[Federal Register Volume 85, Number 251 (Thursday, December 31, 2020)]
[Notices]
[Pages 86948-86965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28905]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States, et al. v. Harvard Pilgrim Health Care, Inc., et 
al.; Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation, and Competitive Impact Statement have been filed with the 
United States District Court for the District of New Hampshire in 
United States and State of New Hampshire vs. Harvard Pilgrim Health 
Care, Inc. and Health Plan Holdings, Inc., Civil Action No. 1:20-cv-
01183. On December 14, 2020, the United States filed a Complaint 
alleging that the proposed merger of Harvard Pilgrim Health Care, Inc. 
and Health Plan Holdings, Inc. (f/k/a Tufts Health Plan, Inc.) would 
violate Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed Final 
Judgment, filed at the same time as the Complaint, requires Health Plan 
Holdings to divest its New Hampshire subsidiary, Tufts Health Freedom 
Plans, Inc., along with certain tangible and intangible assets.
    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 District of New 
Hampshire. Copies of these materials may be obtained from the Antitrust 
Division upon request and payment of the copying fee set by Department 
of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, 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 Eric D. Welsh, 
Chief, Healthcare and Consumer Products Section, Antitrust Division, 
Department of Justice, 450 Fifth Street NW, Suite

[[Page 86949]]

4100, Washington, DC 20530 (telephone: 202-598-8681).

Suzanne Morris,
Chief, Premerger and Division Statistics, Antitrust Division.

United States District Court for the District of New Hampshire

United States of America and State of New Hampshire, Plaintiffs, vs. 
Harvard Pilgrim Health Care, Inc. and Health Plan Holdings, Inc., 
Defendants.

Civil Action No.: 1:20-cv-01183-JL
Judge Joseph N. Laplante

Complaint

    The United States of America and the State of New Hampshire bring 
this civil antitrust action to block the proposed merger of Harvard 
Pilgrim Health Care and Health Plan Holdings (f/k/a Tufts Health Plan). 
The combination of Harvard Pilgrim and Health Plan Holdings--two of the 
largest suppliers of health insurance in New Hampshire for certain 
employers purchasing group coverage for their employees--into one firm 
would likely lead to higher prices, lower quality, and reduced choice 
for consumers of commercial group health insurance in New Hampshire. To 
prevent this harm to consumers, the United States and the State of New 
Hampshire seek an injunction to stop the proposed merger. Plaintiffs 
allege as follows:

I. Introduction

    1. Health insurance is an integral part of the American healthcare 
system. Americans collectively spend trillions of dollars on healthcare 
each year, and the cost of healthcare impacts almost every American. 
Consumers depend on health insurance to secure affordable access to 
doctors and hospitals and to protect themselves from the risk of 
medical expenses that could be financially devastating.
    2. Half of all Americans obtain health insurance coverage through 
their employers. Employers purchase group health insurance plans for 
their employees from insurance companies such as Harvard Pilgrim and 
Health Plan Holdings. Competition between insurance companies like 
Harvard Pilgrim and Health Plan Holdings ensures that employers can 
purchase high-quality group health insurance plans for their employees 
at affordable prices.
    3. Harvard Pilgrim sells commercial group health insurance plans to 
small and large employer groups in New Hampshire. Health Plan Holdings 
sells commercial group health insurance plans to small and large 
employer groups in New Hampshire through Tufts Health Freedom Plan, 
Inc. (``Tufts Freedom'').
    4. In New Hampshire, Harvard Pilgrim and Tufts Freedom are two of 
the three top companies offering commercial group health insurance 
plans to (1) private small group employers with up to 50 full-time 
eligible employees (``small groups'') and (2) private large group 
employers with between 51 and 99 full-time eligible employees, a 
segment of commercial large group health insurance referred to as 
community rated by class or ``CRC'' by Defendants and others in the 
industry (``CRC groups''). Competition between Harvard Pilgrim and 
Tufts Freedom has resulted in lower premiums, richer (i.e., more robust 
and comprehensive) plan benefits, and better service for small groups 
and CRC groups in New Hampshire.
    5. Combining Harvard Pilgrim and Health Plan Holdings into one firm 
would eliminate this competition, likely raising the price and reducing 
the quality of commercial health insurance sold to small groups and to 
CRC groups in New Hampshire.
    6. As a result, the proposed transaction is likely to substantially 
lessen competition for commercial health insurance sold to small groups 
and to CRC groups, in violation of Section 7 of the Clayton Act, 15 
U.S.C. 18. The Court, therefore, should enjoin this transaction.

II. Defendants and the Transaction

    7. Harvard Pilgrim sells commercial group health insurance to small 
and large employer groups in four states: New Hampshire, Massachusetts, 
Connecticut, and Maine. Harvard Pilgrim's annual revenue in 2019 was 
approximately $3 billion, and it has over one million members.
    8. Health Plan Holdings sells commercial group health insurance to 
small and large employer groups in New Hampshire through Tufts Freedom, 
which until September 2020 was a joint venture with the Granite 
Healthcare consortium consisting of several large New Hampshire health 
systems and now is solely owned by Health Plan Holdings. It also sells 
commercial group health insurance in Massachusetts and Rhode Island. 
Health Plan Holdings' annual revenue in 2019 was over $5.5 billion, and 
it has over one million members.
    9. Defendants have agreed to a ``merger of equals,'' which was 
memorialized in a Combination Agreement dated August 9, 2019 (the 
``Transaction'').

III. Jurisdiction and Venue

    10. This Court has subject-matter jurisdiction under Section 15 of 
the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345.
    11. The State of New Hampshire brings this action in its sovereign 
capacity as parens patriae on behalf of and to protect the health and 
general welfare of its citizens and the general economy of the State 
under Section 16 of the Clayton Act, 15 U.S.C. 26 and under N.H. Rev. 
Stat. Ann. 356:4-a & 4-b, seeking injunctive and other relief from 
Defendants' violation of Section 7 of the Clayton Act, 15 U.S.C. 18 and 
state antitrust law.
    12. Defendants are engaged in activities that substantially affect 
interstate commerce. Defendants sell health insurance and 
administrative services for which employers and consumers remit 
payments across state lines, and Defendants otherwise participate in 
interstate commerce.
    13. Venue is proper under Section 12 of the Clayton Act, 15 U.S.C. 
22, and under 28 U.S.C. 1391(b) and (c).
    14. This Court has personal jurisdiction over each Defendant. 
Harvard Pilgrim is headquartered in Wellesley, Massachusetts and 
transacts business in this district. Health Plan Holdings is 
headquartered in Watertown, Massachusetts and transacts business in 
this district. Both Harvard Pilgrim and Health Plan Holdings have 
consented to personal jurisdiction and the acceptance of service of 
process in this district for purposes of this matter. The Transaction 
would also have effects on employers and consumers in this district.

IV. The Relevant Markets

    15. Commercial group health insurance is sold by health insurance 
companies to employers to provide health insurance coverage to their 
employees and their employees' families. Employers cover at least a 
portion of the cost of the insurance for their employees, making it a 
cost-effective way for employees, and their families, to obtain health 
insurance.
    16. Insurers offering commercial group health insurance plans to 
employers try to make them attractive by competing on price, product 
design, customer service, care management, wellness programs, and 
reputation. Insurers also compete based on the breadth of their network 
of healthcare providers, including doctors and hospitals, as employers 
seek an insurance plan that offers in-network access to medical 
providers that are close to where their employees live and

[[Page 86950]]

work. An insurer's ability to compete on price depends largely on 
medical costs, which are impacted significantly by the discounts the 
insurer obtains from medical providers.
    17. In New Hampshire, Harvard Pilgrim and Health Plan Holdings 
compete vigorously with one another in the sale of commercial health 
insurance to small groups and to CRC groups.
    18. The Transaction is likely to harm competition in two health 
insurance markets in New Hampshire: (1) The sale of commercial group 
health insurance to small groups and (2) the sale of commercial group 
health insurance to CRC groups. For both of these markets, employers 
tend to be local, with the majority of their employees based in New 
Hampshire, although some employers offer insurance to employees in 
multiple states. Competition to win small groups and CRC groups in New 
Hampshire is primarily driven by which insurer offers the lowest rates. 
Small groups and CRC groups, as defined in this complaint, do not 
include governmental employers (e.g., municipalities, school districts) 
in New Hampshire with fewer than 100 employees, as historically almost 
all those employers have purchased health insurance through a trust 
instead of directly from an insurer.

A. Commercial Health Insurance Sold to Small Groups

    19. The sale of commercial health insurance to small groups in New 
Hampshire is a relevant antitrust product market in which to analyze 
the effects of the Transaction. New Hampshire Insurance Department 
regulations define a ``small group'' as an employer with 50 or fewer 
full-time eligible employees. For small groups, health plans are 
typically fully insured, which means that the employer pays a premium 
to the insurance company and in return the company covers the 
employees' healthcare costs. Small groups tend to be local in nature, 
requiring a strong local provider network.
    20. The commercial health insurance plans offered to small groups 
are governed by the New Hampshire Insurance Department and cannot be 
substituted with plans offered to New Hampshire employers with 51 or 
more full-time eligible employees, defined by statute as ``large 
group.'' Harvard Pilgrim and Health Plan Holdings also differentiate 
small group accounts separately from large group accounts internally 
and offer different pricing for small group accounts compared to large 
group accounts.
    21. New Hampshire law does not require that an insurer offer a 
small group product statewide and therefore permits an insurer to offer 
small group plans only in certain counties. Accordingly, despite the 
fact that state law does not allow insurers to charge different prices 
for the same small group plans based on location, insurers can offer a 
more expensive set of small group plans in one part of the state, and a 
less expensive set of different small group plans in another part of 
the state. This allows insurers to charge different prices for 
different products to small groups based on where employees live and 
work. The Transaction is likely to substantially lessen competition for 
the sale of commercial health insurance to small groups in all seven of 
New Hampshire's Core Based Statistical Areas (``CBSA''): (1) The 
Manchester-Nashua CBSA, (2) the Concord CBSA, (3) the Laconia CBSA, (4) 
the Keene CBSA, (5) the Berlin CBSA, (6) the New Hampshire counties 
(Grafton and Sullivan) of the Lebanon NH-VT CBSA, and (7) the New 
Hampshire counties (Rockingham and Strafford) of the Boston-Cambridge-
Newton MA-NH CBSA.
    22. Each of these seven CBSAs is a relevant geographic market. A 
hypothetical monopolist over the sale of commercial health insurance to 
small groups in each of these markets would impose a small but 
significant and non-transitory increase in price, or SSNIP. A small 
group employer, faced with a significant price increase, cannot defeat 
the price increase by purchasing a large group product for which it is 
ineligible. This price increase would not be defeated by substitution 
outside the relevant market or by arbitrage (meaning a small group 
trying to repurchase insurance through another employer group).

