[Federal Register Volume 83, Number 45 (Wednesday, March 7, 2018)]
[Notices]
[Pages 9750-9760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04593]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States et al. v. W.A. Foote Memorial Hospital, d/b/a 
Allegiance Health; 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, 
Notification of Settlement and Explanation of Consent Decree 
Procedures, and Competitive Impact Statement have been filed with the 
United States District Court for the Eastern District of Michigan in 
United States and State of Michigan v. W.A. Foote Memorial Hospital, 
Civil Action No. 15-cv-12311 (JEL) (DRG). On June 25, 2015, the United 
States and the State of Michigan filed a Complaint alleging that 
Defendant W.A. Foote Memorial Hospital d/b/a Allegiance Health 
(``Allegiance'') entered into an agreement with Hillsdale Community 
Health Center that unlawfully allocated customers in violation of 
Section 1 of the Sherman Act, 15 U.S.C. 1, and 2 of the Michigan 
Antitrust Reform Act, MCL 445.772. The proposed Final Judgment, filed 
February 9, 2018, prohibits Allegiance from agreeing with other 
healthcare providers to prohibit or limit marketing or to divide any 
geographic market or territory. The proposed Final Judgment also 
prohibits Allegiance from communicating with competing healthcare 
systems regarding its marketing plans, with limited exceptions. The 
proposed Final Judgment also imposes an antitrust compliance officer 
and other training and monitoring requirements on Allegiance.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website at http://www.justice.gov/atr, and at the Office of 
the Clerk of the United States District Court for the Eastern District 
of Michigan. 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 on the proposed Final Judgment is invited within 60 
days of the date of this notice. Such comments, including the name of 
the submitter, and responses thereto, will be posted on the Antitrust 
Division's website, filed with the Court, and, under certain 
circumstances, published in the Federal Register. Comments should be 
directed to Peter J. Mucchetti, Chief, Healthcare & Consumer Products 
Section, Antitrust Division, Department of Justice, 450 Fifth Street 
NW, Suite 4100, Washington, DC 20530 (telephone: 202-307-0001).

 Patricia A. Brink,
Director of Civil Enforcement.

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

    United States of America and State of Michigan, and Plaintiffs, 
v. Hillsdale Community Health Center, W.A. Foote Memorial Hospital, 
D/B/A Allegiance Health, Community Health Center of Branch County, 
and Promedica Health System, Inc., Defendants.

Case No.: 2:15-cv-12311-JEL-DRG
Hon. Judith E. Levy
Mag. Judge David R. Grand

COMPLAINT

    The United States of America and the State of Michigan bring this 
civil antitrust action to enjoin agreements by Defendants Hillsdale 
Community Health Center (``Hillsdale''), W.A. Foote Memorial Hospital, 
d/b/a Allegiance Health (``Allegiance''), Community Health Center of 
Branch County (``Branch''), and ProMedica Health System, Inc. 
(``ProMedica'') (collectively, ``Defendants'') that unlawfully allocate 
territories for the marketing of competing healthcare services and 
limit competition among Defendants.

NATURE OF THE ACTION

    1. Defendants are healthcare providers in Michigan that operate the 
only general acute-care hospital or hospitals in their respective 
counties. Defendants directly compete with each other to provide 
healthcare services to the residents of south-central Michigan. 
Marketing is a key component of this competition and includes 
advertisements, mailings to patients, health fairs, health screenings, 
and outreach to physicians and employers.
    2. Allegiance, Branch, and ProMedica's Bixby and Herrick Hospitals 
(``Bixby and Herrick'') are Hillsdale's closest Michigan competitors. 
Hillsdale orchestrated agreements to limit marketing of competing 
healthcare services. Allegiance explained in a 2013 oncology marketing 
plan: ``[A]n agreement exists with the CEO of Hillsdale Community 
Health Center, Duke Anderson, to not conduct marketing activity in 
Hillsdale County.'' Branch's CEO described the Branch agreement with 
Hillsdale as a ``gentlemen's agreement not to market services.'' A 
ProMedica communications specialist described the ProMedica agreement 
with Hillsdale

[[Page 9751]]

in an email: ``The agreement is that they stay our [sic] of our market 
and we stay out of theirs unless we decide to collaborate with them on 
a particular project.''
    3. The Defendants' agreements have disrupted the competitive 
process and harmed patients, physicians, and employers. For instance, 
all of these agreements have deprived patients, physicians, and 
employers of information they otherwise would have had when making 
important healthcare decisions. In addition, the agreement between 
Allegiance and Hillsdale has deprived Hillsdale County patients of free 
medical services such as health screenings and physician seminars that 
they would have received but for the unlawful agreement. Moreover, it 
denied Hillsdale County employers the opportunity to develop 
relationships with Allegiance that could have allowed them to improve 
the quality of their employees' medical care.
    4. Defendants' senior executives created and enforced these 
agreements, which lasted for many years. On certain occasions when a 
Defendant violated one of the agreements, executives of the aggrieved 
Defendant complained about the violation and received assurances that 
the previously agreed upon marketing restrictions would continue to be 
observed going forward.
    5. Defendants' agreements are naked restraints of trade that are 
per se unlawful under Section 1 of the Sherman Act, 15 U.S.C. Sec.  1, 
and Section 2 of the Michigan Antitrust Reform Act, MCL 445.772.

JURISDICTION, VENUE, AND INTERSTATE COMMERCE

    6. The United States brings this action pursuant to Section 4 of 
the Sherman Act, 15 U.S.C. Sec.  4, to prevent and restrain Defendants' 
violations of Section 1 of the Sherman Act, 15 U.S.C. Sec.  1. The 
State of Michigan brings this action in its sovereign capacity under 
its statutory, equitable and/or common law powers, and pursuant to 
Section 16 of the Clayton Act, 15 U.S.C. Sec.  26, to prevent and 
restrain Defendants' violations of Section 2 of the Michigan Antitrust 
Reform Act, MCL 445.772.
    7. This Court has subject matter jurisdiction over this action 
under Section 4 of the Sherman Act, 15 U.S.C. Sec.  4 (as to claims by 
the United States); Section 16 of the Clayton Act, 15 U.S.C. Sec.  26 
(as to claims by the State of Michigan); and 28 U.S.C. Sec. Sec.  1331, 
1337(a), 1345, and 1367.
    8. Venue is proper in the Eastern District of Michigan under 28 
U.S.C. Sec.  1391 and Section 12 of the Clayton Act, 15 U.S.C. Sec.  
22. Each Defendant transacts business within the Eastern District of 
Michigan, all Defendants reside in the State of Michigan, and at least 
two Defendants reside in the Eastern District of Michigan.
    9. Defendants all engage in interstate commerce and in activities 
substantially affecting interstate commerce. Defendants provide 
healthcare services to patients for which employers, health plans, and 
individual patients remit payments across state lines. Defendants 
purchase supplies and equipment from out-of-state vendors that are 
shipped across state lines.

