[Federal Register Volume 84, Number 70 (Thursday, April 11, 2019)]
[Notices]
[Pages 14675-14680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07195]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States et al. v. The Charlotte-Mecklenburg Hospital 
Authority, d/b/a Carolinas Healthcare System; Response to Public 
Comment

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that one comment was received 
concerning the proposed Final Judgment in this case, and that comment 
together with the Response of the United States to Public Comment have 
been filed with the United States District Court for the Western 
District of North Carolina in United States and State of North 
Carolina. v. The Charlotte-Mecklenburg Hospital Authority, d/b/a 
Carolinas HealthCare System, Civil Action No. 3:16-cv-00311-RJC-DCK. 
Copies of the comment and the United States' Response 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 Western District of North Carolina. 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.

Patricia A. Brink,
Director of Civil, Enforcement.

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA 
CHARLOTTE DIVISION

    United States of America and the State of North Carolina, 
Plaintiffs, v. The Charlotte-Mecklenburg Hospital Authority, d/b/a 
Carolinas Healthcare System, Defendant.

Case No. 3:16-cv-00311-RJC-DCK
Judge Robert J. Conrad, Jr.

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

    As required by the Antitrust Procedures and Penalties Act (the 
``APPA'' or ``Tunney Act''), 15 U.S.C. Sec. Sec.  16(b)-(h), the United 
States hereby responds to the one public comment received by the United 
States about the proposed Final Judgment in this case. After careful 
consideration of the comment submitted, the United States continues to 
believe that the proposed remedy will address the harm alleged in the 
Complaint and is therefore in the public interest. The proposed Final 
Judgment will prevent Atrium from impeding insurers' steered plans and 
transparency initiatives and restore competition among healthcare 
providers in the Charlotte area. The United States will move the Court 
for entry of a modified proposed Final Judgment \1\ after this response 
and the public comment have been published in the Federal Register, 
pursuant to 15 U.S.C. Sec.  16(d).
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    \1\ During the December 13, 2018 hearing in this matter, the 
Court raised concerns regarding certain aspects of Paragraph IX(B) 
of the proposed Final Judgment. The United States and Atrium have 
agreed to modify the proposed Final Judgment to address the Court's 
concerns. The modifications do not alter the structure or substance 
of the remedy and will not materially affect Atrium's obligations 
and therefore do not require an additional notice and comment period 
under the Tunney Act, 15 U.S.C. Sec.  16. The United States will 
describe in detail the parties' agreed-upon modifications and 
discuss how those modifications address the Court's concerns 
regarding Paragraph IX(B) in its forthcoming motion for entry of the 
modified proposed Final Judgment.
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I. Procedural History

    On June 9, 2016, the United States and the State of North Carolina 
filed a civil antitrust lawsuit against The Charlotte-Mecklenburg 
Hospital Authority, formerly known as Carolinas HealthCare System and 
now doing business as Atrium Health (``Atrium''), to enjoin it from 
using steering restrictions in its agreements with health insurers in 
the Charlotte, North Carolina area. The Complaint alleges that Atrium's 
steering restrictions are anticompetitive and violate Section 1 of the 
Sherman Act, 15 U.S.C. Sec.  1.
    After over two years of litigation, on November 15, 2018, the 
United States filed a proposed Final Judgment and a Stipulation signed 
by the parties that consents to entry of the proposed Final Judgment 
after compliance with the requirements of the Tunney Act. (Dkt. No. 87-
1.) On December 4, 2018, the United States filed a Competitive Impact 
Statement describing the proposed Final Judgment. (Dkt. No. 89.) The 
United States caused the Complaint, the proposed Final Judgment, and 
the Competitive Impact Statement to be published in the Federal 
Register on December 11, 2018, see 83 Fed. Reg. 63,674, and caused 
notice regarding the same, together with directions for the submission 
of written comments relating to the proposed Final Judgment, to be 
published in The Charlotte Observer and The Washington Post for seven 
days beginning on December 7, 2018, and ending on December 13, 2018. 
The 60-day period for public comment ended on February 11, 2019. The 
United States received only one comment, which is described below in 
Section IV, and attached as Exhibit A hereto.