B. Commercial Health Insurance Sold to CRC Groups

    23. The sale of commercial health insurance to CRC groups is a 
relevant antitrust product market. In New Hampshire, employers with 
between 51 and 99 full-time eligible employees represent a distinct 
segment of large group and are referred to as CRC employers (or CRC 
groups). CRC groups have different needs and make different buying 
decisions than small groups or even larger employers. Harvard Pilgrim 
and Tufts Freedom employ different sales strategies for this segment 
than they do for other types of employers.
    24. For CRC groups, similar to small groups, health plans are 
typically fully insured, which means that the employer pays a premium 
to the insurance company and in return the company covers the 
employees' healthcare costs. Insurers, including Harvard Pilgrim and 
Tufts Freedom, differentiate employers with 51 to 99 full-time eligible 
employees from other large group employers, and refer to these 
employers as the CRC segment. As with small groups, CRC groups also 
tend to be more local in nature than other large group employers, 
requiring a strong local provider network, as opposed to large group 
employers with more than 100 full-time eligible employees, which tend 
to require strong national provider networks.
    25. Insurers offering commercial health insurance to CRC groups in 
New Hampshire can charge different prices to different employers. Group 
health plans for CRC groups, in contrast to larger group employers, are 
typically (although not exclusively) community rated by class, meaning 
that, when setting rates for CRC groups, the insurer first establishes 
a base rate determined by the medical costs of a class of similar 
groups, rather than upon the medical costs of the individual group 
seeking the plan. The insurer then uses this base rate, along with the 
individual employer's medical costs, to negotiate rates with the 
specific CRC group.
    26. The Defendants target CRC groups directly through their sales 
efforts. For example, Tufts Freedom has focused its large group sales 
efforts on CRC groups since it began selling commercial health 
insurance in New Hampshire, and Harvard Pilgrim tracks CRC groups 
separately from other large group accounts. In addition, both Harvard 
Pilgrim and Tufts Freedom utilize specific pricing strategies for CRC 
groups. The Defendants have formulated these specific pricing 
strategies because CRC groups in New Hampshire are generally more price 
sensitive than large group employers with more than 100 full-time 
eligible employees.
    27. As with commercial health insurance sold to small groups, New 
Hampshire law does not require that an insurer offer a CRC group 
product statewide and therefore permits an insurer to offer CRC plans 
only in certain counties. Accordingly, insurers can offer more 
expensive plans to CRC groups in one part of the state and less 
expensive plans in another part of the state. This allows insurers to 
charge different prices for different products to CRC groups based on 
where employees live and work. The Transaction is likely to 
substantially lessen competition for the sale of commercial health 
insurance to CRC groups in six separate CBSAs in New Hampshire: (1) The 
Manchester-Nashua CBSA, (2) the Concord CBSA,

[[Page 86951]]

(3) the Laconia CBSA, (4) the Keene CBSA, (5) the New Hampshire 
counties (Grafton and Sullivan) of the Lebanon NH-VT CBSA, and (6) the 
New Hampshire counties (Rockingham and Strafford) of the Boston-
Cambridge-Newton MA-NH CBSA.
    28. Each of these six CBSAs is a relevant geographic market. A 
hypothetical monopolist over the sale of commercial health insurance to 
CRC groups in each of these markets would impose a small but 
significant and non-transitory increase in price or SSNIP. This price 
increase would not be defeated by substitution outside the relevant 
market or by arbitrage.

V. The Transaction Is Presumptively Illegal

    29. Mergers that significantly increase concentration in already 
concentrated markets are presumptively anticompetitive and therefore 
presumptively unlawful.
    30. To measure market concentration, courts often use the 
Herfindahl-Hirschman Index (``HHI''). HHI is an accepted measure of 
market concentration. It is calculated by squaring the market share of 
each firm competing in the market and then summing the resulting 
numbers. For example, for a market consisting of four firms with shares 
of 30 percent, 30 percent, 20 percent, and 20 percent, the HHI is 2,600 
(30\2\ + 30\2\ + 20\2\ + 20\2\ = 2,600). The HHI recognizes the 
relative size distribution of the firms in a market, ranging from 0 in 
markets with no concentration to 10,000 in markets where one firm has 
100 percent market share. See Horizontal Merger Guidelines Sec.  5.3. 
Courts have found that mergers that increase the HHI by more than 200 
and result in an HHI above 2,500 in any relevant market or line of 
commerce are presumed to be anticompetitive.

A. The Relevant Markets Are Highly Concentrated and the Transaction 
Would Significantly Increase Their Concentration

    31. In the small group market, based upon 2018 data, the combined 
market shares for Harvard Pilgrim and Tufts Freedom would range from 
over 45% to over 60% in each of the seven CBSAs. The Transaction would 
reduce the number of small group health insurers from four to three, 
with the two largest insurers--Anthem and the merged Harvard Pilgrim/
Tufts Freedom--possessing over 95% share in each of the seven CBSAs. 
The Transaction would result in an HHI increase ranging from over 350 
points to over 1,600 points with post-transaction HHIs of between 4,500 
points and 7,500 points for commercial health insurance sold to small 
groups in New Hampshire. Thus, the Transaction is presumptively 
unlawful.
    32. For the CRC group market, based upon 2018 data, the combined 
market shares for Harvard Pilgrim and Tufts Freedom would range from 
more than 40% to over 65% in each of the six CBSAs. The Transaction 
would reduce the number of CRC group health insurers from four to 
three, with the two largest insurers--Anthem and the merged Harvard 
Pilgrim/Tufts Freedom--possessing over 95% share in each of the six 
CBSAs. The Transaction would result in an HHI increase ranging from 
over 200 to over 2,000 points in the CRC group market with post-
transaction HHIs of just under 5,000 to almost 7,000 for CRC groups in 
New Hampshire. Thus, the Transaction is presumptively unlawful.

B. The Transaction Likely Would Harm Consumers in New Hampshire

    33. Harvard Pilgrim and Tufts Freedom are particularly close 
competitors for commercial health insurance sold to small groups and 
CRC groups in New Hampshire with competition between the two insurers 
more robust for certain types of groups than the market shares would 
predict. This is in part because Harvard Pilgrim and Tufts Freedom--two 
strong local health insurers that have not built national provider 
networks--are more attractive to small groups and CRC groups with 
higher percentages of employees resident in New Hampshire. Similarly, 
because Harvard Pilgrim and Tufts Freedom have priced aggressively, the 
two appeal to small groups and CRC groups that have greater price 
sensitivity.
    34. Tufts Freedom's entry into New Hampshire in 2016 was backed by 
its Granite Healthcare provider partners, which formed the core of 
Tufts Freedom's provider network and extended it substantially below-
market rates, enabling it to price aggressively. Using a combination of 
competitive pricing and a strong provider network, Tufts Freedom 
significantly grew its small group market share throughout New 
Hampshire after entering the state in 2016, with its share reaching 
almost 20% by 2019. Tufts Freedom achieved much of this growth at the 
expense of Harvard Pilgrim. As a result, and as Harvard Pilgrim 
recognized, the New Hampshire small group market became a three-player 
market, consisting of Harvard Pilgrim, Tufts Freedom, and Anthem.
    35. Tufts Freedom's aggressive pricing and growth caused Harvard 
Pilgrim to respond by significantly lowering prices and improving plan 
features to be more competitive with Tufts Freedom. This response 
included a strategy of targeting its competitors' ``sweet spots,'' 
meaning lowering its rates on plans that competed with the most popular 
offerings of its competitors. Tufts Freedom observed this competitive 
reaction and in turn responded by announcing lower than expected rate 
increases. The Transaction would eliminate this fierce competition 
between Harvard Pilgrim and Tufts Freedom and its resulting benefits to 
consumers in New Hampshire.
    36. Direct competition between Harvard Pilgrim and Tufts Freedom in 
New Hampshire also has benefitted CRC groups. Again, Tufts Freedom 
entered New Hampshire pursuing a targeted pricing strategy that allowed 
it to gain market share. Harvard Pilgrim reacted to this competitive 
pressure resulting in lower health insurance prices for CRC groups.
    37. In addition to this price competition, New Hampshire consumers 
also have benefitted from competition between Harvard Pilgrim and Tufts 
Freedom on plan features and quality of service for commercial health 
insurance sold to CRC groups. For example, in 2019, Harvard Pilgrim 
developed four new no-coinsurance plans, which limited out-of-pocket 
expenses to insureds and offered different features, with the express 
purpose of making them more attractive to the insureds. Just this year, 
Tufts Freedom offered consumers a novel telehealth option that included 
zero copayment in fully insured plans in order to drive innovation 
around this new emerging platform.
    38. Harvard Pilgrim and Tufts Freedom have engaged in head-to-head 
competition on price, plan features, and quality of service in the sale 
of commercial health insurance to small groups and to CRC groups in New 
Hampshire. Eliminating this competition would likely result in higher 
prices, lower quality, and less customer choice in the sale of 
commercial health insurance to small groups and to CRC groups in New 
Hampshire.

VI. Absence of Countervailing Factors

    39. Other firms are unlikely to enter or expand into the relevant 
markets in a manner that would be timely, likely, or sufficient to 
replace the competition that would be lost as a result of the 
Transaction.
    40. Each of the relevant markets is characterized by high barriers 
to entry, including state licensing and regulatory

[[Page 86952]]

requirements, the cost of developing a comprehensive provider network 
where employees live and work, the inability of insurers without 
significant membership to obtain competitive discounts from providers, 
and the development of sufficient business to permit the spreading of 
risk.
    41. The Transaction will not result in verifiable, transaction-
specific efficiencies in the relevant markets sufficient to reverse the 
Transaction's likely anticompetitive effects.

VII. Violation Alleged

    42. Plaintiffs allege and incorporate paragraphs 1 through 41 as if 
set forth fully herein.
    43. Unless enjoined, the Transaction is likely to substantially 
lessen competition in the relevant markets, in violation of Section 7 
of the Clayton Act, 15 U.S.C. 18.
    44. Among other things, the Transaction would:
    (a) Eliminate present and future competition between Harvard 
Pilgrim and Health Plan Holdings in New Hampshire;
    (b) likely cause prices for commercial health insurance sold to 
small groups and to CRC groups in New Hampshire to be higher than they 
would be otherwise; and
    (c) likely reduce quality, service, choice, and innovation for 
commercial health insurance sold to small groups and to CRC groups in 
New Hampshire.

VIII. Request for Relief

    45. Plaintiffs request that:
    (a) The Transaction be adjudged to violate Section 7 of the Clayton 
Act, 15 U.S.C. 18;
    (b) the Court permanently enjoin and restrain Defendants from 
entering into the Transaction contemplated in the Combination 
Agreement;
    (c) Plaintiffs be awarded the costs of this action, including 
attorneys' fees to the State of New Hampshire; and
    (d) Plaintiffs be awarded any other relief that the Court deems 
just and proper.

Dated: December 14, 2020.

Respectfully submitted,

For Plaintiff United States of America:
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Makan Delrahim,

Assistant Attorney General for Antitrust.
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Michael Murray,

Principal Deputy Assistant, Attorney General.
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Kathleen S. O'Neill,

Acting Deputy Assistant, Attorney General.
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Eric D. Welsh,

 Chief, Healthcare and Consumer Products Section.
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Jill C. Maguire,

Assistant Chief, Healthcare and Consumer Products Section.

For the Plaintiff State of New Hampshire.

By its attorney,
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Gordon J. MacDonald,

Attorney General of New Hampshire.

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Brandon H. Garod, NH Bar #21164,

Senior Assistant Attorney General.

Consumer Protection and Antitrust Bureau,New Hampshire Department of 
Justice, Office of Attorney General, 33 Capitol Street, Concord, NH 
03301, Phone: (603) 271-1217, [email protected].
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Jennifer Foley, NH Bar #10519,

Assistant Attorney General.

Consumer Protection and Antitrust Bureau, New Hampshire Department 
of Justice, Office of Attorney General, 33 Capitol Street, Concord, 
NH 03301, Phone: (603) 271-7987 [email protected].
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Scott W. Murray,

United States Attorney.

By:--------------------------------------------------------------------
Michael McCormack,

Assistant U.S. Attorney, NH Bar. #16470.

United States Attorney's Office,53 Pleasant Street, Concord, NH 
03301, Tel: (603) 225-1552, Email: [email protected].

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Catherine R. Reilly
Garrett Liskey
Justin Dempsey
Jeremy Evans
Chris S. Hong
Barry Joyce
John P. Lohrer
Natalie Melada
David M. S
Brandon Storm

Attorneys for the United States.

U.S. Department of Justice, Antitrust Division, 450 5th Street, NW, 
Suite 4100, Washington, D.C. 20530, Tel.: (202) 598-2744, Email: 
[email protected]

United States District Court for the District of New Hampshire

    United States of America and State of New Hampshire, Plaintiffs, 
vs. Harvard Pilgrim Health Care, INC., and Health Plan Holdings, 
INC., Defendants.