DEFENDANTS

    10. Hillsdale is a Michigan corporation headquartered in Hillsdale, 
Michigan. Its general acute-care hospital, which is in Hillsdale 
County, Michigan, has 47 beds and a medical staff of over 90 
physicians.
    11. Allegiance is a Michigan corporation headquartered in Jackson, 
Michigan. Its general acute-care hospital, which is in Jackson County, 
Michigan, has 480 beds and a medical staff of over 400 physicians.
    12. Branch is a Michigan corporation headquartered in Coldwater, 
Michigan. Its general acute-care hospital, which is in Branch County, 
Michigan, has 87 beds and a medical staff of over 100 physicians.
    13. ProMedica is an Ohio corporation headquartered in Toledo, Ohio, 
with facilities in northwest Ohio and southern Michigan. ProMedica's 
Bixby and Herrick Hospitals are both in Lenawee County, Michigan. Bixby 
is a general acute-care hospital with 88 beds and a medical staff of 
over 120 physicians. Herrick is a general acute-care hospital with 25 
beds and a medical staff of over 75 physicians.
[GRAPHIC] [TIFF OMITTED] TN07MR18.002


[[Page 9752]]



BACKGROUND ON HOSPITAL COMPETITION

    14. Hillsdale competes with each of the other Defendants to provide 
many of the same hospital and physician services to patients. Hospitals 
compete on price, quality, and other factors to sell their services to 
patients, employers, and insurance companies. An important tool that 
hospitals use to compete for patients is marketing aimed at informing 
patients, physicians, and employers about a hospital's quality and 
scope of services. An executive from each Defendant has testified at 
deposition that marketing is an important strategy through which 
hospitals seek to increase their patient volume and market share.
    15. Defendants' marketing includes advertisements through mailings 
and media such as local newspapers, radio, television, and billboards. 
Allegiance's marketing to patients also includes the provision of free 
medical services, such as health screenings, physician seminars, and 
health fairs. Some Defendants also market to physicians through 
educational and relationship-building meetings that provide physicians 
with information about those Defendants' quality and range of services. 
Allegiance also engages in these marketing activities with employers.

HILLSDALE'S UNLAWFUL AGREEMENTS

    16. Hillsdale has agreements limiting competition with Allegiance, 
ProMedica, and Branch.

Unlawful Agreement Between Hillsdale and Allegiance

    17. Since at least 2009, Hillsdale and Allegiance have had an 
agreement that limits Allegiance's marketing for competing services in 
Hillsdale County. As Allegiance explained in a 2013 oncology marketing 
plan: ``[A]n agreement exists with the CEO of Hillsdale Community 
Health Center, Duke Anderson, to not conduct marketing activity in 
Hillsdale County.''
    18. In compliance with this agreement, Allegiance has excluded 
Hillsdale County from marketing campaigns since at least 2009. For 
example, Allegiance excluded Hillsdale County from the marketing plans 
outlined in the above-referenced 2013 oncology marketing plan. And 
according to a February 2014 board report, Allegiance excluded 
Hillsdale from marketing campaigns for cardiovascular and orthopedic 
services.
    19. On at least two occasions, Hillsdale's CEO complained to 
Allegiance after Allegiance sent marketing materials to Hillsdale 
County residents. Both times--at the direction of Allegiance CEO 
Georgia Fojtasek--Allegiance's Vice President of Marketing, Anthony 
Gardner, apologized in writing to Hillsdale's CEO. In one apology he 
said, ``It isn't our style to purposely not honor our agreement.'' Mr. 
Gardner assured Hillsdale's CEO that Allegiance would not repeat this 
mistake.
    20. Allegiance also conveyed its hands-off approach to Hillsdale in 
2009 when Ms. Fojtasek told Hillsdale's CEO that Allegiance would take 
a ``Switzerland'' approach towards Hillsdale, and then confirmed this 
approach by mailing Hillsdale's CEO a Swiss flag.
    21. Allegiance executives and staff have discussed the agreement in 
numerous correspondences and business documents. For example, 
Allegiance staff explained in a 2012 cardiovascular services analysis: 
``Hillsdale does not permit [Allegiance] to conduct free vascular 
screens as they periodically charge for screenings.'' As a result, 
around that time, Hillsdale County patients were deprived of free 
vascular-health screenings.
    22. In another instance, in 2014 Allegiance discouraged one of its 
newly employed physicians from giving a seminar in Hillsdale County 
relating to competing services. In response to the physician's request 
to provide the seminar, the Allegiance Marketing Director asked the 
Vice President of Physician Integration and Business Development: ``Who 
do you think is the best person to explain to [the doctor] our 
restrictions in Hillsdale? We're happy to do so but often our docs find 
it hard to believe and want a higher authority to confirm.''
    23. The agreement between Hillsdale and Allegiance has deprived 
Hillsdale County patients, physicians, and employers of information 
regarding their healthcare-provider choices and of free health-
screenings and education.

Unlawful Agreement Between Hillsdale and ProMedica

    24. Since at least 2012, Hillsdale and ProMedica have agreed to 
limit their marketing for competing services in one another's county.
    25. This agreement has restrained marketing in several ways. For 
example, in June 2012, Bixby and Herrick's President asked Hillsdale's 
CEO if he would have any issue with Bixby marketing its oncology 
services to Hillsdale physicians. Hillsdale's CEO replied that he 
objected because his hospital provided those services. Bixby and 
Herrick's President responded that he understood. Bixby and Herrick 
then refrained from marketing their competing oncology services in 
Hillsdale County.
    26. Another incident occurred around January 2012, when Hillsdale's 
CEO complained to Bixby and Herrick's President about the placement of 
a ProMedica billboard across from a physician's office in Hillsdale 
County. At the conclusion of the conversation, Bixby and Herrick's 
President assured Hillsdale's CEO that he would check into taking down 
the billboard.
    27. ProMedica employees have discussed and acknowledged the 
agreement in multiple documents. For example, after Hillsdale's CEO 
called Bixby and Herrick's President to complain about ProMedica's 
billboard, a ProMedica communications specialist described the 
agreement to marketing colleagues via email: ``According to [Bixby and 
Herrick's President] any potential marketing (including network 
development) efforts targeted for the Hillsdale, MI market should be 
run by him so that he can talk to Hillsdale Health Center in advance. 
The agreement is that they stay our [sic] of our market and we stay out 
of theirs unless we decide to collaborate with them on a particular 
project.''
    28. The agreement between Hillsdale and ProMedica deprived 
patients, physicians, and employers of Hillsdale and Lenawee Counties 
of information regarding their healthcare-provider choices.

