DOJ Focuses Antitrust Enforcement on Health Care Industry

By
June 5, 2018

As health care attorneys we are often called upon to consider the antitrust implications in a variety of contracts and transactions.  For example, the establishment of clinically integrated health care networks requires consideration of potential price fixing and exclusionary issues.  The antitrust laws require elements of financial and clinical integration in order to mitigate potential antitrust risk.

The U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) have historically been very active in their oversight and enforcement of antitrust laws.  Given the Trump Administration’s stance on a variety of regulatory issues, health care and antitrust attorneys have been anxious to ascertain the Administration’s antitrust enforcement approach and priorities.

Recently the enforcement agencies have given some indications that they intend to continue to place special emphasis on antitrust enforcement in the health care industry.  Two of the most recent indications come directly from top officials in the DOJ.

On May 17, Barry Nigro, Deputy Assistant Attorney General in the DOJ Antitrust Division, told an American Bar Association conference that competition in health care is essential, and that “few, if any segments of our economy merit higher priority when it comes to antitrust enforcement”.

Mr. Nigro described enforcement efforts on the both the criminal side and the civil side.  In the criminal area, he said “price fixing and naked market allocation agreements are effectively agreements to steal from consumers” by way of higher prices, lower quality, or fewer choices.  He also noted the Trump Administration is placing priority on “no poaching” agreements, which are agreements between two unrelated companies not to recruit or hire each other’s employees.

On the civil side, Mr. Nigro said that DOJ has been and will be active in the following areas:

  1. Challenging mergers of dominant health care companies;
  2. Challenging clauses in contracts between providers and insurers that prevent insurers from steering patients to providers which offer lower-priced comparable services;
  3. Challenging agreements between providers that limit marketing in the rival’s home area so as not to solicit the rival’s patients; and
  4. Seeking treble damages in cases where the government has been the victim of conduct in violation of antitrust laws.

Mr. Nigro emphasized another area of concern – where competitors band together to set standards for professional licensing or certification, whether it is acting on behalf of a state or as private self-regulatory bodies.  While Mr. Nigro acknowledged that licensing requirements and certification of professionals serve to protect the public, he said that DOJ sees these activities as potentially anti-competitive by restricting who can provide services to consumers.

Mr. Nigro’s speech came on the heels of an address by Makun Delrahim, the Assistant Attorney General for DOJ’s Antitrust Division, in which he announced the creation of an Office of Decree Enforcement within the Division.  The Office is charged with ensuring compliance with and enforcement of present and future antitrust consent decrees.  The Division recently announced its intent to include provisions in consent decrees it negotiates to make them easier to enforce.  These provisions include agreement the Division may use a lower standard of proof to establish a violation of a decree, agreement the Division may ask the court to extend a decree in event of a violation, and agreement the Division may seek reimbursement of legal fees and costs incurred in enforcing a decree.

Health care, as a highly regulated industry, has always been subject to antitrust enforcement at the federal level.  All indications are that health care providers will not get a reprieve from antitrust compliance issues under the Trump Administration.

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