Civil Action No. 1:20-cv-01183-JL
Judge Joseph N. Laplante

[Proposed] Final Judgment

    Whereas, Plaintiffs, United States of America and the State of New 
Hampshire, filed their Complaint on December 14, 2020;
    And whereas, Plaintiffs and Defendants, Harvard Pilgrim Health 
Care, Inc. and Health Plan Holdings, Inc. (f/k/a Tufts Health Plan, 
Inc.), have consented to entry of this Final Judgment without the 
taking of testimony, without trial or adjudication of any issue of fact 
or law, and without this Final Judgment constituting any evidence 
against or admission by any party regarding any issue of fact or law;
    And whereas, Defendants agree to make a divestiture to remedy the 
loss of competition alleged in the Complaint;
    And whereas, Defendants represent that the divestiture and other 
relief required by this Final Judgment can and will be made and that 
Defendants will not later raise a claim of hardship or difficulty as 
grounds for asking the Court to modify any provision of this Final 
Judgment;
    And whereas, the resolution of the interests of the State of New 
Hampshire through its Consumer Protection and Antitrust Bureau pursuant 
to Section 7 of the Clayton Act and the state antitrust law, N.H. Rev. 
Stat. Ann. Ch. 356, does not impact the jurisdiction or authority of 
the New Hampshire Insurance Department to pursue any interest 
authorized by law.
    Now therefore, it is ordered, adjudged, and decreed:

I. Jurisdiction

    The Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against Defendants under Section 7 of the Clayton 
Act, as amended (15 U.S.C. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Harvard Pilgrim'' means Defendant Harvard Pilgrim Health Care, 
Inc., a Massachusetts nonprofit corporation with its headquarters in 
Wellesley, Massachusetts, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships, and joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    B. ``Health Plan Holdings'' means Defendant Health Plan Holdings, 
Inc. (f/k/a Tufts Health Plan, Inc.), a Massachusetts nonprofit 
corporation with its headquarters in Watertown, Massachusetts, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their directors, 
officers, managers, agents, and employees.
    C. ``Tufts Health Freedom Plan'' means Tufts Health Freedom Plans, 
Inc., its successors and assigns, and its subsidiaries, divisions, 
groups, affiliates, partnerships, and joint

[[Page 86953]]

ventures, and their directors, officers, managers, agents, and 
employees.
    D. ``Acquirer'' means UnitedHealth Group, Inc. or another entity 
approved by the United States of America in its sole discretion to whom 
Defendants divest the Divestiture Assets.
    E. ``CRC'' means community rating by class, which refers to the 
sale of commercial group health insurance to private employers with 
between 51 and 99 full-time eligible employees.
    F. ``Divestiture Assets'' means:
    1. All Healthcare Provider Contracts;
    2. All of Defendants' rights, title, and interests in and to all 
property and assets, tangible and intangible, wherever located, of 
Tufts Health Freedom Plan, including:
    a. All licenses, permits, certifications, approvals, consents, 
registrations, waivers, and authorizations issued or granted by any 
governmental organization, and all pending applications or renewals;
    b. All real property interests, including leases; and
    c. All contracts, other than Healthcare Provider Contracts, to 
which Tufts Health Freedom Plan is a party, including contractual 
rights, membership, customer contracts, and all other agreements, 
commitments, and understandings.
    3. All current and historical member records for the health plans 
that Tufts Health Freedom Plan offers or has offered, including contact 
information, claims information, clinical information, all underlying 
electronic data, and all files that contain any current or historical 
member records for those health plans;
    4. All provider-furnished data related to members of health plans 
that Tufts Health Freedom Plan offers or has offered and all files that 
contain any provider-furnished data related to those health plans; and
    5. An exclusive license to use the ``Tufts Health Freedom,'' 
``Tufts Health Freedom Insurance Company,'' and ``Tufts Health Freedom 
Plan(s)'' brand names, and all associated trademarks, service marks, 
and service names, in New Hampshire from the date on which the 
Divestiture Assets are divested to Acquirer through December 31, 2021.
    G. ``Granite Healthcare'' means Granite Healthcare Asset Holding 
Company, LLC, its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures as of July 1, 2020, and their members, 
directors, officers, managers, agents, and employees. Its members 
include Catholic Medical Center, Concord Hospital, Southern New 
Hampshire Health System, Wentworth-Douglass Hospital, and Delta Dental 
Plan of New Hampshire, Inc. d/b/a Northeast Delta Dental.
    H. ``Granite Healthcare Provider Contracts'' means the contracts 
with Catholic Medical Center, Concord Hospital, Southern New Hampshire 
Health System, and Wentworth-Douglass Hospital, and any other hospitals 
that had an ownership interest in Granite Healthcare as of July 1, 
2020, to which Tufts Health Freedom Plan is a signatory.
    I. ``Healthcare Provider Contracts'' means contracts with 
healthcare providers to which Tufts Health Freedom Plan is a signatory, 
including the Granite Healthcare Provider Contracts.
    J. ``Including'' means including but not limited to.
    K. ``Recruitment Period'' means the period of 60 calendar days from 
the date on which the Divestiture Assets are divested to Acquirer.
    L. ``Regulatory Approvals'' means any approvals or clearances 
pursuant to Health Plan Holdings' November 16, 2020 Form A filed with 
the Massachusetts Division of Insurance that are required for the 
proposed combination of Health Plan Holdings and Harvard Pilgrim to 
proceed.
    M. ``Relevant Personnel'' means every employee of Health Plan 
Holdings based in or assigned to New Hampshire in calendar year 2020 
who (1) holds the title of President; Senior Executive Assistant; 
Public Policy Manager; Small and Large Group Account Executive; Senior 
Account Executive; Sales and Account Associate; Small Group Account 
Manager; Key Account Manager; Large Group Account Manager; Senior 
Manager, Strategic Marketing; Senior Provider Group Manager; or Small 
Group Account Manager; and (2) has responsibility for Small Group or 
CRC for Tufts Health Freedom Plan. The United States, in its sole 
discretion, will resolve any disagreement regarding which employees are 
Relevant Personnel.
    N. ``Run-out Services'' means services that are customarily 
provided following an operational transfer of health insurance plans 
and that require Defendants' ongoing support, including claims 
processing, claims reporting, administrative support, and routine 
investigations necessary for claims processing.
    O. ``Small Group'' means the sale of commercial group health 
insurance to private employers with between 1 and 50 full-time eligible 
employees.
    P. ``United'' means UnitedHealth Group, Inc., a Delaware 
corporation with its headquarters in Minnetonka, Minnesota, its 
successors and assigns, and its subsidiaries, including its subsidiary 
United Healthcare Services, Inc., divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.

III. Applicability

    A. This Final Judgment applies to Harvard Pilgrim and Health Plan 
Holdings, as defined above, and all other persons in active concert or 
participation with any Defendant who receive actual notice of this 
Final Judgment.
    B. If, prior to complying with Section IV and Section V of this 
Final Judgment, Defendants sell or otherwise dispose of all or 
substantially all of their assets or of business units that include the 
Divestiture Assets, Defendants must require any purchaser to be bound 
by the provisions of this Final Judgment. Defendants need not obtain 
such an agreement from Acquirer.

IV. Divestiture

    A. Defendants are ordered and directed, within 30 calendar days 
after the Court's entry of the Asset Preservation Stipulation and Order 
(``Stipulation and Order'') in this matter, to divest the Divestiture 
Assets in a manner consistent with this Final Judgment to United or to 
another Acquirer acceptable to the United States, in its sole 
discretion, after consultation with the State of New Hampshire.
    B. If Defendants have not received all Regulatory Approvals within 
30 calendar days after the Court's entry of the Stipulation and Order 
in this matter, the time period under Paragraph IV.A will be extended 
until 5 calendar days after all Regulatory Approvals are received. This 
extension allowed for securing Regulatory Approvals shall be no longer 
than 60 calendar days past the time period provided in Paragraph IV.A, 
unless the United States, in its sole discretion, consents to an 
additional extension.
    C. Defendants must use their best efforts to divest the Divestiture 
Assets as expeditiously as possible and may not take any action to 
impede the permitting, operation, or divestiture of the Divestiture 
Assets.
    D. Unless the United States otherwise consents in writing, 
divestiture pursuant to this Final Judgment must include the entire 
Divestiture Assets, and must be accomplished in such a way as to 
satisfy the United States, in its sole discretion, that the Divestiture 
Assets can and will be used by Acquirer as part of a viable, ongoing 
business to

[[Page 86954]]

compete effectively in Small Group and CRC in New Hampshire and that 
the divestiture to Acquirer will remedy the competitive harm alleged in 
the Complaint.
    E. The divestiture must be made to an Acquirer that, in the United 
States' sole judgment, after consultation with the State of New 
Hampshire, has the intent and capability (including the necessary 
managerial, operational, technical, and financial capability) to 
compete effectively in Small Group and CRC in New Hampshire.
    F. The divestiture must be accomplished so as to satisfy the United 
States, in its sole discretion, after consultation with the State of 
New Hampshire, that none of the terms of any agreement between Acquirer 
and Defendants gives Defendants the ability unreasonably to raise 
Acquirer's costs, to lower Acquirer's efficiency, or otherwise to 
interfere in the ability of Acquirer to compete effectively in Small 
Group and CRC in New Hampshire.
    G. Defendants must permit Acquirer to have reasonable access to 
personnel and access, subject to customary confidentiality assurances, 
to any and all financial, operational, or other documents and 
information regarding the Divestiture Assets customarily provided as 
part of a due diligence process.
    H. In the event Defendants are attempting to divest the Divestiture 
Assets to an Acquirer other than United, Defendants promptly must make 
known, by usual and customary means, the availability of the 
Divestiture Assets. Defendants must inform any person making an inquiry 
regarding a possible purchase of the Divestiture Assets that the 
Divestiture Assets are being divested in accordance with this Final 
Judgment and must provide that person with a copy of this Final 
Judgment. Defendants must offer to furnish and promptly provide to all 
prospective Acquirers, subject to customary confidentiality assurances, 
all information and documents relating to the Divestiture Assets that 
are customarily provided in a due-diligence process, including all 
information and documents provided to United; provided, however, that 
Defendants need not provide information or documents subject to the 
attorney-client privilege or work-product doctrine. Defendants must 
make all information and documents available to the United States at 
the same time that the information and documents are made available to 
any other person.
    I. Defendants must cooperate with and assist Acquirer in 
identifying Relevant Personnel and, at the option of Acquirer, in 
hiring any Relevant Personnel, including:
    1. No later than five business days following the filing of the 
Complaint in this matter, Defendants must provide to Acquirer and 
Plaintiffs, a list of all Relevant Personnel.
    2. Following the filing of the Complaint in this matter, within 
seven business days following receipt of a request by Acquirer or the 
United States, Defendants must provide to Acquirer and Plaintiffs, 
additional information related to Relevant Personnel, including name, 
job title, reporting relationships, past experience, responsibilities, 
training and educational history, relevant certifications, job 
performance evaluations. Defendants must also provide to Acquirer 
current, recent, and accrued compensation and benefits, including most 
recent bonuses paid, aggregate annual compensation, current target or 
guaranteed bonus, if any, any retention agreement or incentives, and 
any other payments due, compensation or benefits accrued, or promises 
made to Relevant Personnel. If Defendants are barred by any applicable 
laws from providing any of this information, Defendants must provide, 
within seven business days following receipt of the request, the 
requested information to the full extent permitted by law and also must 
provide a written explanation of Defendants' inability to provide the 
remaining information, including specifically identifying the 
provisions of the applicable laws.
    3. At the request of Acquirer, Defendants must promptly make 
Relevant Personnel available for private interviews with Acquirer 
during normal business hours at a mutually agreeable location.
    4. Defendants must not interfere with any effort by Acquirer to 
employ any Relevant Personnel. Interference includes offering to 
increase the compensation or benefits of Relevant Personnel unless the 
offer is part of a company-wide increase in compensation or benefits 
granted that was announced prior to May 1, 2020, or has been approved 
by the United States, in its sole discretion. Defendants' obligations 
under this Paragraph I.4. will expire after the Recruitment Period.
    5. For Relevant Personnel who elect employment with Acquirer during 
the Recruitment Period, Defendants must waive all non-compete and non-
disclosure agreements; vest and pay to the Relevant Personnel (or to 
Acquirer for payment to the employee) on a prorated basis any bonuses, 
incentives, other salary, benefits, or other compensation fully or 
partially accrued at the time of the transfer of the employee to 
Acquirer; vest any unvested pension and other equity rights; and 
provide all other benefits that those Relevant Personnel otherwise 
would have been provided had the Relevant Personnel continued 
employment with Defendants, including any retention bonuses or 
payments. Defendants may maintain reasonable restrictions on disclosure 
by Relevant Personnel of Defendants' proprietary non-public information 
that is unrelated to the Divestiture Assets and not otherwise required 
to be disclosed by this Final Judgment.
    6. Acquirer's right to hire Relevant Personnel under Paragraph 
IV.I. lasts throughout the duration of the Recruitment Period.
    7. For a period of one year from the date on which the Divestiture 
Assets are divested to Acquirer, Defendants may not solicit to rehire 
Relevant Personnel who were hired by Acquirer during the Recruitment 
Period, unless (a) an individual is terminated or laid off by Acquirer 
or (b) Acquirer agrees in writing that Defendants may solicit to rehire 
that individual. Nothing in this Paragraph prohibits Defendants from 
advertising employment openings using general solicitations or 
advertisements and rehiring Relevant Personnel who apply for an 
employment opening through a general solicitation or advertisement.
    J. Defendants must warrant to Acquirer that (1) the Divestiture 
Assets will be operational and without material defect on the date of 
their transfer to Acquirer; (2) there are no material defects in any 
permits pertaining to the operation of the Divestiture Assets; and (3) 
Defendants have disclosed all encumbrances on any part of the 
Divestiture Assets, including on intangible property. Following the 
sale of the Divestiture Assets, Defendants must not undertake, directly 
or indirectly, challenges to any permits pertaining to the operation of 
the Divestiture Assets.
    K. Defendants must make best efforts to assist Acquirer to obtain 
all necessary licenses, registrations, and permits to operate the 
Divestiture Assets. Until Acquirer obtains the necessary licenses, 
registrations, and permits, Defendants must provide Acquirer with the 
benefit of Defendants' licenses, registrations, and permits to the full 
extent permissible by law.
    L. Defendants must make best efforts to transition customers from 
the Health Plan Holdings operating platform to Acquirer's operating 
platform beginning July 1, 2021, and ending by December 31, 2021.