Unlawful Agreement Between Hillsdale and Branch

    29. Since at least 1999, Hillsdale and Branch have agreed to limit 
marketing in one another's county. In the fall of 1999, Hillsdale's 
then-CEO and Branch's CEO reached an agreement whereby each hospital 
agreed not to market anything but new services in the other hospital's 
county. Branch's CEO testified recently in deposition that ``There's a 
gentlemen's agreement not to market services other than new services.''
    30. Branch has monitored Hillsdale's compliance with the agreement. 
For example, in November 2004, Hillsdale promoted one of its physicians 
through an advertisement in the Branch County newspaper. Branch's CEO 
faxed Hillsdale's then-CEO a copy of the advertisement, alerting him to 
the violation of their agreement.
    31. In addition to monitoring Hillsdale's compliance, Branch has 
directed its marketing employees to abide by the agreement with 
Hillsdale. For example, Branch's 2013 guidelines

[[Page 9753]]

for sending out media releases instructed that it had a ``gentleman's 
agreement'' with Hillsdale and thus Branch should not send media 
releases to the Hillsdale Daily News.
    32. The agreement between Hillsdale and Branch deprived Hillsdale 
and Branch County patients, physicians, and employers of information 
regarding their healthcare-provider choices.

NO PROCOMPETITIVE JUSTIFICATIONS

    33. The Defendants' anticompetitive agreements are not reasonably 
necessary to further any procompetitive purpose.

VIOLATIONS ALLEGED

First Cause of Action: Violation of Section 1 of the Sherman Act

    34. Plaintiffs incorporate paragraphs 1 through 33.
    35. Allegiance, Branch, and ProMedica are each a horizontal 
competitor of Hillsdale in the provision of healthcare services in 
south-central Michigan. Defendants' agreements are facially 
anticompetitive because they allocate territories for the marketing of 
competing healthcare services and limit competition among Defendants. 
The agreements eliminate a significant form of competition to attract 
patients.
    36. The agreements constitute unreasonable restraints of trade that 
are per se illegal under Section 1 of the Sherman Act, 15 U.S.C. Sec.  
1. No elaborate analysis is required to demonstrate the anticompetitive 
character of these agreements.
    37. The agreements are also unreasonable restraints of trade that 
are unlawful under Section 1 of the Sherman Act, 15 U.S.C. Sec.  1, 
under an abbreviated or ``quick look'' rule of reason analysis. The 
principal tendency of the agreements is to restrain competition. The 
nature of the restraints is obvious, and the agreements lack legitimate 
procompetitive justifications. Even an observer with a rudimentary 
understanding of economics could therefore conclude that the agreements 
would have anticompetitive effects on patients, physicians, and 
employers, and harm the competitive process.

Second Cause of Action: Violation of MCL 445.772

    38. Plaintiff State of Michigan incorporates paragraphs 1 through 
37 above.
    39. Defendants entered into unlawful agreements with each other 
that unreasonably restrain trade and commerce in violation of Section 2 
of the Michigan Antitrust Reform Act, MCL 445.772.

REQUESTED RELIEF

    The United States and the State of Michigan request that the Court:
    (A) judge that Defendants' agreements limiting competition 
constitute illegal restraints of interstate trade in violation of 
Section 1 of the Sherman Act, 15 U.S.C. Sec.  1, and Section 2 of the 
Michigan Antitrust Reform Act, MCL 445.772;
    (B) enjoin Defendants and their members, officers, agents, and 
employees from continuing or renewing in any manner the conduct alleged 
herein or from engaging in any other conduct, agreement, or other 
arrangement having the same effect as the alleged violations;
    (C) enjoin each Defendant and its members, officers, agents, and 
employees from communicating with any other Defendant about any 
Defendant's marketing in its or the other Defendant's county, unless 
such communication is related to the joint provision of services, or 
unless the communication is part of normal due diligence relating to a 
merger, acquisition, joint venture, investment, or divestiture;
    (D) require Defendants to institute a comprehensive antitrust 
compliance program to ensure that Defendants do not establish any 
similar agreements and that Defendants' members, officers, agents and 
employees are fully informed of the application of the antitrust laws 
to hospital restrictions on competition; and
    (E) award Plaintiffs their costs in this action, including 
attorneys' fees and investigation costs to the State of Michigan, and 
such other relief as may be just and proper.

Dated: June 25, 2015.
Respectfully submitted,

FOR PLAINTIFF UNITED STATES OF AMERICA:

William J. Baer,
Assistant Attorney General for Antitrust.

David I. Gelfand,
Deputy Assistant Attorney General.

\s\--------------------------------------------------------------------

Katrina Rouse (D.C. Bar #1013035),
Jennifer Hane,
Barry Joyce,

Attorneys, Litigation I, Antitrust Division, U.S. Department of 
Justice, 450 Fifth Street NW, Suite 4100, Washington, DC 20530, 
(202) 305-7498, email: [email protected].

LOCAL COUNSEL:

Barbara L. McQuade,

United States Attorney.

\s\ with the consent of Peter Caplan
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Peter Caplan,
Assistant United States Attorney, 211 W. Fort Street, Suite 2001, 
Detroit, Michigan 48226, (313) 226-9784, P30643, E-mail: 
[email protected].

FOR PLAINTIFF STATE OF MICHIGAN:

Bill Schuette, Attorney General, State of Michigan.

\s\ with the consent of Joseph Potchen
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Joseph Potchen,

Division Chief.

\s\ with the consent of Mark Gabrielse
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Mark Gabrielse (P75163),
D.J. Pascoe,

Assistant Attorney Generals, Michigan Department of Attorney 
General, Corporate Oversight Division, G. Mennen Williams Building, 
6th Floor, 525 W. Ottawa Street, Lansing, Michigan 48933, (517) 373-
1160, Email: [email protected].

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

    United States of America and State Of Michigan, Plaintiffs, v. 
W.A. Foote Memorial Hospital, D/B/A Allegiance Health, Defendant.