II. Standard of Judicial Review

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a 60-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 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 
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. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) 
(assessing public-interest standard under the Tunney Act); United 
States v. Charleston Area Med. Ctr., No. 2:16-3664, 2016 WL 6156172, at 
*2 (S.D. W. Va. Oct. 21, 2016) (noting that in evaluating whether the 
proposed final judgment is in the public interest, the inquiry is ``a 
narrow one'' and only requires the court to determine if the remedy 
effectively addresses the harm identified in the complaint); United 
States v. U.S. Airways Grp., Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) 
(explaining that the ``court's inquiry is limited'' in Tunney Act 
settlements); 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

[[Page 14676]]

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'').
    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, among other things, 
the relationship between the remedy secured and the specific 
allegations in the government's complaint, whether the decree is 
sufficiently clear, whether its 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. Instead:

[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.\2\
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    \2\ See also 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'').

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).
    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 74-75 (noting that a court should not reject the proposed remedies 
because it believes others are preferable and that room must be made 
for the government to grant concessions in the negotiation process for 
settlements); 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 government's prediction as to the effect of 
proposed remedies, its perception of the market structure, and its 
views of the nature of the case''). The ultimate question is 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.' '' Microsoft, 56 F.3d at 1461 (quoting United States v. 
Western Elec. Co., 900 F.2d 283, 309 (D.C. Cir. 1990)). 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 75 (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.
    In its 2004 amendments to the APPA \3\, Congress made clear its 
intent to preserve the practical benefits of utilizing 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 (indicating that a court is not required to hold an 
evidentiary hearing or to permit intervenors as part of its review 
under the Tunney Act). This language explicitly wrote into the statute 
what Congress intended when it first 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 Sen. 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. 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; see also 
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''); S. Rep. No. 93-298 93d 
Cong., 1st Sess., 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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    \3\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for a 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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III. The Investigation, the Harm Alleged in the Complaint, and the 
Proposed Final Judgment

    The proposed Final Judgment is the culmination of a thorough, 
comprehensive investigation conducted by the Antitrust Division of the 
U.S. Department of Justice and the North Carolina Department of Justice 
and over two years of litigation regarding Atrium's use of steering 
restrictions in its contracts with health insurers in the Charlotte, 
North Carolina area. These steering restrictions either expressly 
prohibited the insurers from steering their members away from Atrium or 
impeded steering through other means, such as by imposing a financial 
penalty on any steering by the insurer away from Atrium or by allowing 
Atrium to promptly terminate the insurer's contract if the insurer 
steered members

[[Page 14677]]

