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Health Law Alert
2011: Issue 7 – Focus on Antitrust
Final ACO Antitrust Enforcement Statement Won’t Deter Procompetitive ACOs
By: John J. Miles
When the idea of ACOs was floating around prior to enactment of the Affordable Care Act last March, some groups and commentators argued that antitrust enforcement was likely to deter their formation. Some commentators simply had an ox to gore and raised antitrust concern merely as a smokescreen. But the primary concern was that ACOs would constitute clinically integrated provider-controlled contracting networks and that there was too little and uncertain antitrust guidance explaining the circumstances under which networks are sufficiently clinically integrated so that their joint negotiations of contracts with health plans on behalf of their competing participants would not run afoul of the antitrust law’s per se ban on horizontal price-fixing agreements.
Click to continue...The Noerr-Pennington Exemption: Freedom to Stifle Impending Competition — Maybe
By: William A. Roach, Jr.*
Entry by a competitor into a highly concentrated market can benefit consumers by leading to lower prices, innovation, and increased competition. In the case of health care services, a new hospital or other type of provider that enters a market otherwise dominated by a large incumbent, or the expansion of another incumbent, can offer health plans and their enrollees an alternative to the dominant provider. There are often barriers to entry, to be sure, even when a potential entrant is well-funded and eager to compete. As the Seventh Circuit’s recent decision in Mercatus Group, LLC v. Lake Forest Hospital, 631 F.3d 834 (7th Cir. 2011), makes abundantly clear, an incumbent provider can successfully block a competitor from entering the market in some situations; and, it can avoid antitrust liability despite acting with anticompetitive intent, especially when the blockage results from the incumbent provider’s petitioning the government for anticompetitive action. But when the petitioning includes making intentional misrepresentations, the standards become less clear.
Click to continue...DOJ Steps Up Antitrust Enforcement Against Health-Plan/Provider Restraints on Competition
By: John J. Miles
Pursuant to an implicit, if not explicit, market-allocation agreement between the Federal Trade Commission and the Antitrust Division, the Division has primary responsibility for investigating and, where warranted, challenging alleged anticompetitive conduct by health plans. Some commentators heavily criticized the Division during the Bush administration for its seeming lack of effort in policing the anticompetitive activities of health plans, although the Division did challenge several health-plan mergers and investigated others. Prior to his election as president, then- Candidate Obama was particularly critical of the Antitrust Division’s performance.
There seems to have been an uptick in health-plan antitrust enforcement under President Obama. For example, in March 2010, the Division issued a press release explaining that Blue Cross Blue Shield of Michigan and Physicians Health Plan of Mid-Michigan abandoned, in response to an Antitrust Division investigation, a health-plan merger that would have combined Blue Cross’s 70 percent market share and Physician Health Plan’s 20 percent share in the Lansing, Michigan area.
Click to continue...The FTC’s Interpretation of the State-Action Exemption
By: John J. Miles
In a number of situations, the antitrust laws do not apply to certain parties or to certain activities — that is, the party or conduct is “exempt” or “immune” from antitrust liability. One of the more important antitrust exemption doctrines in analyzing many health care antitrust issues is the state-action exemption — an exemption based on congressional intent that the antitrust laws not apply to the activities of states and on federalism when they choose to replace competition with regulation.
Click to continue...Five Things Directors of Nonprofit Health Care Providers Can Learn from Lemington Home
Recently, a federal appeals court in In re Lemington Home for the Aged revived claims brought by unsecured creditors against the directors and officers (D&Os) of the insolvent Lemington Home for the Aged when it reversed a lower court’s decision in favor of the D&Os. The unsecured creditors committee asserted that the D&Os had breached their fiduciary duty to the unsecured creditors while wrapping up Lemington Home’s corporate affairs. The committee further alleged that the D&Os had acted fraudulently in conveying assets to third parties, which led to Lemington Home’s deepening insolvency.
Click to continue...What Every Hospital Should Know Before Implementing a Mandatory Flu Shot Policy
By: Sarah E. Swank and Kristina J. Longo
In 2009, the potential for a massive H1N1 “swine” flu outbreak convinced some hospitals to implement mandatory employee vaccinations as hospitals planned for staffing shortages and an influx of infected patients. In the past, discussions about mandatory influenza vaccination policies (or flu shots) were often theoretical due to vaccine shortages. As the peak of this year’s flu season approaches, hospitals should review their flu shot policies to consider the various legal and operational hurdles, especially for those hospitals considering mandatory flu shots. For now, it is a policy issue for each hospital to debate.
Click to continue...Participants in Medicare Part C and Part D May Now Be Considered Federal Contractors and Subcontractors
By: Sharon A. Snyder and Kathleen A. McGinley
Recently, health care providers have been targeted by the Office of Federal Contract Compliance Programs (OFCCP), which has taken the position that participants in Medicare Part C and D are now federal contractors and may be federal subcontractors, subject to equal opportunity and affirmative action requirements.
In 2009 and 2010, the OFCCP decided two administrative cases that address when a participating TRICARE health care provider is a federal contractor or subcontractor. In the first case, an administrative judge held that a Florida hospital was a federal subcontractor because it contracted with Humana Military Healthcare Services to service TRICARE members as part of a provider network. The judge expressly rejected the hospital’s assertion that TRICARE payments should be treated like Medicare payments for purposes of determining whether they constituted payments under a federal contract, holding that participation in TRICARE was a contract to provide services, unlike Medicare, which is considered a contract to pay for services.
Click to continue...Providers Benefit from False Claims Act’s First-to-File Rule
Health care providers sued under the False Claims Act (FCA) are often subjected to multiple “copy cat” lawsuits filed by different persons, but all based on the same allegations raised in an earlier-filed lawsuit. The FCA contains a “first-to-file” rule prohibiting that tactic. The rule states that when an individual files a “qui tam” claim under the FCA, “no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5).
A recent federal court decision highlights the potential for defendants to invoke the first-to-file rule to fight back against copy cat FCA lawsuits. Although the case did not involve a federal health care program, the decision nonetheless is instructive and useful for health care providers who may become involved in FCA litigation.
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