Case No.: 5:15-cv-12311-JEL-DRG
Hon. Judith E. Levy
Mag. Judge David R. Grand

[PROPOSED] FINAL JUDGMENT

    Whereas, Plaintiffs, the United States of America and the State of 
Michigan, filed their joint Complaint on June 25, 2015, alleging that 
W.A. Foote Memorial Hospital, d/b/a/Allegiance Health; Hillsdale 
Community Health Center; Community Health Center of Branch County; and 
ProMedica Health System, Inc. violated Section 1 of the Sherman Act, 15 
U.S.C. Sec.  1, and Section 2 of the Michigan Antitrust Reform Act, MCL 
445.772;
    And Whereas, Plaintiffs and W.A. Foote Memorial Hospital, d/b/a 
Henry Ford Allegiance Health, 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 Whereas, Plaintiffs require Allegiance to agree to undertake 
certain actions and refrain from certain conduct for the purpose of 
remedying the anticompetitive effects alleged in the Complaint;
    And Whereas, Plaintiffs require Allegiance to agree to be bound by 
the provisions of the Final Judgment pending its approval by the Court;
    Now Therefore, before any testimony is taken, without this Final 
Judgment constituting any evidence against or admission by Allegiance 
regarding any issue of fact or law, and upon consent of the parties to 
this action, it is Ordered, Adjudged, and Decreed:

[[Page 9754]]

I. JURISDICTION

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. 28 U.S.C. Sec. Sec.  1331, 1337(a), 1345, 
1367(a). The Complaint states a claim upon which relief may be granted 
against Allegiance under Section 1 of the Sherman Act, 15 U.S.C. Sec.  
1, and Section 2 of the Michigan Antitrust Reform Act, MCL 445.772.

II. DEFINITIONS

    As used in this Final Judgment:
    A. ``Allegiance'' means Defendant W.A. Foote Memorial Hospital, d/
b/a Henry Ford Allegiance Health, a corporation organized and existing 
under the laws of the State of Michigan and affiliated with the Henry 
Ford Health System with headquarters in Detroit, Michigan, (i) its 
successors and assigns, (ii) all subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures that are controlled by 
Henry Ford Allegiance Health, and (iii) their directors, officers, 
managers, agents, and employees.
    B. ``Agreement'' means any contract, arrangement, or understanding, 
formal or informal, oral or written, between two or more persons.
    C. ``Communicate'' means to discuss, disclose, transfer, 
disseminate, or exchange information or opinion, formally or 
informally, directly or indirectly, in any manner.
    D. ``Communication'' means any discussion, disclosure, transfer, 
dissemination, or exchange of information or opinion.
    E. ``Joint Provision of Services'' means any past, present, or 
future coordinated delivery of any healthcare services by two or more 
healthcare providers, including a clinical affiliation, joint venture, 
management agreement, accountable care organization, clinically 
integrated network, group purchasing organization, management services 
organization, or physician hospital organization.
    F. ``Marketing'' means any past, present, or future activities that 
are involved in making persons aware of the services or products of the 
hospital or of physicians employed or with privileges at the hospital, 
including advertising, communications, public relations, provider 
network development, outreach to employers or physicians, and 
promotions, such as free health screenings and education.
    G. ``Marketing Manager'' means any company officer or employee at 
the level of director, or above, with responsibility for or oversight 
of Marketing.
    H. ``Person'' means any natural person, corporation, firm, company, 
sole proprietorship, partnership, joint venture, association, 
institute, governmental unit, or other legal entity.
    I. ``Provider'' means any physician or physician group and any 
inpatient or outpatient medical facility including hospitals, 
ambulatory surgical centers, urgent care facilities, and nursing 
facilities.

III. APPLICABILITY

    This Final Judgment applies to Allegiance and all other persons in 
active concert or participation with Allegiance who receive actual 
notice of this Final Judgment by personal service or otherwise.

IV. PROHIBITED CONDUCT

    A. Allegiance shall not enter into, attempt to enter into, 
maintain, or enforce any Agreement with any other Provider that:
    (1) prohibits or limits Marketing; or
    (2) allocates any service, customer, or geographic market or 
territory between or among Allegiance and any other Provider, unless 
such Agreement is reasonably necessary for and ancillary to a bona fide 
Agreement providing for the Joint Provision of Services.
    B. Allegiance shall not Communicate with any other Provider about 
Allegiance's Marketing in its or the Provider's county, except 
Allegiance may:
    (1) Communicate with any Provider about joint Marketing if the 
Communication is related to the Joint Provision of Services;
    (2) Communicate with any Provider about Marketing if the 
Communication is part of customary due diligence relating to a merger, 
acquisition, joint venture, investment, or divestiture; or
    (3) Market to Providers, including through its physician liaison 
program.
    C. Allegiance shall not exclude or eliminate Hillsdale County from 
its Marketing or business development opportunities.

V. REQUIRED CONDUCT

    A. Within thirty days of entry of this Final Judgment, Allegiance 
shall hire and appoint an Antitrust Compliance Officer. The Antitrust 
Compliance Officer may be a current employee of Henry Ford and must be 
approved by Plaintiffs.
    B. Antitrust Compliance Officer shall:
    (1) within sixty days of entry of the Final Judgment, furnish a 
copy of this Final Judgment, the Competitive Impact Statement, and a 
cover letter that is identical in content to Exhibit 1 to (a) all of 
Allegiance's Marketing Managers and other employees engaged, in whole 
or in part, in activities relating to Allegiance's Marketing or 
business development activities; (b) all direct reports of Allegiance's 
CEO; and (c) Allegiance's officers and directors (including their 
Boards of Directors);
    (2) within thirty days of any person's succession to any position 
described in Section V.B.(1) above, furnish a copy of this Final 
Judgment, the Competitive Impact Statement, and a cover letter that is 
identical in content to Exhibit 1;
    (3) annually brief each person designated in Section V.B.(1) and 
(2) on the meaning and requirements of this Final Judgment and the 
antitrust laws;
    (4) obtain from each person designated in Section V.B.(1) and (2), 
within sixty days of that person's receipt of the Final Judgment, a 
certification that he or she (i) has read and, to the best of his or 
her ability, understands and agrees to abide by the terms of this Final 
Judgment; (ii) is not aware of any violation of the Final Judgment that 
has not already been reported to Allegiance; and (iii) understands that 
any person's failure to comply with this Final Judgment may result in 
an enforcement action for civil or criminal contempt of court against 
Allegiance and/or any person who violates this Final Judgment;
    (5) maintain a record of certifications received pursuant to 
Section V.B.(4);
    (6) annually communicate to Allegiance's employees that they may 
disclose to the Antitrust Compliance Officer, without reprisal, 
information concerning any potential violation of this Final Judgment 
or the antitrust laws;
    (7) ensure that each person identified in Section V.B.(1) and (2) 
of this Final Judgment receives at least four hours of training 
annually on the meaning and requirements of this Final Judgment and the 
antitrust laws, such training to be delivered by the Antitrust 
Compliance Officer or an attorney with relevant experience in the field 
of antitrust law;
    (8) maintain a log of telephonic, electronic, in-person, and other 
communications regarding Marketing with any Officers or Directors of 
any healthcare system Provider and make it available to Plaintiffs for 
inspection upon either Plaintiff's request; and
    (9) provide to Plaintiffs annually, on or before the anniversary of 
the effective date of this order, a written statement affirming 
Allegiance's compliance with Section V of this order, and including the 
training or instructional materials used or supplied by Allegiance or 
Henry Ford in connection with the training as required by Section 
V.B.(7).
    C. Allegiance shall:
    (1) upon learning of any violation or potential violation of any of 
the terms