[[Page 86955]]

    M. At the option of Acquirer, and subject to approval by the United 
States, in its sole discretion, on or before the date on which the 
Divestiture Assets are divested to Acquirer, Defendants must enter into 
one or more agreements to provide transition services for a period 
ending no later than December 31, 2021, or, if Acquirer is not United, 
for a period of one year from the date of divestiture, on terms and 
conditions reasonably related to market conditions and must fully 
perform the duties and obligations of such agreements. The transition 
services to be provided by Defendants to Acquirer under such agreements 
must encompass all services necessary for the Acquirer to operate the 
Divestiture Assets, including: (1) Providing the operational platform 
and systems infrastructure to run the Divestiture Assets, including 
appropriate hardware and software; (2) preparing regulatory plan 
submissions, including filing and securing regulatory approval, for 
product, rate, and other required submissions; (3) handling member 
services and enrollment, the processing and administration of claims, 
routine investigations, and member appeals and grievances; (4) 
providing and preparing claims reports; (5) performing accounting and 
billing, finance support, and payment integrity maintenance; (6) 
providing care management services; (7) providing regulatory 
compliance; (8) processing vendor costs; (9) providing benefits 
configuration; (10) providing broker and employer services; (11) 
handling provider services and appeals; (12) processing provider 
demographic, contract, and fee schedules updates; (13) maintaining 
coordination of benefits programs; (14) providing underwriting support 
services; and (15) making personnel available to assist Acquirer with 
operational questions and issues. Any amendments to or modifications of 
any provision of a transition services agreement are subject to 
approval by the United States, in its sole discretion. Acquirer may 
terminate a transition services agreement, or any portion of a 
transition services agreement, without cost or penalty at any time upon 
commercially reasonable notice. The employee(s) of Defendants tasked 
with providing transition services must not share any competitively 
sensitive information of Acquirer with any other employee of 
Defendants, unless such sharing is for the sole purpose of providing 
transition services to Acquirer.
    N. At the option of Acquirer, and subject to approval by the United 
States in its sole discretion, on or before the date on which the 
Divestiture Assets are divested to Acquirer, Defendants must enter into 
one or more agreements to provide Run-out Services to Acquirer from the 
date of each customer's transition to Acquirer's operating platform to 
June 30, 2022. At Acquirer's option, after written notice to the United 
States, Defendants must extend any contract for Run-out Services for a 
total of up to an additional 90 days. Defendants must provide Run-out 
Services on terms and conditions reasonably related to market 
conditions. Any amendments to or modifications of any provision of a 
Run-out Services agreement are subject to approval by the United 
States, in its sole discretion. Acquirer may terminate a Run-out 
Services agreement, or any portion of a Run-out Services agreement, 
without cost or penalty at any time upon commercially reasonable 
notice. The employee(s) of Defendants tasked with providing Run-out 
Services must not share any competitively sensitive information of 
Acquirer with any other employee of Defendants, unless such sharing is 
for the sole purpose of providing Run-out Services to Acquirer.
    O. Except for Healthcare Provider Contracts, Defendants must make 
any required notifications and use best efforts to obtain all necessary 
consents of the contracting party to the change of control of Tufts 
Health Freedom Plan to Acquirer. Defendants must not interfere with any 
negotiations between Acquirer and a contracting party.
    P. Defendants warrant that as of the date on which the Divestiture 
Assets are divested to Acquirer, the Granite Healthcare Provider 
Contracts have not expired or terminated, will run through at least 
December 31, 2021, and will be on the same rates and terms that were in 
effect as of October 1, 2020, except for any increase in rates that is 
(a) no greater than a rate increase imposed on Health Plan Holdings 
between October 1, 2020 and April 1, 2021, and (b) reasonably related 
to market conditions.
    Q. Defendants must make best efforts and must cooperate with and 
assist Acquirer to ensure that Acquirer will retain all of the 
Healthcare Provider Contracts. Best efforts includes the following:
    1. For Healthcare Provider Contracts with Tufts Health Freedom 
Plan's fifteen largest healthcare providers in New Hampshire, as 
measured by Tufts Health Freedom Plan's 2019 claims volume, that do not 
require notification of a change in ownership or control of Tufts 
Health Freedom Plan, Defendants must ensure that as of the date on 
which the Divestiture Assets are divested to Acquirer, the contracts 
have not expired or terminated and include the same rates and terms 
that were in effect as of October 1, 2020, except for any increase in 
rates that is (a) no greater than a rate increase imposed on Health 
Plan Holdings between October 1, 2020 and April 1, 2021, and (b) 
reasonably related to market conditions.
    2. For all Healthcare Provider Contracts that require a provider's 
consent to a change in ownership or control of Tufts Health Freedom 
Plan, or that allow a provider to terminate the contract upon notice of 
a change in ownership or control, Defendants must notify each such 
provider of the change in ownership or control within 30 calendar days 
of entering into an agreement to divest the Divestiture Assets to 
Acquirer. Except for Healthcare Provider Contracts for which the time 
to exercise any termination rights has expired without the provider 
terminating the contract or giving Defendants written notice of an 
intent to terminate, Defendants must use best efforts to obtain any 
necessary consent to a change in ownership or control or written 
acknowledgment that a provider will not terminate because of a change 
in ownership or control.
    3. For any Healthcare Provider Contract that is terminated or for 
which a provider gives written notice of its intent to terminate within 
90 days from the date on which the Divestiture Assets are divested to 
Acquirer, at Acquirer's request, Defendants must assist Acquirer to 
secure a new contract with that provider as expeditiously as possible 
by sharing information with Acquirer concerning the history of the 
provider's participation in the Tufts Health Freedom Plan, including 
the performance of the contract and any material disputes relating to 
the contract, and assisting Acquirer in developing strategies to retain 
or bring the provider in-network and on the same rates and terms that 
were in effect as of October 1, 2020, except for any increase in rates 
that is (a) no greater than a rate increase imposed on Health Plan 
Holdings between October 1, 2020 and April 1, 2021, and (b) reasonably 
related to market conditions.
    4. If a provider terminates or gives written notice of its intent 
to terminate any Healthcare Provider Contract within 90 days from the 
date on which the Divestiture Assets are divested to Acquirer and 
Acquirer is unable to secure a contract with the provider before the 
contract terminates, and either (1) the provider is one of Tufts Health 
Freedom Plan's fifteen largest healthcare providers in New Hampshire, 
as measured by Tufts Health Freedom Plan's 2019 claims volume, or (2) 
the termination would result in Tufts

[[Page 86956]]

Health Freedom Plan not meeting provider network adequacy standards 
required by applicable law or regulation, at Acquirer's request, 
Defendants must, to the full extent permitted by the terms of 
Defendants' provider contracts, immediately enter into a rental, lease, 
or similar contract to provide Acquirer with in-network access to the 
relevant healthcare provider(s) for a period of 12 months from the date 
on which the Divestiture Assets are divested to Acquirer. Defendants 
may charge Acquirer no more than Defendants' costs paid to the relevant 
healthcare provider(s), without adding any mark-up, for the provision 
of such rental, lease, or similar contract.
    5. For all Healthcare Provider Contracts that will expire between 
the filing of the Complaint in this matter and 90 days after the date 
on which the Divestiture Assets are divested to Acquirer, Defendants 
must use best efforts to expeditiously renew each contract to avoid a 
termination and out-of-network status for that provider, on the same 
rates and terms that were in effect as of October 1, 2020, except for 
any increase in rates that is (a) no greater than a rate increase 
imposed on Health Plan Holdings between October 1, 2020 and April 1, 
2021, and (b) reasonably related to market conditions.
    R. From the date on which the Divestiture Assets are divested to 
Acquirer through December 31, 2021, Defendants must not sell any 
commercial health insurance products in New Hampshire that use the 
``Tufts Health'' or ``Tufts Health Plan'' brand(s) (and all associated 
trademarks, service marks, and service names). This Paragraph does not 
prohibit Defendants from using the ``Tufts Health'' or ``Tufts Health 
Plan'' brand(s) for group retiree plans, Medicaid plans, or Medicare 
plans in New Hampshire.
    S. Beginning on the date on which the Divestiture Assets are 
divested to Acquirer, Defendants must not use the terms ``Health 
Freedom Plan(s),'' ``Freedom,'' and/or ``Freedom Plan(s)'' for any 
business name or to identify, market, or promote any products or 
services in New Hampshire.
    T. If any term of an agreement between Defendants and Acquirer to 
effectuate the divestiture required by this Final Judgment varies from 
a term of this Final Judgment, to the extent that Defendants cannot 
fully comply with both, this Final Judgment determines Defendants' 
obligations.

V. Appointment of Divestiture Trustee

    A. If Defendants have not divested the Divestiture Assets within 
the period specified in Paragraphs IV.A. and IV.B., Defendants must 
immediately notify Plaintiffs of that fact in writing. Upon application 
of the United States, the Court will appoint a divestiture trustee 
selected by the United States and approved by the Court to effect the 
divestiture of the Divestiture Assets.
    B. After the appointment of a divestiture trustee by the Court, 
only the divestiture trustee will have the right to sell the 
Divestiture Assets. The divestiture trustee will have the power and 
authority to accomplish the divestiture to an Acquirer acceptable to 
the United States, in its sole discretion, after consultation with the 
State of New Hampshire, at a price and on terms as are then obtainable 
upon reasonable effort by the divestiture trustee, subject to the 
provisions of Sections IV, V, and VI of this Final Judgment, and will 
have other powers as the Court deems appropriate. The divestiture 
trustee must sell the Divestiture Assets as quickly as possible.
    C. Defendants may not object to a sale by the divestiture trustee 
on any ground other than malfeasance by the divestiture trustee. 
Objections by Defendants must be conveyed in writing to Plaintiffs and 
the divestiture trustee within ten calendar days after the divestiture 
trustee has provided the notice of proposed divestiture required under 
Section VI.
    D. The divestiture trustee will serve at the cost and expense of 
Defendants pursuant to a written agreement, on terms and conditions, 
including confidentiality requirements and conflict of interest 
certifications, that are approved by the United States.
    E. The divestiture trustee may hire at the cost and expense of 
Defendants any agents or consultants, including, but not limited to, 
investment bankers, attorneys, and accountants, that are reasonably 
necessary in the divestiture trustee's judgment to assist with the 
divestiture trustee's duties. These agents or consultants will be 
accountable solely to the divestiture trustee and will serve on terms 
and conditions, including terms and conditions governing 
confidentiality requirements and conflict-of-interest certifications, 
that are approved by the United States.
    F. The compensation of the divestiture trustee and agents or 
consultants hired by the divestiture trustee must be reasonable in 
light of the value of the Divestiture Assets and based on a fee 
arrangement that provides the divestiture trustee with incentives based 
on the price and terms of the divestiture and the speed with which it 
is accomplished. If the divestiture trustee and Defendants are unable 
to reach agreement on the divestiture trustee's compensation or other 
terms and conditions of engagement within 14 calendar days of the 
appointment of the divestiture trustee by the Court, the United States 
may, in its sole discretion, take appropriate action, including by 
making a recommendation to the Court. Within three business days of 
hiring an agent or consultant, the divestiture trustee must provide 
written notice of the hiring and rate of compensation to Defendants and 
the United States.
    G. The divestiture trustee must account for all monies derived from 
the sale of the Divestiture Assets sold by the divestiture trustee and 
all costs and expenses incurred. Within 30 calendar days of the date of 
the sale of the Divestiture Assets, the divestiture trustee must submit 
that accounting to the Court for approval. After approval by the Court 
of the divestiture trustee's accounting, including fees for unpaid 
services and those of agents or consultants hired by the divestiture 
trustee, all remaining money must be paid to Defendants and the trust 
will then be terminated.
    H. Defendants must use their best efforts to assist the divestiture 
trustee to accomplish the required divestiture. Subject to reasonable 
protection for trade secrets, other confidential research, development, 
or commercial information, or any applicable privileges, Defendants 
must provide the divestiture trustee and agents or consultants retained 
by the divestiture trustee with full and complete access to all 
personnel, books, records, and facilities of the Divestiture Assets. 
Defendants also must provide or develop financial and other information 
relevant to the Divestiture Assets that the divestiture trustee may 
reasonably request. Defendants may not take any action to interfere 
with or to impede the divestiture trustee's accomplishment of the 
divestiture.
    I. The divestiture trustee must maintain complete records of all 
efforts made to sell the Divestiture Assets, including by filing 
monthly reports with Plaintiffs setting forth the divestiture trustee's 
efforts to accomplish the divestiture ordered by this Final Judgment. 
The reports must include the name, address, and telephone number of 
each person who, during the preceding month, made an offer to acquire, 
expressed an interest in acquiring, entered into negotiations to 
acquire, or was contacted or made an inquiry about acquiring any 
interest in the Divestiture Assets and must describe in detail each 
contact with any such person.
    J. If the divestiture trustee has not accomplished the divestiture 
ordered by