away from Atrium. Based on the evidence gathered during the 
investigation and litigation, the United States concluded that Atrium's 
steering restrictions were anticompetitive and violated Section 1 of 
the Sherman Act, 15 U.S.C. Sec.  1, because the restrictions had 
detrimental effects on competition among healthcare providers in the 
Charlotte area. Specifically, the United States concluded that Atrium, 
in order to protect its dominant share and high prices and to insulate 
itself from competition, used its market power to require every major 
insurer in the Charlotte area to accept contract terms that restrict 
the insurers from steering their members to Atrium's lower-cost 
competitors. Atrium's steering restrictions reduced hospital 
competition in the Charlotte area; prevented transparency in the 
communication of price, cost, quality, or patient experience 
information to a member; and prevented consumers from benefitting from 
lower prices. The proposed Final Judgment provides an effective and 
appropriate remedy for this competitive harm by enjoining Atrium from 
(1) enforcing provisions in its current insurer contracts that restrict 
steering and transparency; (2) seeking or obtaining contract provisions 
with an insurer that would prohibit, prevent, or penalize the insurer 
from using popular steering methods or providing transparency; and (3) 
penalizing, or threatening to penalize, any insurer for its use of 
these popular steering methods and transparency.
    The proposed Final Judgment has several components, which Atrium 
agreed to abide by during the pendency of the Tunney Act proceedings 
and which the Court ordered in the Stipulation and Order of December 
14, 2018 (Dkt. No. 92).
    First, the proposed Final Judgment eliminates the anti-steering 
language in Atrium's agreements with health insurers. The proposed 
Final Judgment voids contract provisions (listed in Exhibit A to the 
proposed Final Judgment) that expressly prevent steering. The proposed 
Final Judgment also prohibits Atrium from using certain contract 
provisions that would require an insurer to include Atrium in all of 
its benefit plans (listed in Exhibit B to the proposed Final Judgment) 
to prevent, prohibit, or penalize steered plans and transparency. 
Finally, the proposed Final Judgment prevents Atrium from enforcing a 
``material impact'' provision in its contract with Blue Cross and Blue 
Shield of North Carolina (``BCBS-NC'') in a manner that reduces BCBS-
NC's incentives to steer to more efficient providers.
    Second, the proposed Final Judgment prevents Atrium from seeking or 
obtaining new contract provisions that would prohibit, prevent, or 
penalize steering through steered plans or transparency in the 
Charlotte area. The proposed Final Judgment prohibits Atrium from: (1) 
expressly prohibiting steered plans or transparency; (2) requiring 
prior approval of new benefit plans; or (3) demanding to be included in 
the most-preferred tier of benefit plans regardless of price.
    Third, the proposed Final Judgment prohibits Atrium from seeking or 
obtaining any contract provision, or taking any other action, that 
would penalize an insurer for steering away from Atrium through steered 
plans or transparency.
    Finally, the proposed Final Judgment includes robust mechanisms 
that will allow the United States and the Court to monitor the 
effectiveness of the relief and to enforce compliance.

 The proposed Final Judgment requires Atrium to provide certain 
health insurers with a copy of the Final Judgment and notify those 
insurers in writing of the Court's entry of the proposed Final Judgment 
and its requirements. Atrium is also required to provide a copy of the 
proposed Final Judgment to each of its commissioners and officers as 
well as each employee who has responsibility for negotiating or 
approving contracts with insurers.
 The proposed Final Judgment also requires Atrium to develop 
and implement procedures necessary to ensure compliance with the 
proposed Final Judgment, including procedures to answer questions from 
Atrium's commissioners and employees about abiding by the terms of the 
proposed Final Judgment. Atrium must submit to the United States and 
the State of North Carolina a written report setting forth its actions 
to comply with the proposed Final Judgment and a copy of any new or 
revised agreement or amendment to any agreement with any insurer that 
is executed during the term of the proposed Final Judgment. Atrium must 
also notify the United States and the State of North Carolina of when a 
provider which Atrium controls has a contract with any insurer with a 
provision that prohibits, prevents, or penalizes transparency or any 
steered plan.
 The proposed Final Judgment provides the United States with 
the ability to investigate Atrium's compliance with the Final Judgment 
and enforce the provisions of the proposed Final Judgment, including 
its rights to seek an order of contempt from this Court.