[[Page 9755]]

and conditions contained in this Final Judgment, promptly take 
appropriate action to terminate or modify the activity so as to comply 
with this Final Judgment and maintain all documents related to any 
violation or potential violation of this Final Judgment;
    (2) upon learning of any violation or potential violation of any of 
the terms and conditions contained in this Final Judgment, within 
thirty days of its becoming known, file with each Plaintiff a statement 
describing any violation or potential violation, and any steps taken in 
response to the violation, which statement shall include a description 
of any communication constituting the violation or potential violation, 
including the date and place of the communication, the persons 
involved, and the subject matter of the communication; and
    (3) certify to each Plaintiff annually on the anniversary date of 
the entry of this Final Judgment that Allegiance has complied with the 
provisions of this Final Judgment.

VI. COMPLIANCE INSPECTION

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time authorized representatives of the United States 
Department of Justice or the Office of the Michigan Attorney General, 
including consultants and other retained persons, shall, upon the 
written request of an authorized representative of the Assistant 
Attorney General in charge of the Antitrust Division or of the Office 
of the Michigan Attorney General, and on reasonable notice to 
Allegiance, be permitted:
    (1) access during Allegiance's office hours to inspect and copy, or 
at the option of the United States or the State of Michigan, to require 
Allegiance to provide hard copy or electronic copies of, all books, 
ledgers, accounts, records, data, and documents in the possession, 
custody, or control of Allegiance, relating to any matters contained in 
this Final Judgment; and
    (2) to interview, either informally or on the record, Allegiance's 
officers, directors, employees, or agents, who may have individual 
counsel present, regarding such matters. The interviews shall be 
subject to the reasonable convenience of the interviewee and without 
restraint or interference by Allegiance.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division or of 
the Office of the Michigan Attorney General, Allegiance shall submit 
written reports or response to written interrogatories, under oath if 
requested, relating to any of the matters contained in this Final 
Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States or the State of 
Michigan to any person other than an authorized representative of the 
executive branch of the United States or the State of Michigan, except 
in the course of legal proceedings to which the United States or the 
State of Michigan is a party (including grand jury proceedings), or for 
the purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If at the time information or documents are furnished by 
Allegiance to the United States or the State of Michigan, Allegiance 
represents and identifies in writing the material in any such 
information or documents to which a claim of protection may be asserted 
under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure, and 
Allegiance marks 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 and the State of Michigan 
shall give Allegiance ten calendar days notice prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding).

VII. INVESTIGATION FEES AND COSTS

    Allegiance shall pay to the United States the sum of $5,000.00 for 
pre-trial litigation costs and the State of Michigan the sum of 
$35,000.00 to partially cover transcripts and related litigation costs.

VIII. RETENTION OF JURISDICTION

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time prior to the expiration of 
this Final Judgment 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.

IX. ENFORCEMENT OF FINAL JUDGMENT

    A. Plaintiffs retain and reserve all rights to enforce the 
provisions of this Final Judgment, including their right to seek an 
order of contempt from this Court. Allegiance agrees that in any civil 
contempt action, any motion to show cause, or any similar action 
brought by Plaintiffs regarding an alleged violation of this Final 
Judgment, Plaintiffs may establish a violation of the Final Judgment 
and the appropriateness of any remedy therefor by a preponderance of 
the evidence, and Allegiance waives any argument that a different 
standard of proof should apply.
    B. In any enforcement proceeding in which the Court finds that 
Allegiance has violated this Final Judgment, Plaintiffs may apply for a 
one-time extension of this Final Judgment, together with such other 
relief as may be appropriate. Allegiance agrees to reimburse the 
Plaintiffs for any attorneys' fees, experts' fees, and costs incurred 
in connection with any effort to enforce this Final Judgment.

X. EXPIRATION OF FINAL JUDGMENT

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

XI. NOTICE

    For purposes of this Final Judgment, any notice or other 
communication required to be filed with or provided to the United 
States or the State of Michigan shall be sent to the persons at the 
addresses set forth below (or such other address as the United States 
or the State of Michigan may specify in writing to Allegiance):

Chief
Healthcare & Consumer Products Section
U.S. Department of Justice
Antitrust Division
450 Fifth Street, Suite 4100
Washington, DC 20530

Division Chief
Corporate Oversight Division
Michigan Department of Attorney General
525 West Ottawa Street
P.O. Box 30755
Lansing, MI 48909

XII. PUBLIC INTEREST DETERMINATION

    The parties, as required, have complied with the procedures of the 
Antitrust Procedures and Penalties Act, 15 U.S.C. Sec.  16, including 
making copies available to the public of this Final Judgment, the 
Competitive Impact Statement, and any comments thereon, and the United 
States' responses 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.

