• United States v. United Regional Health Care System
  • May 24, 2011 | Authors: Kathryn M. Almar; Arthur N. Lerner
  • Law Firm: Crowell & Moring LLP - Washington Office
  • On February 25, 2011, United Regional Health Care System of Wichita Falls, Texas ("United Regional") stipulated to a consent decree proposed to the U.S. District Court for the Northern District by the U.S. Department of Justice and the Texas Attorney General ("plaintiffs"). The consent decree's terms include proscriptions, permissions, and requirements, all designed to purge anticompetitive aspects from United Regional's past and future contracts with commercial health care payer organizations in the Wichita Falls market for inpatient hospital services and outpatient surgical services. The legal basis for the plaintiffs' complaint is § 2 of the Sherman Antitrust Act, which prohibits the maintenance of monopolistic market power to anticompetitive effect.

    To support their § 2 claim, plaintiffs had to show that United Regional's role and behavior in the relevant product markets satisfied several elements: 1) the defendant must have monopoly power in a given product market, 2) it must willfully maintain and exploit that monopoly power, 3) thereby creating anticompetitive effects, and it must do so in a way that cannot reasonably be characterized as procompetitive. The plaintiffs' complaint focuses on United Regional's role in two product markets, general acute-care inpatient hospital services and outpatient surgical services sold to commercial health insurers, within a geographic scope "no larger than the Wichita Falls Metropolitan Statistical Area (MSA)," which is comprised of Archer, Clay and Wichita counties. The complaint explains that the services offered in these product markets have no substitutes from other product markets, and that competition from providers outside the Wichita Falls MSA could not prevent providers of inpatient hospital services or outpatient surgical services in the MSA from charging supracompetitive prices.

    United Regional denied any wrongdoing alleged by the complaint described above, but also agreed to marked revisions in its contracts with commercial health care payers when it stipulated the terms of a consent decree proposed to the U.S. District Court for the Northern District of Texas. The decree prohibits United Regional from entering into, adopting, maintaining, or enforcing any contractual term that conditions price discounts on exclusive dealing. It permits United Regional to offer discounts to payers only to the extent that those discounts reflect efficiencies in United Regional's cost structure. It requires United Regional to extend the full discount on billed charges to all commercial payers in the region, regardless of whether they contract with United Regional exclusively. Finally, it also requires United Regional to appoint an Antitrust Compliance Officer, to make that Officer responsible for implementing compliance with the decree's terms, and to report periodically to the Department of Justice and the State of Texas on the status of its contractual relationships with commercial payers.