IV. Summary of Public Comments and the United States' Response

    The United States received only one comment concerning the proposed 
Final Judgment. The comment was submitted by the North Carolina State 
Health Plan for Teachers and State Employees \4\ and the State 
Treasurer of North Carolina, Dale R. Folwell (collectively, the ``State 
Health Plan''). Importantly, the State Health Plan agrees with the 
purpose of the proposed Final Judgment and does not criticize the 
central components of the relief obtained by the United States. Rather, 
the State Health Plan suggests limited changes to the proposed Final 
Judgment relating to (1) the monitoring of Atrium's compliance with the 
proposed Final Judgment, (2) the extent of price transparency that the 
proposed Final Judgment requires of Atrium, and (3) the possible 
preclusion of monetary relief and penalties. As explained below, 
however, the proposed Final Judgment provides strong mechanisms for 
monitoring Atrium's conduct and ensuring its compliance with the 
proposed Final Judgment, allows effective transparency that patients 
can use to compare quality and out-of-pocket costs, and does not 
preclude the State Health Plan or any other party from pursuing an 
action to recover monetary damages or other relief against Atrium.
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    \4\ The State Health Plan is a Division of the North Carolina 
Department of State Treasurer. The Treasurer and the State Health 
Plan's Executive Administrator and Board of Trustees are responsible 
for administering the plan. See Exhibit A at p. 1.
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    Although the State Health Plan contends that the compliance 
mechanisms in the proposed Final Judgment are insufficient and 
recommends an independent auditor, the proposed Final Judgment provides 
strong mechanisms to monitor Atrium and ensure its compliance with the 
judgment. Paragraph VI of the proposed Final Judgment requires Atrium 
to provide a copy of the Final Judgment to all of the major insurers in 
the Charlotte area and to notify those insurers that (1) the Final 
Judgment prohibits Atrium from entering into or enforcing any agreement 
provision that violates the Final Judgment and (2) Atrium may not 
enforce the steering restrictions in its current contracts with those 
insurers. Those insurers will have ample incentive to alert the United 
States and North Carolina should Atrium take any action that may be 
deemed a violation of the Final Judgment. Paragraph VII of the proposed 
Final Judgment requires

[[Page 14678]]

