGMENT

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16(b)-(h) (``APPA'' or ``Tunney Act''), 
the United States hereby files the single public comment concerning the 
proposed Final Judgment in this case and the United States' response to 
that comment. After careful consideration of the comment, the United 
States continues to believe that the proposed Final Judgment will 
provide an effective and appropriate remedy for the antitrust 
violations alleged in the Complaint. The United States will move the 
Court for entry of the proposed Final Judgment after the public comment 
and this response have been published in the Federal Register, pursuant 
to 15 U.S.C. Sec.  16(d).

I. PROCEDURAL HISTORY

    On April 8, 2013, the United States filed a civil antitrust 
Complaint against Defendant Chiropractic Associates, Ltd. of South 
Dakota (``CASD'') alleging that CASD negotiated at least seven 
contracts with payers that set prices for chiropractic services on 
behalf of CASD's members in violation of Section 1 of the Sherman Act, 
15 U.S.C. Sec.  1. CASD's actions raised prices for chiropractic 
services and decreased the availability of chiropractic services in 
South Dakota.
    Simultaneously with the filing of the Complaint, the United States 
filed a proposed Final Judgment and a Stipulation signed by the United 
States and CASD consenting to entry of the proposed Final Judgment 
after compliance with the APPA, 15 U.S.C. Sec.  16. The proposed Final 
Judgment would prevent the recurrence of the violations alleged in the 
Complaint by enjoining the Defendant from jointly determining prices 
and negotiating contracts with payers.
    Pursuant to the requirements of the APPA, the United States (1) 
filed its Competitive Impact Statement (``CIS'') with the Court on 
April 8, 2013; (2) published the proposed Final Judgment and CIS in the 
Federal Register on April 17, 2013 (see 78 Fed. Reg. 22901); and (3) 
had summaries of the terms of the proposed Final Judgment and CIS, 
together with directions for the submission of written comments 
relating to the proposed Final Judgment, published in (a) The 
Washington Post for seven days beginning on April 15, 2013, and ending 
on April 21, 2013, and (b) The Argus Leader for seven days beginning on 
April 15, 2013 and ending on April 21, 2013. The Defendant filed the 
statement required by 15 U.S.C. Sec.  16(g) on April 18, 2013. The 
sixty-day public comment period ended on June 20, 2013. One comment was 
received, as described below and attached hereto.

II. THE INVESTIGATION AND PROPOSED RESOLUTION

    On June 7, 2011, the United States Department of Justice (the 
``Department'') opened its investigation into the conduct at issue. The 
Department conducted a detailed investigation into CASD's actions. As 
part of this investigation, the Department obtained and considered more 
than 240,000 documents.
    From this investigation, the Department concluded that CASD's 
conduct violated Section 1 of the Sherman Act, 15 U.S.C. Sec.  1. As 
more fully explained in the CIS, the Stipulation and proposed Final 
Judgment in this case are designed to prevent the recurrence of the 
violations alleged in the Complaint and restore competition in the sale 
of chiropractic services in South Dakota.
    Specifically, Section IV of the proposed Final Judgment would 
enjoin CASD from:
    (A) providing, or attempting to provide, any services to any 
physician regarding such physician's actual, possible, or contemplated 
negotiation or contracting with any payer, or other dealings with any 
payer;
    (B) acting, or attempting to act, in a representative capacity, 
including as a messenger or in dispute resolution (such as 
arbitration);

[[Page 48905]]