Dated:-----------------------------------------------------------------


[[Page 9756]]

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


-----------------------------------------------------------------------

United States District Judge

Exhibit 1

[Letterhead of Allegiance]
[Name and Address of Antitrust Compliance Officer]
Dear [XX]:

    I am providing you this notice to make sure you are aware of a 
court order recently entered by the Honorable Judith E. Levy, a 
federal judge in Ann Arbor, Michigan. This court order applies to 
our institution and all of its employees, including you, so it is 
important that you understand the obligations it imposes on us. Ms. 
Georgia Fojtasek has asked me to let each of you know that they 
expect you to take these obligations seriously and abide by them.
    In a nutshell, the order prohibits us from agreeing with other 
healthcare providers, including hospitals and physicians, to limit 
marketing or to divide any geographic market, territory, customers, 
or services between healthcare providers. This means you cannot give 
any assurance to another healthcare provider that Henry Ford 
Allegiance Health will refrain from marketing our services, and you 
cannot ask for any assurance from them that they will refrain from 
marketing. The court order also prohibits communicating with any 
health care system provider, or their employees about our marketing 
plans or about their marketing plans. There are limited exceptions 
to this restriction on communications, such as discussing joint 
projects, but you should check with me before relying on those 
exceptions.
    A copy of the court order is attached. Please read it carefully 
and familiarize yourself with its terms. The order, rather than the 
above description, is controlling. If you have any questions about 
the order or how it affects your activities, please contact me. 
Thank you for your cooperation.
    Sincerely,

    [Allegiance's Antitrust Compliance Officer]

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

    United States of America and State of Michigan, Plaintiffs, v. 
W.A. Foote Memorial Hospital, D/B/A Allegiance Health, Defendant.

Case No.: 5:15-cv-12311-JEL-DRG
Hon. Judith E. Levy
Mag. Judge David R. Grand

COMPETITIVE IMPACT STATEMENT

    Plaintiff the United States of America, pursuant to Section 2(b) of 
the Antitrust Procedures and Penalties Act (``APPA'' or ``Tunney 
Act''), 15 U.S.C. Sec.  16(b)-(h), files this Competitive Impact 
Statement relating to the proposed Final Judgment concerning W.A. Foote 
Memorial Hospital, d/b/a Henry Ford Allegiance Health (``Allegiance'') 
submitted for entry in this civil antitrust proceeding.

I. NATURE AND PURPOSE OF THE PROCEEDING

    On June 25, 2015, the United States and the State of Michigan filed 
a civil antitrust Complaint alleging that Allegiance, Hillsdale 
Community Health Center (``HCHC''), Community Health Center of Branch 
County (``Branch''), and ProMedica Health System, Inc. (``ProMedica'') 
violated Section 1 of the Sherman Act, 15 U.S.C. Sec.  1, and Section 2 
of the Michigan Antitrust Reform Act, MCL 445.772. Concerning 
Allegiance, the Complaint alleged that Allegiance entered into an 
agreement with HCHC to limit marketing of competing healthcare services 
in Hillsdale County. This agreement eliminated a significant form of 
competition to attract patients and substantially diminished 
competition in Hillsdale County, depriving consumers, physicians, and 
employers of important information and services. The hospitals' 
agreement to allocate territories for marketing is per se illegal under 
Section 1 of the Sherman Act, 15 U.S.C. Sec.  1, and Section 2 of the 
Michigan Antitrust Reform Act, MCL 445.772.
    With the Complaint, the United States and the State of Michigan 
filed a Stipulation and proposed Final Judgment (``Original Judgment'') 
with respect to HCHC, Branch, and ProMedica. That Original Judgment 
settled this suit as to those three defendants. Following a Tunney Act 
review process, the Court granted Plaintiffs' Motion for Entry of the 
Original Judgment (Dkt. 36) and dismissed HCHC, Branch, and ProMedica 
from the case (Dkt. 37). The case against Allegiance continued.
    Allegiance has now agreed to a proposed Final Judgment, which 
contains terms that are similar to those in the Original Judgment, as 
well as additional terms. The United States filed this proposed Final 
Judgment with respect to Allegiance (``proposed Final Judgment'') on 
February 9, 2018 (Dkt. 122-1). The proposed Final Judgment is described 
in more detail in Section III below.
    The proposed Final Judgment may be entered by the Court after 
compliance with the provisions of the APPA. Entry of the proposed Final 
Judgment would terminate this action, except that this Court would 
retain jurisdiction to construe, modify, and enforce the proposed Final 
Judgment and to punish violations thereof.

II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATIONS

A. Background on Allegiance and Its Marketing Activities

    Allegiance is a nonprofit general medical and surgical hospital in 
Jackson County, which is adjacent to HCHC's location in Hillsdale 
County in South Central Michigan. Allegiance is the only hospital in 
its county. Allegiance directly competes with HCHC to provide many of 
the same hospital and physician services to patients.
    An important tool that hospitals use to compete for patients is 
marketing aimed at informing consumers, physicians, and employers about 
a hospital's quality and scope of services. Allegiance and HCHC's 
marketing includes advertisements through mailings and media, such as 
local newspapers, radio, television, and billboards, as well as the 
provision of free medical services, such as health screenings, 
physician seminars, and health fairs. Allegiance and HCHC also market 
to physicians and employers through educational and relationship-
building meetings that provide physicians and employers with 
information about the hospitals' quality and range of services.

B. Allegiance's Unlawful Agreement with HCHC to Limit Marketing

    Allegiance agreed with HCHC to suppress its marketing in Hillsdale 
County, and since at least 2009 to the time of filing of the Complaint 
in June 2015, Allegiance and HCHC's agreement limited Allegiance's 
marketing for competing services in Hillsdale County. Allegiance 
believed that HCHC might refer more complicated cases to Allegiance 
because of Allegiance's agreement to pull its competitive punches in 
Hillsdale County. Allegiance executives acknowledged the agreement in 
numerous documents. The hospitals' senior executives, including their 
CEOs, created, monitored, and enforced the agreement, which lasted for 
many years. The harmful effects of the agreement continue to the 
present day.
    In compliance with this agreement, Allegiance routinely excluded 
Hillsdale County from many of its marketing campaigns. As Allegiance 
explained in a 2013 oncology marketing plan: ``[A]n agreement exists 
with the CEO of Hillsdale Community Health Center . . . to not conduct 
marketing activity in Hillsdale County.'' Allegiance employees 
repeatedly referred in internal documents to an ``agreement'' or a 
``gentleman's agreement'' with HCHC, with a high-ranking executive

[[Page 9757]]

describing Allegiance's ``relationship with HCHC'' as ``one of seeking 
`approval' to provide services in their market.'' Allegiance executives 
on occasion apologized in writing to HCHC for violating the agreement 
and assured HCHC executives that Allegiance would honor the previously 
agreed-upon marketing restrictions going forward: ``It isn't our style 
to purposely not honor our agreement.'' Allegiance even reduced the 
number of free health benefits, such as physician seminars and health 
screenings, offered to residents of Hillsdale County because of the 
agreement. This unlawful agreement between Allegiance and HCHC has 
deprived Hillsdale County consumers, physicians, and employers of 
valuable free health screenings and education and information regarding 
their healthcare provider choices.