Atrium to (1) provide a copy of the Final Judgment to each of its 
commissioners, officers, and employees responsible for negotiating or 
approving contracts with health insurers; (2) develop and implement 
procedures to ensure compliance with the Final Judgment; (3) submit to 
the United States and North Carolina a written report setting forth all 
actions taken by Atrium to comply with the Final Judgment, including a 
description of the status of all contract negotiations between Atrium 
and insurers relating to healthcare services rendered in the Charlotte 
area; and (4) provide to the United States and North Carolina a copy of 
each contract or contract amendment with insurers that covers 
healthcare services in the Charlotte area within 30 days of execution. 
Further, Paragraph VII(B) provides that during the term of the Final 
Judgment, the United States and North Carolina may demand access to 
Atrium's books and records; interview Atrium's officers, employees, or 
agents; and require Atrium to submit written reports or responses to 
interrogatories on matters related to the Final Judgment.
    The State Health Plan also recommends that Atrium be required to 
(1) begin implementation of procedures to comply with the Final 
Judgment as soon as possible, rather than the 60 days specified in 
Paragraph VII(A)(3) of the proposed Final Judgment \5\ and (2) submit 
its plan to comply with the Final Judgment in 90 days, rather than the 
270 days specified in Paragraph VII(C) of the proposed Final 
Judgment.\6\ In the Division's experience, however, the deadlines 
provided for in the proposed Final Judgment are reasonable to ensure 
compliance.\7\ Given Atrium's size, and the time and effort that will 
be required to develop and approve a compliance plan that will be 
applicable throughout a large and diverse health system, 60 days is a 
reasonable period for developing such a plan. Further, allowing Atrium 
an additional 210 days to submit a written report will provide Atrium 
time to describe the status of its negotiations with insurers as 
required by Paragraph VII(C). Finally, this timing does not postpone 
Atrium's obligations to abide by the Final Judgment. In the Joint 
Stipulation that the parties filed with the Court on November 15, 2018, 
Atrium agreed to abide by the terms of the proposed Final Judgment 
during the pendency of the Tunney Act process. See Joint Stipulation 
(Dkt. No. 87), at ] 3. The Court entered the Joint Stipulation as an 
order of the Court on December 14, 2018.
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    \5\ Paragraph VII(A)(3) provides: It shall be the responsibility 
of the Defendant's designated counsel to undertake the following: . 
. . within sixty (60) calendar days of entry of this Final Judgment, 
develop and implement procedures necessary to ensure Defendant's 
compliance with the Final Judgment. Such procedures shall ensure 
that questions from any of Defendant's commissioners, officers, or 
employees about this Final Judgment can be answered by counsel 
(which may be outside counsel) as the need arises. Paragraph 21.1. 
of the Amended Protective Order Regarding Confidentiality shall not 
be interpreted to prohibit outside counsel from answering such 
questions.
    \6\ Paragraph VII(C) provides: Within 270 calendar days of entry 
of this Final Judgment, Defendant must submit to the United States 
and the State of North Carolina a written report setting forth its 
actions to comply with this Final Judgment, specifically describing 
(1) the status of all negotiations between Managed Health Resources 
(or any successor organization) and an Insurer relating to contracts 
that cover Healthcare Services rendered in the Charlotte Area since 
the entry of the Final Judgment, and (2) the compliance procedures 
adopted under Paragraph VII(A)(3) of this Final Judgment.
    \7\ See United States v. United Reg'l Healthcare Sys., No. 7:11-
cv-ws0030-O (N.D. Tex. Sept. 29, 2011) (entering Final Judgment 
enjoining hospital from entering into contracts with insurers that 
prevent insurers from contracting with hospital's competitors and 
providing hospital 60 days to implement compliance procedures and 
270 days to submit written report regarding compliance) available at 
https://www.justice.gov/atr/case-document/file/514136/download.
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    See Stipulation and Order, dated December 14, 2018 (Dkt. No. 92), 
at ] 3. Thus, consumers are already receiving the benefits of the 
proposed Final Judgment.
    Concerning pricing transparency, the United States agrees with the 
State Health Plan that price information enables consumers to make 
informed healthcare decisions. The proposed Final Judgment enables 
insurers to make pricing and quality information transparent to their 
members and to employers. Specifically, the proposed Final Judgment 
prohibits Atrium from implementing contract provisions or actions that 
restrict health insurers' ability to provide their members with 
information about the price, quality, patient experience, and 
anticipated out-of-pocket costs of Atrium's healthcare services 
compared to Atrium's competitors. This information will help insurers 
to make steered plans more effective by providing consumers with 
information that enables them to choose more cost-effective, high-
quality providers, thereby encouraging competition among healthcare 
providers.
    The State Health Plan, however, incorrectly argues that the Final 
Judgment should not allow Atrium to place any limitations on health 
insurers' ability to disseminate Atrium's prices.\8\ Limitless sharing 
of pricing information, which contains competitively sensitive 
negotiated pricing, is not needed to redress the harm alleged in this 
case. Allowing insurers to provide information about price and quality 
to their members and their employers is sufficient to facilitate 
steering. Indeed, the proposed Final Judgment enables insurers to 
disclose to enrollees insurer-calculated estimates of their out-of-
pocket costs at alternative providers, which accounts for negotiated 
provider prices and enrollees' insurance coverage. This information 
gives consumers the ability to make informed healthcare decisions. For 
this reason, the proposed Final Judgment does not need to require 
Atrium to disclose competitively sensitive price information to 
Atrium's competitors and the general public.
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    \8\ Paragraph V(C) of the proposed Final Judgment provides:
    [F]or an Insurer's dissemination of price or cost information 
(other than communication of an individual consumer's or member's 
actual or estimated out-of-pocket expense), nothing in the Final 
Judgment will prevent or impair Defendant from enforcing current or 
future provisions, including but not limited to confidentiality 
provisions, that (i) prohibit an Insurer from disseminating price or 
cost information to Defendant's competitors, other Insurers, or the 
general public; and/or (ii) require an Insurer to obtain a covenant 
from any third party that receives such price or cost information 
that such third party will not disclose that information to 
Defendant's competitors, another Insurer, the general public, or any 
other third party lacking a reasonable need to obtain such 
competitively sensitive information.
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    Finally, the State Health Plan expresses concern that the proposed 
Final Judgment may preclude the State Health Plan from pursuing an 
action for damages against Atrium. As stated in the Competitive Impact 
Statement, Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, however, 
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 any private antitrust damage 
action. Therefore, the State Health Plan remains free to pursue an 
action for monetary damages or other remedies.