    (C) communicating, reviewing, or analyzing, or attempting to 
communicate, review, or analyze with or for any physician, except as 
otherwise allowed, about (1) that physician's, or any other 
physician's, negotiating, contracting, or participating status with any 
payer; (2) that physician's, or any other physician's, fees or 
reimbursement rates; or (3) any proposed or actual contract or contract 
term between any physician and any payer;
    (D) facilitating communication or attempting to facilitate 
communication, among or between physicians, regarding any proposed, 
contemplated, or actual contract or contractual term with any payer, 
including the acceptability of any proposed, contemplated, or actual 
contractual term, between such physicians and any payer;
    (E) entering into or enforcing any agreement, arrangement, 
understanding, plan, program, combination, or conspiracy with any 
payers or physicians to raise, stabilize, fix, set, or coordinate 
prices for physician services, or fixing, setting, or coordinating any 
term or condition relating to the provision of physician services;
    (F) requiring that CASD physician members negotiate with any payer 
through CASD or otherwise restricting, influencing, or attempting to 
influence in any way how CASD physician members negotiate with payers;
    (G) coordinating or communicating, or attempting to coordinate or 
communicate, with any physician, about any refusal to contract, 
threatened refusal to contract, recommendation not to participate or 
contract with any payer, or recommendation to boycott, on any proposed 
or actual contract or contract term between such physician and any 
payer;
    (H) responding, or attempting to respond, to any question or 
request initiated by any payer or physician relating to (1) a 
physician's negotiating, contracting, or participating status with any 
payer; (2) a physician's fees or reimbursement rates; or (3) any 
proposed or actual contract or contract term between any physician and 
any payer, except to refer a payer to a third-party messenger \1\ and 
otherwise to state that the Final Judgment prohibits any additional 
response; and
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    \1\ A messenger is a person or entity that operates a messenger 
model, which is an arrangement designed to minimize the costs 
associated with the contracting process between payers and health-
care providers. Messenger models can operate in a variety of ways. 
For example, network providers may use an agent or third-party to 
convey to purchasers information obtained individually from 
providers about the prices or price-related terms that the providers 
are willing to accept. In some cases, the agent may convey to the 
providers all contract offers made by purchasers, and each provider 
then makes an independent, unilateral decision to accept or reject 
the contract offers. See Statement 9(C) of the 1996 Statements of 
Antitrust Enforcement Policy in Health Care, available at http://www.justice.gov/atr/public/guidelines/1791.htm.
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    (I) training or educating, or attempting to train or educate, any 
physician in any aspect of contracting or negotiating with any payer, 
including, but not limited to, contractual language and interpretation 
thereof, methodologies of payment or reimbursement by any payer for 
such physician's services, and dispute resolution such as arbitration, 
except that CASD may, provided it does not violate other prohibitions 
of the Final Judgment, (1) speak on general topics (including 
contracting), but only when invited to do so as part of a regularly 
scheduled medical educational seminar offering continuing medical 
education credit; (2) publish articles on general topics (including 
contracting) in a regularly disseminated newsletter; and (3) provide 
education to physicians regarding the regulatory structure (including 
legislative developments) of workers' compensation, Medicaid, and 
Medicare, except Medicare Advantage.
    With limited exceptions, Section V of the proposed Final Judgment 
requires CASD to terminate all payer contracts at the earlier of (1) 
CASD's receipt of a payer's written request to terminate its contract, 
(2) the earliest termination date, renewal date (including automatic 
renewal date), or the anniversary date of such payer contract, or (3) 
three months from the date the Final Judgment is entered. Furthermore, 
the Final Judgment immediately makes void any clause in a provider 
agreement that disallows a physician from contracting individually with 
a Payer.
    To promote compliance with the decree, Section VII of the proposed 
Final Judgment requires that CASD provide to its members, directors, 
officers, managers, agents, employees, and representatives, who provide 
or have provided, or supervise or have supervised the provision of 
services to physicians, copies of the Final Judgment and this 
Competitive Impact Statement and to institute mechanisms to facilitate 
compliance. Finally, for a period of ten years following the date of 
entry of the Final Judgment, CASD must certify annually to the United 
States whether it has complied with the provisions of the Final 
Judgment.

III. STANDARD OF JUDICIAL REVIEW

    The Tunney Act requires that proposed consent judgments in 
antitrust cases brought by the United States be subject to a sixty-day 
comment period, after which the court shall determine whether entry of 
the proposed Final Judgment ``is in the public interest.'' 15 U.S.C. 
Sec.  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. Sec.  16(e)(1)(A) & (B). In considering these statutory 
factors, the court's inquiry is necessarily a limited one as the United 
States 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 (D.C. 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., 2009-2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, 
No. 08-1965 (JR), 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 mechanism to enforce the final judgment 
are clear and manageable.'').

    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

[[Page 48906]]

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; United States v. Alcoa, Inc., 152 
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, 
at *3. 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'').
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    \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 less 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.'' United States v. 
Abitibi-Consolidated, Inc., 584 F. Supp. 2d 162, 165 (D.D.C. 2008) 
(citing 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 
that the United States did not pursue. Microsoft, 56 F.3d at 1459-60. 
As the United States District Court for the District of Columbia 
confirmed in SBC Communications, courts ``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,\3\ Congress made clear its intent to 
preserve the practical benefits of using consent decrees in antitrust 
enforcement, stating 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. Sec.  
16(e)(2). This language reflects 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.
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    \3\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for the court 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. 
Sec.  16(e) (2004), with 15 U.S.C. Sec.  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).
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IV. SUMMARY OF PUBLIC COMMENT AND THE UNITED STATES' RESPONSE

    During the sixty-day comment period, the United States received one 
public comment, which the comment says is from an anonymous South 
Dakota resident who consumes chiropractic care.

A. Summary of Comment

    The commenter argues that the proposed Final Judgment does nothing 
to punish CASD's principals for their conduct because the proposed 
Final Judgment affixes no fine or penalty. The commenter urges the 
Court to issue substantial monetary penalties.

B. The United States' Response

    The lack of fines or other criminal penalties in the proposed Final 
Judgment is not a valid basis for challenging its entry because the 
purpose of this Tunney Act proceeding is to determine whether the 
proposed Final Judgment resolves the violations identified in the 
Complaint in a manner that is within the reaches of the public 
interest. The commenter does not argue that the proposed Final Judgment 
will not remedy the violations alleged in the Complaint. Indeed, the 
proposed Final Judgment contains prohibitions which, as described in 
Section II and the CIS, broadly enjoin the Defendant from jointly 
determining prices and negotiating contracts with payers. Because the 
proposed Final Judgment will remedy the violations alleged in the 
complaint and restore competition in the sale of chiropractic services 
in South Dakota, the proposed Final Judgment is within the reaches of 
the public interest.

