Justice Department Condemns Agreements Among Competing Medical Providers That Limit Treatment Options

June 1, 2020 | Insights

By Elizabeth Pittman, Edwin Buffmire

The Department of Justice recently sent a stark message to medical providers (and other businesses) that agreements to allocate services, employees, and customers among competing providers will be prosecuted under criminal antitrust laws. One of the largest independent oncology groups in the country allegedly participated in a criminal antitrust conspiracy to allocate oncology treatments for cancer patients in Southwest Florida and has agreed to pay a $100 million fine to resolve the charges.

DOJ alleged Florida Cancer Specialists & Research Institute LLC (FCS) conspired with competitors to eliminate competition for certain cancer treatments by allocating chemotherapy treatments in the region exclusively to FCS and radiology treatments exclusively to a competitor oncology group. Central to the violation, FCS agreed not to employ any radiation oncologists and its competitor agreed not to employ medical oncologists. This agreement to allocate customers, employees, and treatments—rather than compete for those services—violated federal antitrust law.

FCS agreed to pay the statutory maximum penalty in exchange for a deferred prosecution agreement. FCS further agreed to maintain a robust antitrust compliance program and waive any non-compete agreements with current or former oncologists or employees in order to restore competition in cancer treatments in the region.

Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division stated that “FCS and its co-conspirators agreed to cheat by limiting treatment options available to cancer patients in order to line their pockets. The Antitrust Division is continuing its investigation to ensure that all responsible participants are held accountable to the maximum extent possible.” The Government’s investigation is ongoing.

The Florida Office of Attorney General also announced that FCS has agreed to settle the civil claims for violation of state antitrust laws.

DOJ Initiatives: Antitrust Strike Force and Pandemic Guidance

This $100 million criminal settlement follows a late-2019 DOJ announcement of a special strike force targeting collusion in dealings with the government, called the Procurement Collusion Strike Force. The FCS prosecution specifically highlighted that FCS submitted requests for payment and received payment from federal and state insurance plans in furtherance of the alleged conspiracy. The strike force is part of the DOJ’s efforts to reverse a downturn in antitrust prosecutions and collections.

Also, the large fine for non-competes signals a heightened interest in specialty healthcare services as well as the interplay between competition in the labor market and traditional antitrust violations. The DOJ’s Antitrust Division released an important “Q&A” document, including an entire section on non-compete agreements. Healthcare providers should be mindful of such agreements being used in their practices and physician contracts.

Notably, the FCS conduct at issue in this prosecution preceded the recent DOJ and FTC statement regarding collaboration among healthcare entities to address the COVID-19 pandemic. That guidance specifically addresses collaborations among entities to address public health and safety, and there is no indication that FCS’s conduct would have been protected by that federal guidance and expedited review process.

DOJ & FTC Issue Critical COVID-19 Collaboration Guidance »

This settlement reflects enforcers’ increasing antitrust scrutiny on business practices beyond price-fixing. Agreements among businesses not to “poach” employees have been a major focus, spanning various industries from technology companies to rail roads to fast food. This most recent prosecution reflects DOJ’s intent to bring criminal charges against companies, and potentially their executives, for agreements that reduce competition among businesses. DOJ’s allegations reflect a theory of prosecution that agreements not to hire employees of a competitor, or a particular specialty, can be one means to effectuate customer allocation.

Meet Elizabeth

Elizabeth W. Pittman is an attorney in the litigation section of Jackson Walker’s Dallas office. Elizabeth was a Summer Associate with the Firm in 2017 and 2018, when she worked in both the corporate and litigation departments to assist in the creation and termination of various entities and compliance with SEC guidelines. Elizabeth also gained experience in handling antitrust litigation matters, as well as conducted research and drafted memoranda on the enforceability of non-compete covenants.

Meet Edwin

Edwin Buffmire represents clients in antitrust, class action, trade secret, and other complex and sensitive disputes in Texas and across the nation. He has built successful strategies for clients in a variety of industries, including obtaining dismissals for insurers in three class actions, defending an energy client against allegations of anticompetitive conduct in the natural gas industry, securing two full defense verdicts at trial for a securities brokerage firm against RICO claims, and defending media clients against a putative nationwide class asserting conspiracy allegations.

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice.