A California jury recently rejected antitrust claims brought by a class of California consumers seeking more than $400 million in damages from Sutter Health, a large Northern California hospital system. The case, Sidibe v. Sutter Health, Cas. No. 12-04854, N.D. Cal., originally filed in 2012, alleged that Sutter Health had abused its market position by imposing anticompetitive terms in its agreements with commercial insurers, thereby increasing the prices paid by insured consumers for healthcare in Northern California. Continue Reading Long-Running Antitrust Case Challenging Sutter Health’s Restrictive Insurance Contracts Ends With a Defense Victory—But Does This Signal “All Clear” for Health Systems?
The U.S. Department of Justice (DOJ) announced recoveries of more than $5.6 billion in False Claims Act settlements and judgments in fiscal year 2021. This amount is a staggering increase from the $2.2 billion recovered during fiscal year 2020 and the second-highest total ever recorded since the FCA was enacted in 1986.
Although a rebound from pandemic-related constraints may explain part of the substantial jump in recoveries, the near record-setting number also reflects the success of various recently implemented DOJ strategies, including using large-scale data mining and AI to identify high-value cases, a targeted approach in deciding when to intervene, and a focus on combating the opioid epidemic.
The healthcare industry continues to be the biggest target, with more than $5 billion, or close to 90 percent, of the awards relating to matters that involved drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians.
The Federal Trade Commission and the DOJ Antitrust Division recently announced that they would be reviewing, and likely revising, the Horizontal Merger Guidelines – the guidelines used by the agencies when assessing whether a proposed transaction may have adverse impacts on competition. (The announcement, issued on January 18, is available here). In announcing the change, FTC Chairwoman Khan explained that the agencies must “ensure that the Merger Guidelines accurately reflect the realities of the modern economy,” and that “to accurately detect and analyze potentially illegal transactions in the modern economy,” changes to the Guidelines are required. Continue Reading New Merger Guidelines Could Have Significant Impact on Healthcare Transactions
On January 13, 2022, the United State Supreme Court upheld the Department of Health and Humans Services (“HHS”) Centers for Medicare and Medicaid Services (“CMS”) COVID-19 vaccine mandate for staff working at Medicare-participating health care facilities. HHS/CMS had issued an interim final rule on November 5, 2021, that incorporated a vaccine mandate into the health and safety regulations (e.g., conditions and requirements of participation) that apply to 15 types of facilities and agencies that participate in Medicare. The interim rule required these facilities and agencies to adopt policies and procedures mandating COVID-19 vaccination for all staff, except in cases of religious or medical exemption or delay, by stated deadlines. Continue Reading U.S. Supreme Court Upholds the CMS COVID-19 Vaccine Mandate
The Federal Trade Commission (FTC) announced in July of this year that, going forward, whenever merging parties settled an FTC merger challenge, the settlement would impose restrictions on the ability of the merging parties to consummate any future acquisitions, regardless of size, for a period of ten years. This announcement reversed FTC policy (which had been in effect for 25 years), that – absent unusual circumstances – treated each merger, and each merging party, as a new and distinct matter, subject to long-standing merger principles. In announcing the decision, FTC Director Holly Vedova stated that “The FTC should not have to waste valuable time and resources investigating clearly anticompetitive deals that should have died in the boardroom,” and that this new policy will “force acquisitive firms to think twice before going on a buying binge because the FTC can simply say no.”
Health plans and insurers will have a little more time to comply with some of the multitude of new requirements under the Consolidated Appropriations Act (“CAA”). On August 20, 2021, the Departments of Labor, Health and Human Services, and the Treasury (the “Departments”) issued an FAQ updating plans and issuers on critical enforcement guidance for several CAA transparency measures. The Departments have acknowledged that plans and issuers are struggling to comply with the litany, and complexity, of transparency requirements the CAA imposes, going so far as to note that compliance with some requirements by initial enforcement dates “is likely not possible.”
A California Superior Court recently approved the settlement of a hospital merger challenge brought by the California Attorney General’s Office against Cedars-Sinai Health System and Huntington Hospital. The action – and subsequent settlement – is noteworthy for at least two reasons. First, unlike in most other health system merger challenges, the two merging systems in this matter were not direct competitors. Second, the merging parties agreed to a number of limitations on their conduct going forward – including price controls and the appointment of a “monitor” to oversee their compliance going forward – that are quite uncommon and restrictive.
Claiming that “federal inaction” has caused a weakening of competition in many U.S. industries, on July 9 President Biden issued an Executive Order directing the Attorney General and the Chair of the Federal Trade Commission to “vigorously” enforce the antitrust laws. While the Order seeks to increase antitrust enforcement across a wide range of industries, President Biden singles out the healthcare industry for special attention and heightened enforcement. See Executive Order Fact Sheet.
While much of the antitrust world is focused on the actions brought by federal and state antitrust regulators against “big tech,” the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights recently held a hearing to consider the impact of hospital consolidation on the healthcare industry and consumers. Led by Subcommittee Chairwoman Senator Amy Klobuchar, the Committee heard divergent views on the causes of hospital consolidation and its potential impacts on consumers.
On May 13, 2021, the Centers for Medicare and Medicaid Services (“CMS”) published an interim final rule with comment period addressing COVID vaccine education, administration, and reporting requirements for nursing homes. Designed to reduce the spread of COVID-19, the rule updates the existing infection control requirements that nursing homes must meet to participate in the Medicare program, found at 42 C.F.R § 483.80. The effective date for the new rule is May 21, 2021, and Michigan’s state survey and certification staff have advised that they will begin enforcement of the new rule on June 14, 2021.