[[Page 86957]]

this Final Judgment within six months of appointment, the divestiture 
trustee must promptly provide Plaintiffs with a report setting forth: 
(1) The divestiture trustee's efforts to accomplish the required 
divestiture; (2) the reasons, in the divestiture trustee's judgment, 
why the required divestiture has not been accomplished; and (3) the 
divestiture trustee's recommendations for completing the divestiture. 
Following receipt of that report, the United States may make additional 
recommendations consistent with the purpose of the trust to the Court. 
The Court thereafter may enter such orders as it deems appropriate to 
carry out the purpose of this Final Judgment, which may include 
extending the trust and the term of the divestiture trustee's 
appointment by a period requested by the United States.
    K. The divestiture trustee will serve until divestiture of all 
Divestiture Assets is completed or for a term otherwise ordered by the 
Court.
    L. If the United States determines that the divestiture trustee is 
not acting diligently or in a reasonably cost-effective manner, the 
United States may recommend that the Court appoint a substitute 
divestiture trustee.

VI. Notice of Proposed Divestiture

    A. Within two business days following execution of a definitive 
divestiture agreement with a proposed Acquirer other than United, 
Defendants or the divestiture trustee, whichever is then responsible 
for effecting the divestiture, must notify Plaintiffs of a proposed 
divestiture required by this Final Judgment. If the divestiture trustee 
is responsible for completing the divestiture, the divestiture trustee 
also must notify Defendants. The notice must set forth the details of 
the proposed divestiture and list the name, address, and telephone 
number of each person not previously identified who offered or 
expressed an interest in or desire to acquire any ownership interest in 
the Divestiture Assets.
    B. Within 15 calendar days of receipt by the United States of this 
notice, the United States, in its sole discretion, may request from 
Defendants, the proposed Acquirer, other third parties, or the 
divestiture trustee additional information concerning the proposed 
divestiture, the proposed Acquirer, and other prospective Acquirers. 
Defendants and the divestiture trustee must furnish the additional 
information requested within 15 calendar days of the receipt of the 
request unless the United States provides written agreement to a 
different period.
    C. Within 45 calendar days after receipt of the notice required by 
Paragraph VI.A. or within 20 calendar days after the United States has 
been provided the additional information requested pursuant to 
Paragraph VI.B., whichever is later, the United States will provide 
written notice to Defendants and any divestiture trustee that states 
whether or not the United States, in its sole discretion, after 
consultation with the State of New Hampshire, objects to Acquirer or 
any other aspect of the proposed divestiture. Without written notice 
that the United States does not object, a divestiture may not be 
consummated. If the United States provides written notice that it does 
not object, the divestiture may be consummated, subject only to 
Defendants' limited right to object to the sale under Paragraph V.C. of 
this Final Judgment. Upon objection by Defendants pursuant to Paragraph 
V.C., a divestiture by the divestiture trustee may not be consummated 
unless approved by the Court.
    D. No information or documents obtained pursuant to this Section VI 
may be divulged by Plaintiffs to any person other than an authorized 
representative of the executive branch of the United States or an 
authorized representative of the State of New Hampshire, except in the 
course of legal proceedings to which the United States is a party, 
including grand-jury proceedings, for the purpose of evaluating a 
proposed Acquirer or securing compliance with this Final Judgment, or 
as otherwise required by law.
    E. In the event of a request by a third party for disclosure of 
information under the Freedom of Information Act, 5 U.S.C. 552, the 
Antitrust Division will act in accordance with that statute, and the 
Department of Justice regulations at 28 CFR part 16, including the 
provision on confidential commercial information, at 28 CFR 16.7. 
Persons submitting information to the Antitrust Division should 
designate the confidential commercial information portions of all 
applicable documents and information under 28 CFR 16.7. Designations of 
confidentiality expire ten years after submission, ``unless the 
submitter requests and provides justification for a longer designation 
period.'' See 28 CFR 16.7(b).
    F. If at the time that a person furnishes information or documents 
to the United States or the State of New Hampshire pursuant to this 
Section VI, that person represents and identifies in writing 
information or documents for which a claim of protection may be 
asserted under Rule 26(c)(1)(G) of the Federal Rules of Civil 
Procedure, and 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,'' the United States and the State of New Hampshire 
must give that person ten calendar days' notice before divulging the 
material in any legal proceeding (other than a grand-jury proceeding).

VII. Financing

    Defendants may not finance all or any part of Acquirer's purchase 
of all or part of the Divestiture Assets made pursuant this Final 
Judgment.

VIII. Asset Preservation Obligations

    Until the divestiture required by this Final Judgment has been 
accomplished, Defendants must take all steps necessary to comply with 
the Stipulation and Order entered by the Court. Defendants must take no 
action that would jeopardize the divestiture ordered by the Court.

IX. Affidavits

    A. Within 20 calendar days of the filing of the Complaint in this 
matter, and every 30 calendar days thereafter until the divestiture 
required by this Final Judgment has been completed, Defendant Health 
Plan Holdings must deliver to Plaintiffs an affidavit, signed by its 
Chief Financial Officer and Chief Legal Officer, describing the fact 
and manner of Defendants' compliance with this Final Judgment. The 
United States, in its sole discretion, may approve different 
signatories for the affidavits.
    B. Each affidavit must include: (1) The name, address, and 
telephone number of each person who, during the preceding 30 calendar 
days, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, an interest in the Divestiture Assets and 
describe in detail each contact with such persons during that period; 
(2) a description of the efforts Defendants have taken to solicit 
buyers for and complete the sale of the Divestiture Assets and to 
provide required information to prospective Acquirers; and (3) a 
description of any limitations placed by Defendants on information 
provided to prospective Acquirers. Objection by the United States to 
information provided by Defendants to prospective Acquirers must be 
made within 14 calendar days of receipt of the affidavit.
    C. Defendants must keep all records of any efforts made to divest 
the Divestiture Assets until one year after the divestiture has been 
completed.
    D. Within 20 calendar days of the filing of the Complaint in this 
matter, Defendant Health Plan Holdings also

[[Page 86958]]

must deliver to Plaintiffs an affidavit that describes in reasonable 
detail all actions Defendants have taken and all steps Defendants have 
implemented on an ongoing basis to comply with Section VIII of this 
Final Judgment. The United States, in its sole discretion, may approve 
different signatories for the affidavits.
    E. If Defendants make any changes to the efforts and actions 
outlined in any earlier affidavits provided pursuant to Paragraph 
IX.D., Defendants must, within 15 calendar days after any change is 
implemented, deliver to Plaintiffs an affidavit describing those 
changes.
    F. Defendants must keep all records of any efforts made to preserve 
the Divestiture Assets until one year after the divestiture has been 
completed.

X. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment or of related orders such as the Stipulation and Order 
or of determining whether this Final Judgment should be modified or 
vacated, upon written request of an authorized representative of the 
Assistant Attorney General for the Antitrust Division, and reasonable 
notice to Defendants, Defendants must permit, from time to time and 
subject to legally recognized privileges, authorized representatives, 
including agents retained by the United States:
    1. To have access during Defendants' office hours to inspect and 
copy, or at the option of the United States, to require Defendants to 
provide electronic copies of all books, ledgers, accounts, records, 
data, and documents in the possession, custody, or control of 
Defendants relating to any matters contained in this Final Judgment; 
and
    2. to interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews must be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General for the Antitrust Division, Defendants must 
submit written reports or respond to written interrogatories, under 
oath if requested, relating to any of the matters contained in this 
Final Judgment.
    C. No information or documents obtained by the United States 
pursuant to this Section X may be divulged by Plaintiffs to any person 
other than an authorized representative of the executive branch of the 
United States or an authorized representative of the State of New 
Hampshire, except in the course of legal proceedings to which the 
United States is a party, including grand jury proceedings, for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. In the event of a request by a third party for disclosure of 
information under the Freedom of Information Act, 5 U.S.C. 552, the 
Antitrust Division will act in accordance with that statute, and the 
Department of Justice regulations at 28 CFR part 16, including the 
provision on confidential commercial information, at 28 CFR 16.7. 
Defendants submitting information to the Antitrust Division should 
designate the confidential commercial information portions of all 
applicable documents and information under 28 CFR 16.7. Designations of 
confidentiality expire ten years after submission, ``unless the 
submitter requests and provides justification for a longer designation 
period.'' See 28 CFR 16.7(b).
    E. If at the time that Defendants furnish information or documents 
to the United States pursuant to this Section X, Defendants represent 
and identify in writing information or documents for which a claim of 
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules 
of Civil Procedure, and Defendants mark each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(1)(G) of 
the Federal Rules of Civil Procedure,'' the United States must give 
Defendants ten calendar days' notice before divulging the material in 
any legal proceeding (other than a grand jury proceeding).

XI. No Reacquisition

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

XII. Retention of Jurisdiction

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

XIII. Enforcement of Final Judgment

    A. The United States retains and reserves all rights to enforce the 
provisions of this Final Judgment, including the right to seek an order 
of contempt from the Court. Defendants agree that in a civil contempt 
action, a motion to show cause, or a similar action brought by the 
United States regarding an alleged violation of this Final Judgment, 
the United States may establish a violation of this Final Judgment and 
the appropriateness of a remedy therefor by a preponderance of the 
evidence, and Defendants waive any argument that a different standard 
of proof should apply.
    B. This Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws and to restore the 
competition Plaintiffs alleged was harmed by the challenged conduct. 
Defendants agree that they may be held in contempt of, and that the 
Court may enforce, any provision of this Final Judgment that, as 
interpreted by the Court in light of these procompetitive principles 
and applying ordinary tools of interpretation, is stated specifically 
and in reasonable detail, whether or not it is clear and unambiguous on 
its face. In any such interpretation, the terms of this Final Judgment 
should not be construed against either party as the drafter.
    C. In an enforcement proceeding in which the Court finds that 
Defendants have violated this Final Judgment, the United States may 
apply to the Court for a one-time extension of this Final Judgment, 
together with other relief that may be appropriate. In connection with 
a successful effort by the United States to enforce this Final Judgment 
against a Defendant, whether litigated or resolved before litigation, 
that Defendant agrees to reimburse the United States for the fees and 
expenses of its attorneys, as well as all other costs including 
experts' fees, incurred in connection with that enforcement effort, 
including in the investigation of the potential violation.
    D. For a period of four years following the expiration of this 
Final Judgment, if the United States has evidence that a Defendant 
violated this Final Judgment before it expired, the United States may 
file an action against that Defendant in this Court requesting that the 
Court order: (1) Defendant to comply with the terms of this Final 
Judgment for an additional term of at least four years following the 
filing of the enforcement action; (2) all appropriate contempt 
remedies; (3) additional relief needed to ensure the Defendant complies 
with the terms of this Final Judgment; and (4) fees or expenses as 
called for by this Section XIII.