C. Allegiance's Marketing Agreement Is Per Se Illegal

    The agreement between Allegiance and HCHC disrupted the competitive 
process and harmed consumers. The agreement deprived consumers of 
information they otherwise would have had when making important 
healthcare decisions. The agreement also deprived Hillsdale County 
consumers of free medical services such as health screenings and 
physician seminars that they would have received but for the unlawful 
agreement. Moreover, Allegiance's agreement with HCHC denied employers 
the opportunity to receive information and to develop relationships 
that could have allowed them to improve the quality of their employees' 
medical care. And the agreement diminished Allegiance's and HCHC's 
incentives to compete on quality or to improve patient experience, all 
to the detriment of South Central Michigan consumers.
    The agreement to restrict marketing constituted a naked restraint 
of trade that is per se unlawful under Section 1 of the Sherman Act, 15 
U.S.C. Sec.  1, and Section 2 of the Michigan Antitrust Reform Act, MCL 
445.772. See United States v. Topco Assocs., Inc., 405 U.S. 596, 607-08 
(1972) (holding that naked market allocation agreements among 
horizontal competitors are plainly anticompetitive and illegal per se); 
United States v. Cooperative Theatres of Ohio, Inc., 845 F.2d 1367, 
1371, 1373 (6th Cir. 1988) (holding that the defendants' agreement to 
not ``actively solicit[] each other's customers'' was ``undeniably a 
type of customer allocation scheme which courts have often condemned in 
the past as a per se violation of the Sherman Act''); Blackburn v. 
Sweeney, 53 F.3d 825, 828 (7th Cir. 1995) (holding that the 
``[a]greement to limit advertising to different geographical regions 
was intended to be, and sufficiently approximates[,] an agreement to 
allocate markets so that the per se rule of illegality applies''). 
Allegiance's agreement with HCHC was not reasonably necessary to 
further any procompetitive purpose.
    The antitrust laws would not prohibit a hospital from making its 
own marketing decisions and conducting marketing activities as it sees 
fit, so long as it does so unilaterally. By agreeing with a competitor 
to restrict marketing, however, Allegiance engaged in concerted action. 
By doing so, Allegiance deprived consumers of the benefits of 
competition and ran afoul of the antitrust laws.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The proposed Final Judgment will prevent the recurrence of the 
violations alleged in the Complaint and will restore the competition 
restrained by the anticompetitive agreement between Allegiance and 
HCHC. Section X of the proposed Final Judgment provides that these 
provisions will expire five years after its entry.

A. Prohibited Conduct

    Under Section IV of the proposed Final Judgment, Allegiance cannot 
agree with any healthcare provider to prohibit or limit marketing. 
Allegiance also cannot allocate any services, customers, or geographic 
markets or territories, subject to narrow exceptions relating to the 
provision of certain services jointly with another healthcare provider. 
Allegiance is prohibited from communicating with any healthcare 
provider about Allegiance's marketing in its or the provider's county, 
subject to narrow exceptions relating to legitimate procompetitive 
activities.
    Additionally, Allegiance is prohibited from excluding Hillsdale 
County from its marketing or business development activities. This 
prohibition restores competition that was eliminated during the course 
of the agreement, which Allegiance implemented in part by carving out 
Hillsdale County from many of its marketing activities. This 
prohibition ensures that Hillsdale County consumers will benefit from 
competition.

B. Compliance and Inspection

    The proposed Final Judgment sets forth various provisions to ensure 
Allegiance's compliance with the proposed Final Judgment. Section V of 
the proposed Final Judgment requires Allegiance to hire and appoint an 
Antitrust Compliance Officer within thirty days of the Final Judgment's 
entry. The Antitrust Compliance Officer may be a current employee of 
Henry Ford Health System, and Allegiance must obtain Plaintiffs' 
approval for the person appointed to this position.
    The Antitrust Compliance Officer must furnish copies of this 
Competitive Impact Statement, the Final Judgment, and a notice 
explaining the Final Judgment's obligations to Allegiance's officers 
and directors (including its Board of Directors), direct reports to 
Allegiance's Chief Executive Officer, marketing managers at the level 
of director and above, and all other employees engaged in activities 
relating to Allegiance's marketing or business development activities. 
The Antitrust Compliance Officer must also obtain from each recipient a 
certification that he or she has read and agrees to abide by the terms 
of the Final Judgment. The Antitrust Compliance Officer must maintain a 
record of all certifications received. The Antitrust Compliance Officer 
shall annually brief each person receiving a copy of the Final Judgment 
and this Competitive Impact Statement on the meaning and requirements 
of the Final Judgment and the antitrust laws. In addition, the 
Antitrust Compliance Officer shall ensure that each recipient of the 
Final Judgment and this Competitive Impact Statement receives at least 
four hours of training annually on the meaning and requirements of the 
Final Judgment and the antitrust laws.
    Section V of the proposed Final Judgment requires the Antitrust 
Compliance Officer to communicate annually to Allegiance's employees 
that they may disclose to the Antitrust Compliance Officer, without 
reprisal, information concerning any potential violation of the Final 
Judgment or the antitrust laws. In addition, the Antitrust Compliance 
Officer shall maintain a log of communications relating to marketing 
between Allegiance staff and any officers or directors of other 
healthcare system providers. Annually, for the term of the Final 
Judgment, the Antitrust Compliance Officer must provide to Plaintiffs 
written confirmation of Allegiance's compliance with Section V, 
including providing copies of the training materials used for 
Allegiance's antitrust training program.
    Additionally, within thirty days of learning of any violation or 
potential violation of the terms and conditions of the Final Judgment, 
Allegiance must file with the United States a statement describing the 
violation and the actions Allegiance took to terminate it.

[[Page 9758]]

    To ensure Allegiance's compliance with the Final Judgment, Section 
VI of the proposed Final Judgment requires Allegiance to grant the 
United States and the State of Michigan access, upon reasonable notice, 
to Allegiance's records and documents relating to matters contained in 
the Final Judgment. Upon request, Allegiance also must make its 
employees available for interviews or depositions and answer 
interrogatories and prepare written reports relating to matters 
contained in the Final Judgment.
    After entering into the settlement and specifically agreeing not to 
carve out Hillsdale County from its marketing campaigns, Allegiance 
issued a press release that claimed that it was allowed to ``continue 
[its] marketing strategies.'' John Commins, Henry Ford Allegiance 
``Reluctantly'' Settles DOJ Antitrust Suit, HealthLeaders Media, Feb. 
12, 2018, http://www.healthleadersmedia.com/marketing/henry-ford-allegiance-reluctantly-settles-doj-antitrust-suit#. This statement 
demonstrates that Allegiance's need for an effective antitrust 
compliance program is particularly acute and underscores the importance 
of provisions in the proposed Final Judgment to allow Plaintiffs to 
closely monitor Allegiance's actions to ensure compliance.