[[Page 48907]]

V. CONCLUSION

    After reviewing the public comment, the United States continues to 
believe that the proposed Final Judgment will provide an effective and 
appropriate remedy for the antitrust violations alleged in the 
Complaint and is therefore in the public interest. Accordingly, after 
the comment and this Response are published in the Federal Register, 
the United States will move this Court to enter the proposed Final 
Judgment.

DATE: July ----, 2013

FOR PLAINTIFF
UNITED STATES OF AMERICA:

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RICHARD D. MOSIER
(DC BAR 492489)
Attorney for the United States
Antitrust Division
United States Department of Justice
450 Fifth Street NW., Suite 4100
Washington, DC 20530
Telephone: (202) 307-0585
Facsimile: (202) 307-5802
Email: [email protected]

CERTIFICATE OF SERVICE

I, Richard D. Mosier, hereby certify that on ------, 2013, I 
electronically filed the Response of Plaintiff United States to 
Public Comment on the Proposed Final Judgment and the attached 
Public Comment with the Clerk of the Court using the CM/ECF system, 
which will send a notice of electronic filing to the following 
counsel:

For Defendant CASD:

Mark A. Jacobson, Esq.
Lindquist & Vennum PLLP
4200 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Telephone: (612) 371-3211
Facsimile: (612) 371-3207
Email: [email protected]

/s/Richard D. Mosier.
RICHARD D. MOSIER
(DC Bar No. 492489)
Attorney for the United States of America
Litigation I Section
Antitrust Division
United States Department of Justice
450 Fifth Street NW., Suite 4100
Washington, DC 20530
Telephone: (202) 307-0585
Facsimile: (202) 307-5802
Email: [email protected]
Peter J. Mucchetti,
Chief, Litigation I Section,
Antitrust Division,
U.S. Department of Justice
450 Fifth Street NW., Suite 4100
Washington, DC 20530
05/21/2013

Comment regarding;
CASE NO. 13-CV-4030-LLP
FILED: 04/08/2013

UNITED STATES OF AMERICA,
Plaintiff,

v.

CHIROPRACTIC ASSOCIATES, LTD. OF SOUTH DAKOTA,
Defendant:

To the court,

I am a South Dakota resident unaffiliated with CHIROPRACTIC 
ASSOCIATES, LTD. OF SOUTH DAKOTA (CASD), its owners or members. I am 
a consumer of chiropractic care and have been for several years. I 
shall offer these comments anonymously as Mr. Munsterman has 
considerable influence in his role as a state legislator and it is 
known to me that he would/could retaliate for unfavorable comments.

There are three points I wish to make,

First and foremost CASD for over 15 years CASD has conspired, 
defrauded, and committed felonious acts against the people of South 
Dakota and other states as well to increase the price of services 
rendered by their members. The primary beneficiary of the profits 
from this conspiracy was Scott Munsterman as primary owner of CASD.

Although the injunction against CASD prohibits further violations as 
outlined in the case documents, it does nothing to punish the 
principals for their conduct and fraud. It affixes no fine or 
penalty other than I assume court costs. Munsterman and his 
associates have profited for several years from their illegal 
activities and it appears to all that now the justice system is 
saying, ``just don't do it anymore'', keep your ill-gotten profits 
and we will let you get off with this ``slap on the hand''. No fine, 
no penalties, just stop doing what you are doing.

And of course, CASD would accept that, who wouldn't. If someone 
robbed a bank, got away with thousands of dollars of other people's 
hard earned money, later is caught and is told, ``Just don't do it 
anymore''.

Your honor, this is a travesty of justice in the most egregious 
manner.

Second, Scott Munsterman serves as a member of the South Dakota 
House of Representatives, representing District 7. He is the 
chairperson for the Health and Human Services Committee. It is 
egregious to think that this man in his position on the Health and 
Human Services Committee will be making critical decisions and 
influencing votes for the Healthcare issues facing the South Dakota 
Legislature and ultimately becoming laws for the people of South 
Dakota. Sadly few South Dakotans will take notice of the actions 
against CASD and no one will be held accountable and no penalties 
assessed.

With all the recent revelations of corruption, scandals and cover-
ups in our government, now more than ever due the citizens need to 
see that our justice system deals out justice fairly and impartially 
and that those who have manipulated, circumvent and abused the law 
are punished, not just stopped.

Your honor, please do the right thing in this case and issue 
substantial monetary penalties for the illegal action by CASD, its 
owners and associates.

I maintain my anonymity because of potential retaliation from the 
owner(s) of CASD.

[FR Doc. 2013-19384 Filed 8-9-13; 8:45 am]
BILLING CODE 4410-11-P