XIV. Expiration of Final Judgment

    Unless the Court grants an extension, this Final Judgment will 
expire ten years from the date of its entry, except that after five 
years from the date of its entry, this Final Judgment may be terminated 
upon notice by the United

[[Page 86959]]

States to the Court and Defendants the divestiture has been completed 
and that the continuation of this Final Judgment is no longer necessary 
or in the public interest.

XV. Public Interest Determination

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

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

[Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16]
-----------------------------------------------------------------------
United States District Judge

United States District Court for the District of New Hampshire

    United States of Americaand State of New Hampshire, Plaintiffs, 
vs. Harvard Pilgrim Health Care, INC. and Health Plan Holdings, 
INC., Defendants.

Civil Action No.:1:20-cv-01183-JL
Judge Joseph N. Laplante

Competitive Impact Statement

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

I. Nature and Purpose of the Proceeding

    On August 9, 2019, Defendants Harvard Pilgrim and Health Plan 
Holdings (f/k/a Tufts Health Plan) agreed to a ``merger of equals'' 
(the ``Transaction''). The United States, along with the State of New 
Hampshire, filed a civil antitrust complaint on December 14, 2020, 
seeking to enjoin the proposed Transaction. The Complaint alleges that 
the likely effect of the Transaction would be to substantially lessen 
competition in (1) the sale of commercial group health insurance to 
private employers with up to 50 full-time eligible employees (``small 
groups'') in all seven New Hampshire Core Based Statistical Areas 
(``CBSAs''), and (2) the sale of commercial group health insurance to 
private employers with between 51 and 99 full-time eligible employees 
(``CRC groups'') in six New Hampshire CBSAs, in violation of Section 7 
of the Clayton Act, 15 U.S.C. 18.
    At the same time the Complaint was filed, the United States filed 
an Asset Preservation Stipulation and Order (``Stipulation and Order'') 
and proposed Final Judgment, which are designed to remedy the loss of 
competition alleged in the Complaint. Under the proposed Final 
Judgment, which is explained more fully below, Defendants are required 
to divest Health Plan Holdings' New Hampshire subsidiary, Tufts Health 
Freedom Plans, Inc. (``Tufts Freedom''). The United States has approved 
UnitedHealth Group, Inc. (``United'') as the acquirer of Tufts Freedom. 
Under the terms of the Stipulation and Order, Defendants will take 
certain steps to ensure that Tufts Freedom is operated as a 
competitively independent, economically viable, and ongoing business 
concern, which will remain independent and uninfluenced by Defendants, 
and that competition is maintained during the pendency of the required 
divestiture.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment will terminate this action, except that the 
Court will retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Decription of the Events Giving Rise to the Alleged Violation

A. Defendants and the Proposed Transaction

    Harvard Pilgrim is a nonprofit corporation organized and existing 
under the laws of the Commonwealth of Massachusetts with its 
headquarters in Wellesley, Massachusetts. Harvard Pilgrim sells 
commercial group health insurance plans to small and large employer 
groups in New Hampshire, Massachusetts, Connecticut, and Maine. Harvard 
Pilgrim's annual revenue in 2019 was approximately $3 billion, with the 
vast majority of this revenue coming from commercial insurance 
products, and it has over one million members across all its insurance 
products.
    Health Plan Holdings is a nonprofit corporation organized and 
existing under the laws of the Commonwealth of Massachusetts with its 
headquarters in Watertown, Massachusetts. Prior to October 7, 2020, 
Health Plan Holdings was known as Tufts Health Plan, Inc. Health Plan 
Holdings sells commercial group health insurance plans to small and 
large employer groups in New Hampshire, Massachusetts, and Rhode 
Island. In New Hampshire, Health Plan Holdings sells health insurance 
through Tufts Freedom. Tufts Freedom was a joint venture with Granite 
Healthcare, a consortium of New Hampshire hospitals, until September 
2020, when Health Plan Holdings purchased the hospitals' interests and 
became the sole owner. Health Plan Holdings' annual revenue in 2019 was 
over $5.5 billion, with roughly one-third of this revenue coming from 
commercial insurance products, and it has over one million members 
across all its insurance products.
    On August 9, 2019, Defendants entered into an agreement entitled 
``Combination Agreement'' pursuant to which Health Plan Holdings will 
acquire Harvard Pilgrim. No money is exchanging hands and Defendants 
have described the transaction as a ``merger of equals.''

B. The Competitive Effects of the Transaction

    Health insurance companies sell commercial group health insurance 
to employers so employers can provide their employees and their 
employees' families with health insurance coverage. Harvard Pilgrim and 
Health Plan Holdings are two of the largest suppliers of commercial 
health insurance in New Hampshire to employers with less than 100 
employees. Harvard Pilgrim and Health Plan Holdings compete vigorously 
with one another in the sale of commercial health insurance to these 
employers. As alleged in the Complaint, combining Harvard Pilgrim and 
Health Plan Holdings into one firm would likely lead to higher prices, 
lower quality, and reduced choice in New Hampshire.
1. The Relevant Markets
(a) Commercial Health Insurance Sold to Small Groups
    As alleged in the Complaint, the sale of commercial health 
insurance to small groups is a relevant antitrust product market in 
which to analyze the effects of the Transaction. New Hampshire 
Insurance Department regulations define a ``small group'' as an 
employer with 50 or fewer full-time eligible employees. See N.H. Rev. 
Stat. Ann. Sec.  420-G:2, XVI. For small groups, health plans are 
typically fully insured, which means that the employer pays a premium 
to the insurance company and in return the company covers the 
employees' healthcare costs. Small groups tend to be local in nature, 
requiring a strong local provider

[[Page 86960]]

network of doctors and hospitals that are contracted to provide medical 
care to the group's employees. The relevant market for small groups 
alleged in the Complaint does not include governmental employers (e.g., 
municipalities, school districts) in New Hampshire with 50 or fewer 
employees, as historically almost all of these employers have purchased 
health insurance through a multi-employer trust instead of directly 
from an insurer.
    The commercial health insurance plans offered to small groups are 
governed by the New Hampshire Insurance Department. The small group 
plans cannot be substituted with plans offered to New Hampshire 
employers with 51 or more full-time eligible employees, defined by 
statute in New Hampshire as ``large group.'' Harvard Pilgrim and Health 
Plan Holdings also differentiate small group accounts separately from 
large group accounts internally and offer different pricing for small 
group products compared to large group products.
    New Hampshire law does not require that an insurer offer a small 
group product statewide and instead permits an insurer to offer small 
group plans only in certain counties. Accordingly, despite the fact 
that state law does not allow insurers to charge different prices for 
the same small group plans based on location, insurers can offer a more 
expensive set of small group plans in one part of the state, and a less 
expensive set of different small group plans in another part of the 
state. This allows insurers to charge different prices for different 
products to small groups based on where employees live and work.
    There are seven Core Based Statistical Areas (CBSA) in New 
Hampshire: (1) The Manchester-Nashua CBSA, (2) the Concord CBSA, (3) 
the Laconia CBSA, (4) the Keene CBSA, (5) the Berlin CBSA, (6) the New 
Hampshire counties (Grafton and Sullivan) of the Lebanon NH-VT CBSA, 
and (7) the New Hampshire counties (Rockingham and Strafford) of the 
Boston-Cambridge-Newton MA-NH CBSA. As alleged in the Complaint, the 
Transaction is likely to substantially lessen competition for the sale 
of commercial health insurance to small groups in all seven of New 
Hampshire's CBSAs.
    Each of these seven CBSAs is a relevant geographic market. A 
hypothetical monopolist over the sale of commercial health insurance to 
small groups in each of these markets would impose a small but 
significant and non-transitory increase in price (e.g. five percent). A 
small group employer, faced with a significant price increase, cannot 
defeat the price increase by purchasing a large group product for which 
it is ineligible. This price increase also would not be defeated by 
substitution outside the relevant market or by a small group employer 
trying to repurchase insurance through another employer group (i.e. 
arbitrage).
(b) Commercial Health Insurance Sold to CRC Groups
    As alleged in the Complaint, the sale of commercial health 
insurance to CRC groups is a relevant antitrust product market. In New 
Hampshire, employers with between 51 and 99 full-time eligible 
employees represent a distinct segment of large group and are referred 
to as CRC employers (or CRC groups). CRC groups have different needs 
and make different buying decisions than small groups or even larger 
employers. Harvard Pilgrim and Tufts Freedom employ different sales 
strategies for this segment than they do for other types of employers.
    Similar to small groups, CRC group health plans are typically fully 
insured, which means that the employer pays a premium to the insurance 
company and in return the company covers the employees' healthcare 
costs. Insurers offering commercial health insurance in New Hampshire, 
including Harvard Pilgrim and Tufts Freedom, differentiate employers 
with 51 to 99 full-time eligible employees from other large group 
employers, and refer to these employers as the CRC segment. As with 
small groups, CRC groups also tend to be more local in nature than 
other large group employers, requiring a strong local provider network, 
as opposed to large group employers with 100 or more full-time eligible 
employees, which, due to a more geographically dispersed employee base, 
are more likely to require strong national provider networks. As with 
small groups, the relevant market for CRC groups alleged in the 
Complaint does not include governmental employers (e.g., 
municipalities, school districts) in New Hampshire with 51-99 
employees, as historically almost all of these employers have purchased 
health insurance through a multi-employer trust instead of directly 
from an insurer.
    Group health plans for CRC groups, in contrast to larger group 
employers, are typically (although not exclusively) community rated by 
class, meaning that, when setting rates for CRC groups, the insurer 
first establishes a base rate determined by the medical costs of a 
class of similar groups, rather than upon the medical costs of the 
individual group seeking the plan. The insurer then uses this base 
rate, along with the individual employer's medical costs, to negotiate 
rates with the specific CRC group.
    Defendants target CRC groups directly through their sales efforts. 
For example, Tufts Freedom has focused its large group sales efforts on 
CRC groups since it began selling commercial health insurance in New 
Hampshire, while Harvard Pilgrim tracks CRC groups separately from 
other large group accounts. In addition, both Harvard Pilgrim and Tufts 
Freedom utilize specific pricing strategies for CRC groups. Defendants 
have formulated these specific pricing strategies because CRC groups in 
New Hampshire are generally more price sensitive than large group 
employers with 100 or more full-time eligible employees.
    Unlike commercial health insurance sold to small groups, insurers 
offering commercial health insurance to CRC groups in New Hampshire can 
charge different prices to different employers. Thus, insurers may 
charge different prices to CRC groups based on where employees live and 
work. The Transaction is likely to substantially lessen competition for 
the sale of commercial health insurance to CRC groups in six separate 
CBSAs in New Hampshire: (1) the Manchester-Nashua CBSA, (2) the Concord 
CBSA, (3) the Laconia CBSA, (4) the Keene CBSA, (5) the New Hampshire 
counties (Grafton and Sullivan) of the Lebanon NH-VT CBSA, and (6) the 
New Hampshire counties (Rockingham and Strafford) of the Boston-
Cambridge-Newton MA-NH CBSA.
    As alleged in the Complaint, each of these six CBSAs is a relevant 
geographic market. A hypothetical monopolist over the sale of 
commercial health insurance to CRC groups in each of these markets 
would impose a small but significant (e.g., five percent) and non-
transitory increase in price. This price increase would not be defeated 
by substitution outside the relevant market or by arbitrage.
2. The Transaction Would Result in Large Combined Market Shares
    Harvard Pilgrim and Tufts Freedom are two of the largest providers 
of small group and CRC group insurance in New Hampshire. The 
Transaction would result in a substantial increase in concentration of 
insurers that compete to offer commercial health insurance to small 
groups and CRC groups in New Hampshire.
    The Supreme Court has held that mergers that significantly increase 
concentration in already concentrated markets are presumptively 
anticompetitive and therefore

