Settlement Prohibits Allegiance from Agreeing to Limit Marketing and Improperly Communicating with Competing Providers

The Department of Justice has reached a settlement with Henry Ford Allegiance Health (“Allegiance”) for conspiring with a rival hospital in a neighboring county to restrict marketing in that rival’s county. The settlement ends almost three years of litigation and a scheduled March 6 trial relating to agreements to restrict marketing among hospitals in South Central Michigan.

“As a result of Allegiance’s per se illegal agreement to restrict marketing of competing services in Hillsdale County, Michigan consumers were deprived of valuable services and healthcare information,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “By prohibiting further anticompetitive conduct and educating Allegiance executives on antitrust law, this settlement will ensure that consumers receive the fruits of robust competition.”

The proposed settlement, joined by the Michigan Attorney General’s Office, was filed today in the U.S. District Court for the Eastern District of Michigan. If approved by the court, the settlement will end Allegiance’s unlawful conduct and provide residents of South Central Michigan the full benefits of competition. The Department’s Antitrust Division previously settled claims against three other South Central Michigan hospitals. The Department charged Allegiance and these other hospitals with insulating themselves from competition by agreeing to withhold outreach and marketing in each other’s respective counties, so as not to solicit certain customers. As a result, consumers were denied the benefits of competition, including free screenings and other services, as well as valuable information that informs healthcare choices and opportunities for higher quality care.

The Department’s proposed settlement with Allegiance expands on the terms of the Department’s previous settlements in this action, which the court entered more than two years ago. Specifically, the proposed settlement prevents Allegiance from engaging in improper communications with competing providers regarding their respective marketing activities and entering into any improper agreement to allocate customers or to limit marketing. It explicitly prevents Allegiance from continuing to carve out Hillsdale County from its marketing and business development activities. The proposed settlement further requires Allegiance to report any violations to the Department, and imposes an annual obligation to certify compliance with the terms of the final judgment. Allegiance must also submit to compliance inspections at the Department’s request. The proposed settlement requires Allegiance to reimburse the Department and the state of Michigan for certain costs incurred in litigating this case.

Pursuant to Department policy, the settlement includes several new provisions included in all consent decrees designed to improve the effectiveness of the decree and the Division’s future ability to enforce it. “The proposed settlement will make it easier and more efficient for the Department to enforce the decree by allowing the Department to prove alleged violations by a preponderance of the evidence,” said Assistant Attorney General Delrahim. “These provisions will encourage a stronger commitment to compliance and will ease the strain on the Department in investigating and enforcing possible violations.” Similar provisions have been included in a number of recent consent decrees where the Department’s new leadership has sought divestitures as a condition of clearing transactions under Section 7 of the Clayton Act.

Henry Ford Allegiance Health is a 475-bed health system that operates the sole general acute care hospital in Jackson County, Michigan, along with primary care physician offices, physical rehabilitation facilities, and diagnostic centers across several counties in South Central Michigan. In March 2016, Allegiance became part of the Henry Ford Health System. Henry Ford Health System is headquartered in Detroit, Michigan, and is the second largest health system in Michigan, operating Allegiance, five other hospitals, several medical centers, and one of the nation’s largest medical group practices. Its 2016 revenues were over $5 billion.

The proposed settlement, along with the Department’s competitive impact statement, will be published in the Federal Register, consistent with the requirements of the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Peter Mucchetti, Chief, Healthcare & Consumer Products Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, NW, 4th Floor, Washington, DC 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.   back...
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