V. Conclusion

[[Page 14679]]

    After careful consideration of the State Health Plan's comment, the 
United States continues to believe that the proposed Final Judgment 
provides an effective and appropriate remedy for the antitrust 
violations alleged in the Complaint and is therefore in the public 
interest. The United States will move this Court to enter the modified 
proposed Final Judgment after the comment and this response are 
published as required by 15 U.S.C. Sec.  16(d).

Respectfully submitted,

Dated: April 1, 2019

FOR PLAINTIFF UNITED STATES OF AMERICA:

Catherine R. Reilly, Karl D. Knutsen, Antitrust Division, U.S. 
Department of Justice, 450 Fifth Street, NW, Suite 4100, Washington, 
D.C. 20530, (p) 202/598-2744, [email protected]

EXHIBIT A

North Carolina, Department of State Treasurer, Office of the Treasurer

Dale R. Folwell, CPA, State Treasurer of North Carolina

February 8, 2019

Mr. Peter J. Mucchetti, Chief, Healthcare and Consumer Products 
Section, Antitrust Division, Department of Justice, 450 Fifth Street 
NW, Suite 4100, Washington, DC 20530

The Honorable Josh Stein, N.C. Attorney General, North Carolina 
Department of Justice, P.O. Box 629 Raleigh, NC 27602

Chief Mucchetti and Attorney General Stein,

    The North Carolina State Health Plan for Teachers and State 
Employees, a Division of the North Carolina Department of State 
Treasurer (State Health Plan or the Plan), and I, submit these comments 
in response to the Notice of Proposed Final Judgment, Stipulation, and 
Competitive Impact Statement (Proposed Final Judgment) published on 
December 11, 2018, in the case of United States et al. v. The 
Charlotte-Mecklenburg Hospital Authority, d/b/a Carolinas Healthcare 
System (Defendant Atrium). We believe that the Proposed Final Judgment 
does not promote and protect consumers sufficiently and does not 
correct the past harm inflicted on the State Health Plan and its 
members. We request that you set aside the Proposed Final Judgment as 
contemplated and incorporate, at a minimum, the comprehensive relief we 
recommend.
    The North Carolina General Assembly created the State Health Plan 
to provide comprehensive health coverage to over 720,000 teachers, 
state employees, current and former lawmakers, state university and 
community college personnel, local government employees, retirees, and 
their dependents. The State Health Plan spends over $3.3 billion 
annually to provide these benefits. The Plan's mission is to improve 
the health and health care of North Carolina teachers, state employees, 
retirees, and their dependents, in a financially sustainable manner, 
thereby serving as a model to the people of North Carolina for 
improving their health and well-being. The Executive Administrator of 
the Plan, the Plan's Board of Trustees and I are responsible for 
administering the Plan and for carrying out these duties as fiduciaries 
of the Plan and its members. With such expansive coverage and 
responsibility, the State Health Plan is significantly affected by the 
Proposed Final Judgment.
    While we agree with the purpose of the Proposed Final Judgment to 
promote transparency and prevent Defendant Atrium from impeding 
insurers' steered plans, we have concerns with how

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    Defendant Atrium will be monitored to comply with the Proposed 
Final Judgment, the level of transparency that is being asked of 
Defendant Atrium, and the possible preclusion of monetary relief and 
penalties.

Compliance:

    The Proposed Final Judgment requires that, within 60 calendar days 
of entry of the Final Judgment, Defendant Atrium must develop and 
implement procedures that comply with the terms of the Final Judgment. 
Defendant Atrium must submit its plan in writing within 270 calendar 
days of entry of the Final Judgment to the United States and the State 
of North Carolina. The Proposed Final Judgment also states that the 
United States and State of North Carolina, upon written request and 
reasonable notice, can access and review materials pertaining to the 
implementation of the Proposed Final Judgment, to ensure that the 
Defendant Atrium is in compliance.
    The compliance mechanisms contained in the Proposed Final Judgment 
are insufficient. To ensure Defendant Atrium is not utilizing contracts 
that prevent, prohibit, or penalize steering, we recommend that 
Defendant Atrium submit its compliance plan in writing within 90 days, 
rather than 270 days, and begin implementation of these compliance 
measurers as soon as possible. We also recommend the appointment of an 
independent auditor to monitor compliance on a quarterly basis, at the 
expense of Defendant Atrium.

Transparency:

    There should be no exceptions to the transparency requirement. The 
public must be able to evaluate price, cost, and quality to prevent 
future Sherman Act violations. We object specifically to the quoted 
language below, found within the Permitted Conduct Section of the 
Proposed Final Judgment:

Nothing in the Final Judgment will prevent or impair Defendant from 
enforcing current or future provisions, including but not limited to 
confidentiality provisions, that (i) prohibit an Insurer from 
disseminating price or cost information to Defendant's competitors, 
other Insurers, or the general public; and/or (ii) require an Insurer 
to obtain a covenant from any third party that receives such price or 
cost information that such third party will not disclose that 
information to Defendant's competitors, another Insurer, the general 
public, or any other third party lacking a reasonable need to obtain 
such competitively sensitive information.

United States et al. v. The Charlotte-Mecklenburg Hospital Authority, 
d/b/a Carolinas Healthcare System, 83 Fed. Reg. 63674 (published Dec. 
11, 2018).

    Consumers need price information to make informed decisions about 
their health care and to prevent future similar restrictions that would 
create barriers to competition.

Damages:

    We are concerned that the Proposed Final Judgment may preclude the 
State Health Plan and its 720,000 members from pursuing damages to both 
remedy the harm they have incurred and to discourage future anti-
competitive behavior. Over the past two decades, the Plan and its 
members have paid Defendant Atrium over $1.8 billion for health care 
services. Even if, as a result of Defendant Atrium's anti-competitive 
actions, the Plan and its members overpaid Defendant Atrium by only 5% 
over this time period, it would have cost North Carolina taxpayers over 
$90 million. Not only should Defendant Atrium not be allowed to retain 
such amounts obtained through illegal behavior, penalties to discourage 
future activities make sense in this case. Thus, we ask that the 
Proposed Final Judgment be modified to make clear that the State Health 
Plan or any of its members are not precluded from

[[Page 14680]]

pursuing damages, including those intended to penalize the Defendant.

Conclusion:

    Just recently, President Donald J. Trump addressed the current 
State of the Union. In his remarks, President Trump asked Congress to 
pass legislation that finally delivers fairness and price transparency 
for American patients. He remarked that drug companies, insurance 
companies, and hospitals should disclose real prices to foster 
competition and bring costs down.
    The Proposed Final Judgment does not promote or protect consumers 
sufficiently and does not correct the past harm inflicted on the State 
Health Plan and its over 720,000 members. We are opposed vehemently to 
anti-competitive policies and activities such as those employed by 
Defendant Atrium, and believe that strict compliance standards, full 
transparency, and payment of damages to the fullest extent possible are 
vital to promoting and protecting consumerism in the North Carolina 
health care market and to remedying past harm. We trust that you will 
take our feedback into consideration, and set aside the Proposed Final 
Judgment, or modify it as we have suggested.

____________
Dale R. Folwell, CPA
North Carolina State Treasurer

[FR Doc. 2019-07195 Filed 4-10-19; 8:45 am]
 BILLING CODE 4410-11-P