[[Page 86961]]

presumptively unlawful. To measure market concentration, courts often 
use the Herfindahl-Hirschman Index (``HHI'') as described in the 
Horizontal Merger Guidelines. HHIs range from 0 in markets with no 
concentration to 10,000 in markets where one firm has a 100% market 
share. According to the Horizontal Merger Guidelines, mergers that 
increase the HHI by more than 200 and result in an HHI above 2,500 in 
any market are presumed to be anticompetitive and, therefore, unlawful.
    The Complaint alleges that the Transaction is presumptively 
unlawful in the small group market. Based upon 2018 data, the combined 
market shares for Harvard Pilgrim and Tufts Freedom range from over 45% 
to over 60% in each of the seven CBSAs. As alleged in the Complaint, 
the Transaction would reduce the number of small group health insurers 
from four to three, with the two largest insurers--Anthem Blue Cross 
and Blue Shield (``Anthem'') and the merged Harvard Pilgrim/Tufts 
Freedom--possessing over 95% share in each of the seven CBSAs. The 
result is highly concentrated markets with HHIs of between 4,500 and 
7,500 and increases in HHIs from over 350 to over 1,600.
    As alleged in the Complaint, the Transaction is also presumptively 
unlawful in the CRC group market. Based upon 2018 data, the combined 
market shares for Harvard Pilgrim and Tufts Freedom range from more 
than 40% to over 65% in each of the six CBSAs. Similar to the small 
group market, the Transaction would reduce the number of CRC group 
health insurers from four to three, with the two largest insurers--
Anthem and the merged Harvard Pilgrim/Tufts Freedom--possessing over 
95% share in each of the six CBSAs. The result is highly concentrated 
markets with HHIs of between just under 5,000 to almost 7,000 and 
increases in HHIs from over 200 to over 2,000.
3. The Transaction Would Eliminate Head-to-Head Competition Between Two 
Close Competitors
    As alleged in the Complaint, Harvard Pilgrim and Tufts Freedom are 
particularly close competitors for commercial health insurance sold to 
small groups and CRC groups in New Hampshire. The competition between 
the two insurers is more robust for certain types of groups than the 
market shares would predict. This is in part because Harvard Pilgrim 
and Tufts Freedom--two strong local health insurers that have not built 
national provider networks--are more attractive to small groups and CRC 
groups with higher percentages of employees residing in New Hampshire. 
Similarly, because Harvard Pilgrim and Tufts Freedom have priced 
aggressively, the two appeal to small groups and CRC groups that have 
greater price sensitivity.
    Harvard Pilgrim and Tufts Freedom have engaged in head-to-head 
competition on price, plan features, and quality of service in the sale 
of commercial health insurance to small groups and to CRC groups in New 
Hampshire. For example, as the Complaint alleges, upon entering the New 
Hampshire market in 2016, Tufts Freedom priced aggressively, and gained 
significant market share, largely at the expense of Harvard Pilgrim. 
Additionally, in 2019, Harvard Pilgrim developed four new no-
coinsurance plans, which limited out-of-pocket expenses to members and 
offered different features, with the express purpose of making them 
more attractive to members. Just this year, Tufts Freedom offered 
consumers a novel telehealth option that included zero copayment in 
fully insured plans in order to drive innovation around this emerging 
platform. Eliminating competition between Harvard Pilgrim and Tufts 
Freedom would likely result in higher prices, lower quality, less 
innovation, and less customer choice in the sale of commercial health 
insurance to small groups and to CRC groups in New Hampshire.
4. Difficulty of Entry or Expansion
    As alleged in the Complaint, new entry and expansion by competitors 
will likely neither be timely nor sufficient in scope to prevent the 
likely anticompetitive effects of the proposed Transaction. Barriers to 
entry and expansion include state licensing and regulatory 
requirements, the cost of developing a comprehensive provider network 
where employees live and work, the inability of insurers without 
significant membership to obtain competitive discounts from providers, 
and the development of sufficient business to permit the spreading of 
risk.
    The Complaint also alleges that the anticompetitive effects of the 
proposed Transaction are not likely to be eliminated by any 
efficiencies the proposed Transaction may achieve.

III. Explanation of the Proposed Final Judgment

    The relief required by the proposed Final Judgment will remedy the 
loss of competition alleged in the Complaint by establishing an 
independent and economically viable competitor in the markets for the 
sale of commercial group health insurance to small groups and CRC 
groups in New Hampshire. Paragraph IV.A of the Proposed Final Judgment 
requires Defendants, within 30 days after entry of the Stipulation and 
Order by the Court, to divest Tufts Freedom, Health Plan Holdings' New 
Hampshire subsidiary, to United, or an alternative acquirer, acceptable 
to the United States, in its sole discretion, after consultation with 
the State of New Hampshire (``Acquirer''). Paragraph IV.B allows for 
this 30-day period to be extended until 5 calendar days after Harvard 
Pilgrim and Health Plan Holdings receive the required regulatory 
approvals from the Massachusetts Division of Insurance. Any extension 
for securing regulatory approvals shall be no longer than 60 calendar 
days after the 30-day time period provided in Paragraph IV.A, unless 
the United States, in its sole discretion, consents to an additional 
extension. Defendants must take all reasonable steps necessary to 
accomplish the divestiture quickly and must cooperate with Acquirer.

A. Divestiture Assets

    The proposed Final Judgment requires Defendants to divest all 
assets and rights that an Acquirer needs to compete against Defendants 
and other commercial health insurers in New Hampshire for the sale of 
commercial group health insurance to small groups and CRC groups. The 
Divestiture Assets, which are defined in Paragraph II.F of the proposed 
Final Judgment, include all tangible and intangible assets of Tufts 
Freedom, including insurance licenses and real property interests, such 
as leases, membership, and customer contracts; all contracts with 
healthcare providers to which Tufts Freedom is a signatory; all current 
and historical member records for the health plans that Tufts Freedom 
offers or has offered, all underlying electronic data, and all files 
that contain any current or historical member records for those health 
plans; and all provider-furnished data related to members of health 
plans that Tufts Freedom offers or has offered and all files that 
contain any provider-furnished data related to those health plans.
    The Divestiture Assets also include an exclusive license for 
Acquirer to use the ``Tufts Health Freedom,'' ``Tufts Health Freedom 
Insurance Company,'' and ``Tufts Health Freedom Plan(s)'' brand names, 
and all associated trademarks, service marks, and service names, in New 
Hampshire from the date on which the Divestiture Assets are divested to 
Acquirer through December 31, 2021. This license will assist Acquirer 
in

[[Page 86962]]

maintaining plan membership during the period immediately after the 
divestiture. Related to the license included in the Divestiture Assets, 
Paragraphs IV.R and IV.S of the proposed Final Judgment prohibit 
Defendants from selling commercial health insurance products in New 
Hampshire that use the ``Tufts Health'' or ``Tufts Health Plan'' 
brand(s) through December 31, 2021, and prohibit Defendants from using 
the terms ``Health Freedom Plan(s),'' ``Freedom,'' or ``Freedom 
Plan(s)'' for any business name or to identify, market, or promote any 
products or services in New Hampshire. This prohibition will protect 
against consumer confusion between Defendants' commercial health 
insurance plans and Tufts Freedom's commercial health insurance plans.

B. Hiring of Personnel

    The proposed Final Judgment contains provisions intended to 
facilitate Acquirer's efforts to hire certain employees of Health Plan 
Holdings who have responsibilities for the Tufts Freedom business. 
These provisions will help ensure that Acquirer will be able to retain 
qualified employees to operate Tufts Freedom. Paragraph IV.I of the 
proposed Final Judgment requires Defendants to assist Acquirer in 
identifying and hiring employees based in New Hampshire or assigned to 
New Hampshire business and to make them available for interviews. It 
also provides that Defendants must not interfere with any negotiations 
by Acquirer to hire these employees. In addition, for employees who 
elect employment with Acquirer, Defendants must waive all non-compete 
and non-disclosure agreements; vest and pay (or provide to Acquirer for 
payment to the employee) on a prorated basis any bonuses, incentives, 
other salary, benefits, or other compensation fully or partially 
accrued at the time of the transfer of the employee to Acquirer; vest 
any unvested pension and other equity rights; and provide all other 
benefits that those employees otherwise would have been provided had 
they continued employment with Defendants, including any retention 
bonuses or payments. Paragraph IV.I further provides that Defendants 
may not solicit to rehire any employees who elect employment with 
Acquirer, unless an employee is terminated or laid off by Acquirer or 
Acquirer agrees in writing that Defendants may solicit to rehire that 
individual. The non-solicitation period runs for 12 months from the 
date of the divestiture.

C. Transition and Run-Out Services

    The proposed Final Judgment also contains several provisions to 
facilitate the transition of the Divestiture Assets to Acquirer. These 
provisions will facilitate a smooth transition for Tufts Freedom 
members from Health Plan Holdings to Acquirer so that Acquirer can 
compete effectively in the markets for health insurance sold to small 
groups and CRC groups in New Hampshire. For example, Paragraph IV.L of 
the proposed Final Judgment requires Defendants to make best efforts to 
transition customers from the Health Plan Holdings operating platform 
to Acquirer's operating platform beginning July 1, 2021, and ending by 
December 31, 2021. This transition will not begin until July 2021 in 
order to give Acquirer enough time to prepare its own operating 
platform for the Tufts Freedom business. In addition, Paragraph IV.M 
requires Defendants, at Acquirer's option, to enter into one or more 
agreements to provide transition services to Acquirer for a period 
running until December 31, 2021, or if Acquirer is not United, one year 
from the date of the divestiture. Transition services must encompass 
all services necessary for Acquirer to operate the Divestiture Assets. 
Among other things, the proposed Final Judgment allows Health Plan 
Holdings to provide the operational platform and systems infrastructure 
to run the Divestiture Assets, prepare regulatory filings, and handle 
member services for Acquirer for a time-limited period. Acquirer may 
terminate a transition services agreement, or any portion of it, 
without cost or penalty at any time upon commercially reasonable 
notice. Paragraph IV.M also provides that employees of Defendants 
tasked with supporting this agreement must not share any competitively 
sensitive information of Acquirer with any other employee of 
Defendants, unless such sharing is for the sole purpose of providing 
transition services to Acquirer.
    Paragraph IV.N of the proposed Final Judgment further requires 
Defendants, at Acquirer's option, to provide Run-out Services to 
Acquirer to cover the period from the date of a customer's transition 
to Acquirer's operating platform, until June 30, 2022, and at 
Acquirer's option, for up to an additional 90 days. Run-out Services 
are services that are customarily provided to an acquirer by a seller 
following an operational transfer of a health insurance plan. Run-out 
services include, among other things, claims processing, claims 
reporting, administrative support, and routine investigations necessary 
for claims processing. These services are provided by a seller of an 
insurance plan for a period of time after an operational transfer 
because the services relate to claims that were incurred prior to the 
transfer but have not been resolved. For example, a claim that occurred 
during the transition period might not be processed or investigated 
until after the transition period has ended. Requiring Defendants to 
provide these Run-out Services will help to smooth the transfer of the 
Divestiture Assets to Acquirer and ensure that Acquirer can immediately 
and successfully operate Tufts Freedom. The United States, in its sole 
discretion, may approve one or more extensions of Run-out Services. 
Acquirer may terminate a Run-out Services agreement, or any portion of 
it, without cost or penalty at any time upon commercially reasonable 
notice. Paragraph IV.N also provides that employees of Defendants 
tasked with supporting this agreement must not share any competitively 
sensitive information of Acquirer with any other employee of 
Defendants, unless such sharing is for the sole purpose of providing 
Run-out Services to Acquirer.

D. Healthcare Provider Contracts

    An insurer's ability to compete on price depends largely on medical 
costs, which are impacted significantly by the discounts the insurer 
obtains from healthcare providers through its contracts with those 
providers. The proposed Final Judgment contains several provisions to 
help ensure that Tufts Freedom will maintain contracts with New 
Hampshire healthcare providers at competitive rates following the 
divestiture. Keeping contracts with local providers at competitive 
rates will better position Tufts Freedom to be competitive in the small 
group and CRC group markets in New Hampshire.
1. Contracts With Granite Healthcare Providers
    Paragraph IV.P of the proposed Final Judgment requires that 
Defendants warrant that as of the date of divestiture, Tufts Freedom's 
contracts with Catholic Medical Center, Concord Hospital, Southern New 
Hampshire Health System, and Wentworth-Douglass Hospital, and any other 
hospitals that had an ownership interest in Granite Healthcare as of 
July 1, 2020, have not expired or terminated, will run through at least 
December 31, 2021, and will be on the same rates and terms that were in 
effect as of October 1, 2020, subject to certain permitted rate 
increases.