C. Investigation Fees and Costs

    The proposed Final Judgment requires Allegiance to reimburse 
Plaintiffs for a portion of their litigation costs. Allegiance is 
required to pay the United States the sum of $5,000.00 and the State of 
Michigan the sum of $35,000.00.

D. Enforcement and Expiration of the Final Judgment

    The proposed Final Judgment contains provisions designed to promote 
compliance and make the enforcement of consent decrees as effective as 
possible. Paragraph IX(A) provides that Plaintiffs retain and reserve 
all rights to enforce the provisions of the proposed Final Judgment, 
including their rights to seek an order of contempt from the Court. 
Under the terms of this paragraph, Allegiance has agreed that in any 
civil contempt action, any motion to show cause, or any similar action 
brought by Plaintiffs regarding an alleged violation of the Final 
Judgment, Plaintiffs may establish the violation and the 
appropriateness of any remedy by a preponderance of the evidence and 
that Allegiance has waived any argument that a different standard of 
proof should apply. This provision aligns the standard for compliance 
obligations with the standard of proof that applies to the underlying 
offense that the compliance commitments address.
    Paragraph IX(B) of the proposed Final Judgment further provides 
that should the Court find in an enforcement proceeding that Allegiance 
has violated the Final Judgment, Plaintiffs may apply to the Court for 
a one-time extension of the Final Judgment, together with such other 
relief as may be appropriate. In addition, in order to compensate 
American taxpayers for any costs associated with the investigation and 
enforcement of violations of the proposed Final Judgment, Paragraph 
IX(B) requires Allegiance to reimburse Plaintiffs for attorneys' fees, 
experts' fees, or costs incurred in connection with any enforcement 
effort.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
Sec.  16(a), the proposed Final Judgment has no prima facie effect in 
any subsequent private lawsuit that may be brought against Allegiance.

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

    The proposed Final Judgment may be entered by the Court after 
compliance with the provisions of the APPA, which conditions entry upon 
the Court's determination that the proposed Final Judgment is in the 
public interest.
    The APPA provides a period of at least sixty days preceding the 
effective date of the proposed Final Judgment within which any person 
may submit to the United States written comments regarding the proposed 
Final Judgment. Any person who wishes to comment should do so within 
sixty days of the date of publication of this Competitive 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 U.S. Department of Justice. The comments and the 
response of the United States will be filed with the Court. In 
addition, comments will be posted on the U.S. Department of Justice, 
Antitrust Division's internet website and, under certain circumstances, 
published in the Federal Register.
    Written comments should be submitted to:

Peter J. Mucchetti
Chief, Healthcare and Consumer Products Section
Antitrust Division
United States Department of Justice
450 Fifth Street, N.W., Suite 4100
Washington, D.C. 20530

    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against Allegiance. The 
United States is satisfied, however, that the relief in the proposed 
Final Judgment will prevent the recurrence of the violations alleged in 
the Complaint and ensure that consumers, physicians, and employers 
benefit from competition. Thus, the proposed Final Judgment would 
achieve 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.

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 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

[[Page 9759]]

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).\1\ 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 (D.C. Cir. 1995); see generally 
United States v. U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75 
(D.D.C. 2014) (noting the court has broad discretion of the adequacy of 
the relief at issue); United States v. SBC Commc'ns, Inc., 489 F. Supp. 
2d 1 (D.D.C. 2007) (describing the 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\ 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. 
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).
---------------------------------------------------------------------------

    Under the APPA, a court considers, among other things, the 
relationship between the remedy secured and the specific allegations 
set forth in the government's complaint, whether the decree is 
sufficiently clear, whether enforcement mechanisms are sufficient, and 
whether the decree may positively harm third parties. See 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) (quoting 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. One court 
explained:

[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 [e]nsuring 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 U.S. Airways, 38 F. Supp. 3d at 75 (noting 
that a court should not reject the proposed remedies because it 
believes others are preferable); 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); see also U.S. 
Airways, 38 F. Supp. 3d at 75 (noting that room must be made for the 
government to grant concessions in the negotiation process for 
settlements) (citing Microsoft, 56 F.3d at 1461); 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 U.S. Airways, 
38 F. Supp. 3d at 76 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); 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, 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. Sec.  16(e)(2); see also U.S. Airways, 38 F. 
Supp. 3d at 76 (noting that a court is not required to hold an 
evidentiary hearing or to permit intervenors as part of its review 
under the Tunney Act). The language captured Congress's intent when it 
enacted the Tunney Act in 1974. Senator Tunney explained: ``The 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 Sen. Tunney). Rather, the 
procedure

[[Page 9760]]

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\ A court can make 
its public-interest determination based on the competitive impact 
statement and response to public comments alone. U.S. Airways, 38 F. 
Supp. 3d at 76.
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    \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., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (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.'').
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VIII. DETERMINATIVE DOCUMENTS

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

Dated: February 27, 2018
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA:

Peter Caplan (P-30643),
Assistant United States Attorney, U.S. Attorney's Office, Eastern 
District of Michigan, 211 W. Fort Street, Suite 2001, Detroit, 
Michigan 48226, (313) 226-9784, [email protected].
\s\Katrina Rouse

Katrina Rouse (D.C. Bar No. 1013035),

Garrett Liskey,
Andrew Robinson,
Jill Maguire,
Healthcare & Consumer Products Section, Antitrust Division, U.S. 
Department of Justice, 450 Fifth St., NW, Washington, DC 20530, 
(415) 934-5346, [email protected].

Certificate of Service

    I hereby certify that on February 27, 2018, I electronically 
filed the foregoing paper with the Clerk of Court using the ECF 
system, which will send notification of the filing to the counsel of 
record for all parties for civil action 5:15-cv-12311-JEL-DRG, and I 
hereby certify that there are no individuals entitled to notice who 
are non-ECF participants.

\s\Garrett Liskey

Garrett Liskey (D.C. Bar No. 1000937)
Antitrust Division, Healthcare and Consumer Products Section, U.S. 
Department of Justice, 450 Fifth St., NW, Washington, DC 20530, 
(202) 598-2849, [email protected].

[FR Doc. 2018-04593 Filed 3-6-18; 8:45 am]
 BILLING CODE 4410-11-P