[[Page 86963]]

2. Contracts With Other Healthcare Providers
    Paragraph IV.Q of the proposed Final Judgment requires that 
Defendants make best efforts and cooperate with and assist Acquirer to 
ensure that, following the divestiture, Acquirer will retain Tufts 
Freedom's current contracts with healthcare providers in New Hampshire. 
Defendants' obligations under Paragraphs IV.Q.1-5 of the proposed Final 
Judgment vary depending upon whether a Healthcare Provider Contract 
includes change in control provisions, terminates, or expires.
(a) Healthcare Provider Contracts Without Change in Control Provisions
    Some Healthcare Provider Contracts have no requirement that Tufts 
Freedom notify the provider of a change in ownership or control of 
Tufts Freedom and do not include provisions allowing the provider to 
terminate the contract in the event of a change in ownership or 
control. Under Paragraph IV.Q.1, Defendants must make best efforts to 
ensure that contracts with Tufts Freedom's fifteen largest providers in 
New Hampshire (as measured by 2019 claims volume) that do not require a 
notice of change in ownership or control (1) have not expired or 
terminated and (2) include the same rates and terms that were in effect 
as of October 1, 2020, subject to certain permitted rate increases.
(b) Healthcare Provider Contracts With Change in Control Provisions
    Other Healthcare Provider Contracts require the provider's consent 
to a change in Tufts Freedom's ownership or control, or allow the 
provider to terminate the contract upon notice of a change in ownership 
or control. Paragraph IV.Q.2 of the proposed Final Judgment requires 
Defendants to notify those providers of the change in ownership or 
control within 30 calendar days of entering into an agreement to divest 
the Divestiture Assets to Acquirer. Paragraph IV.Q.2 further requires 
Defendants to use best efforts to obtain consent to the change in 
ownership or control from these providers or written acknowledgement 
that the provider will not terminate its contract with Tufts Freedom 
because of the change in ownership or control. The preceding 
requirement does not apply in the event that a provider's deadline to 
exercise any termination rights has already expired without the 
provider terminating the contract or giving Defendants written notice 
of an intent to terminate.
(c) Healthcare Provider Contracts That Terminate
    The proposed Final Judgment places additional obligations on 
Defendants if a healthcare provider terminates or gives notice of an 
intent to terminate within 90 days from the date of the divestiture. 
Paragraph IV.Q.3 requires Defendants to assist Acquirer, at Acquirer's 
request, to secure new contracts with those terminating healthcare 
providers. The assistance required includes sharing information with 
Acquirer concerning the history of the provider's participation in 
Tufts Freedom and aiding Acquirer in developing strategies to retain or 
bring the provider in-network, on the same rates and terms that were in 
effect as of October 1, 2020, subject to certain permitted increases. 
Paragraph IV.Q.4 further requires that if the terminating provider is 
one of Tufts Freedom's fifteen largest healthcare providers in New 
Hampshire (as measured by 2019 claims volume), or the termination would 
result in Tufts Freedom not meeting provider network adequacy standards 
required by applicable law or regulation, at Acquirer's request, 
Defendants must enter into a rental, lease, or similar contract to 
provide Acquirer with in-network access to the relevant healthcare 
provider(s) for a period of 12 months from the date of the divestiture.
(d) Expiring Healthcare Provider Contracts
    Finally, Paragraph IV.Q.5 of the proposed Final Judgment requires 
Defendants to use best efforts to renew all Healthcare Provider 
Contracts that will expire between the filing of the Complaint in this 
matter and 90 days after the date of the divestiture, on the same rates 
and terms that were in effect as of October 1, 2020, subject to certain 
permitted rate increases.

E. Divestiture Trustee

    If Defendants do not accomplish the divestiture within the period 
prescribed in Paragraphs IV.A and IV.B of the proposed Final Judgment, 
Section V of the proposed Final Judgment provides that the Court will 
appoint a divestiture trustee selected by the United States to effect 
the divestiture. If a divestiture trustee is appointed, the proposed 
Final Judgment provides that Defendants will pay all costs and expenses 
of the trustee. The divestiture trustee's commission will be structured 
so as to provide an incentive for the trustee based on the price 
obtained and the speed with which the divestiture is accomplished. 
After the divestiture trustee's appointment becomes effective, the 
trustee will provide monthly reports to the United States and the state 
of New Hampshire setting forth his or her efforts to accomplish the 
divestiture. If the divestiture has not been accomplished within six 
months of the divestiture trustee's appointment, the United States may 
make recommendations to the Court, which will enter such orders as 
appropriate, in order to carry out the purpose of the Final Judgment, 
including by extending the trust or the term of the divestiture 
trustee's appointment.

F. Compliance

    The proposed Final Judgment also contains provisions designed to 
promote compliance and make enforcement of the Final Judgment as 
effective as possible. Paragraph XIII.A provides that the United States 
retains and reserves all rights to enforce the Final Judgment, 
including the right to seek an order of contempt from the Court. Under 
the terms of this paragraph, Defendants have agreed that in any civil 
contempt action, any motion to show cause, or any similar action 
brought by the United States regarding an alleged violation of the 
Final Judgment, the United States may establish the violation and the 
appropriateness of any remedy by a preponderance of the evidence and 
that Defendants have waived any argument that a different standard of 
proof should apply. This provision aligns the standard for compliance 
with the Final Judgment with the standard of proof that applies to the 
underlying offense that the Final Judgment addresses.
    Paragraph XIII.B of the proposed Final Judgment provides additional 
clarification regarding the interpretation of the provisions of the 
proposed Final Judgment. The proposed Final Judgment is intended to 
remedy the loss of competition the United States alleges would 
otherwise be harmed by the transaction. Defendants agree that they will 
abide by the proposed Final Judgment, and that they may be held in 
contempt of this Court for failing to comply with any provision of the 
proposed Final Judgment that is stated specifically and in reasonable 
detail, as interpreted in light of this procompetitive purpose.
    Paragraph XIII.C of the proposed Final Judgment provides that if 
the Court finds in an enforcement proceeding that a Defendant has 
violated the Final Judgment, the United States 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, to compensate American 
taxpayers for any costs associated with

[[Page 86964]]

investigating and enforcing violations of the Final Judgment, Paragraph 
XIII.C provides that in any successful effort by the United States to 
enforce the Final Judgment against a Defendant, whether litigated or 
resolved before litigation, that Defendant will reimburse the United 
States for attorneys' fees, experts' fees, and other costs incurred in 
connection with any effort to enforce the Final Judgment, including the 
investigation of the potential violation.
    Paragraph XIII.D of the proposed Final Judgment states that the 
United States may file an action against a Defendant for violating the 
Final Judgment for up to four years after the Final Judgment has 
expired or been terminated. This provision is meant to address 
circumstances such as when evidence that a violation of the Final 
Judgment occurred during the term of the Final Judgment is not 
discovered until after the Final Judgment has expired or been 
terminated or when there is not sufficient time for the United States 
to complete an investigation of an alleged violation until after the 
Final Judgment has expired or been terminated. This provision, 
therefore, makes clear that, for four years after the Final Judgment 
has expired or been terminated, the United States may still challenge a 
violation that occurred during the term of the Final Judgment.
    Finally, Section XIV of the proposed Final Judgment provides that 
the Final Judgment will expire ten years from the date of its entry, 
except that after five years from the date of its entry, the Final 
Judgment may be terminated upon notice by the United States to the 
Court and Defendants that the divestiture has been completed and that 
continuation of the Final Judgment is no longer necessary or in the 
public interest.

IV. Remedies Available to Potential Private Litigants

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

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least 60 days preceding the 
effective date of the proposed Final Judgment within which any person 
may submit to the United States written comments regarding the proposed 
Final Judgment. Any person who wishes to comment should do so within 60 
days of the date of publication of this Competitive Impact Statement in 
the Federal Register, or the last date of publication in a newspaper of 
the summary of this Competitive Impact Statement, whichever is later. 
All comments received during this period will be considered by the U.S. 
Department of Justice, which remains free to withdraw its consent to 
the proposed Final Judgment at any time before the Court's entry of the 
Final Judgment. The comments and the response of the United States will 
be filed with the Court. In addition, comments and the United States' 
response will be published in the Federal Register unless the Court 
agrees that the United States instead may publish them on the U.S. 
Department of Justice, Antitrust Division's internet website.
    Written comments should be submitted to: Eric D. Welsh, Chief, 
Healthcare and Consumer Products Section, Antitrust Division, U.S. 
Department of Justice, 450 Fifth Street, NW, Suite 4100, Washington, DC 
20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    As an alternative to the proposed Final Judgment, the United States 
considered a full trial on the merits against Defendants. The United 
States could have continued the litigation and sought preliminary and 
permanent injunctions against the combination of Harvard Pilgrim and 
Health Plan Holdings. The United States is satisfied, however, that the 
divestiture of assets described in the proposed Final Judgment will 
remedy the anticompetitive effects alleged in the Complaint, preserving 
competition for the sale of commercial health insurance to small groups 
and CRC groups in each of the geographic markets alleged in the 
Complaint. Thus, the proposed Final Judgment achieves all or 
substantially all of the relief the United States would have obtained 
through litigation, but avoids the time, expense, and uncertainty of a 
full trial on the merits of the Complaint.

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

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a 60-day comment period, after which the Court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In making that determination, 
the Court, in accordance with the statute as amended in 2004, is 
required to consider:
    (A) The competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.
    15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory 
factors, the Court's inquiry is necessarily a limited one as the 
government is entitled to ``broad discretion to settle with the 
defendant within the reaches of the public interest.'' United States v. 
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); 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 a 
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

[[Page 86965]]

antitrust violations alleged in the complaint was reasonable, and 
whether the mechanism to enforce the final judgment are clear and 
manageable'').
    As the U.S. 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 proposed Final Judgment is 
sufficiently clear, whether its enforcement mechanisms are sufficient, 
and whether it may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. With respect to the adequacy of the relief secured by 
the proposed Final Judgment, a court may not ``make de novo 
determination of facts and issues.'' United States v. W. Elec. Co., 993 
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also 
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F. 
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F. 
Supp. 2d 10, 16 (D.D.C. 2000); 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.'' W. 
Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ``The court 
should bear in mind the flexibility of the public interest inquiry: the 
court's function is not to determine whether the resulting array of 
rights and liabilities is one that will best serve society, but only to 
confirm that the resulting settlement is within the reaches of the 
public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks 
omitted); see also United States v. Deutsche Telekom AG, No. 19-2232 
(TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020). More demanding 
requirements would ``have enormous practical consequences for the 
government's ability to negotiate future settlements,'' contrary to 
congressional intent. Id. at 1456. ``The Tunney Act was not intended to 
create a disincentive to the use of the consent decree.'' Id.
    The United States' predictions about the efficacy of the remedy are 
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at 
1461 (recognizing courts should give ``due respect to the Justice 
Department's . . . view of the nature of its case''); United States v. 
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In 
evaluating objections to settlement agreements under the Tunney Act, a 
court must be mindful that [t]he government need not prove that the 
settlements will perfectly remedy the alleged antitrust harms[;] it 
need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'') (internal 
citations omitted); United States v. Republic Servs., Inc., 723 F. 
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to 
which the government's proposed remedy is accorded''); United States v. 
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A 
district court must accord due respect to the government's prediction 
as to the effect of proposed remedies, its perception of the market 
structure, and its view of the nature of the case.''). The ultimate 
question is whether ``the remedies [obtained by the Final Judgment 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 
W. Elec. Co., 900 F.2d at 309).
    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 (``[T]he 
`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, Congress made clear its intent 
to preserve the practical benefits of using consent judgments proposed 
by the United States in antitrust enforcement, Public Law 108-237 Sec.  
221, and added the unambiguous instruction that ``[n]othing in this 
section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. 16(e)(2); 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). ``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 (citing Enova 
Corp., 107 F. Supp. 2d at 17).

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: December 23, 2020.
    Respectfully submitted,
Catherine R. Reilly,
U.S. Department of Justice, Antitrust Division, Healthcare and Consumer 
Products Section, 450 Fifth Street, NW, Suite 4100, Washington, DC 
20530, [email protected].
[FR Doc. 2020-28905 Filed 12-30-20; 8:45 am]
BILLING CODE 4410-11-P