Federal Register / Vol. 76, No. 47 / Thursday, March 10, 2011 / Notices 13209 

the amount of $10.5 million in 

accordance with bond requirements at 

six non-owned sites. 

The Department of Justice will 

receive, for a period of fifteen days from 

the date of this publication, comments 

relating to the Non-Owned Site 

Settlement Agreement. Comments 

should be addressed to the Assistant 

Attorney General, Environment and 

Natural Resources Division, and either 

emailed to pubcommentees.enrd@usdoj.gov or mailed to P.O. 

Box 7611, U.S. Department of Justice, 

Washington, DC 20044–7611, and 

should refer to In re Motors Liquidation 

Corp., et al., D.J. Ref. 90–11–3–09754. 

Commenters may request an 

opportunity for a public meeting in the 

affected area, in accordance with 

Section 7003(d) of RCRA, 42 U.S.C. 

6973(d). 

The Non-Owned Site Settlement 

Agreement may be examined at the 

Office of the United States Attorney, 86 

Chambers Street, 3rd Floor, New York, 

New York 10007, and at the U.S. 

Environmental Protection Agency, Ariel 

Rios Building, 1200 Pennsylvania 

Avenue, NW., Washington, DC 20460. 

During the public comment period, the 

Non-Owned Site Settlement Agreement 

may also be examined on the following 

Department of Justice Web site, http:// 

www.usdoj.gov/enrd/ 

Consent_Decrees.html. Copies of the 

Non-Owned Site Settlement Agreement 

may also be obtained by mail from the 

Consent Decree Library, P.O. Box 7611, 

U.S. Department of Justice, Washington, 

DC 20044–7611 or by faxing or 

e-mailing a request to Tonia Fleetwood 

(tonia.fleetwood@usdoj.gov), fax no. 

(202) 514–0097, phone confirmation 

number (202) 514–1547. In requesting a 

copy from the Consent Decree Library, 

please enclose a check in the amount of 

$6.75 (25 cents per page reproduction 

cost) payable to the U.S. Treasury or, if 

by e-mail or fax, please forward a check 

in that amount to the Consent Decree 

Library at the stated address. 

Maureen Katz, 

Assistant Section Chief, Environmental 

Enforcement Section, Environment and 

Natural Resources Division. 

[FR Doc. 2011–5445 Filed 3–9–11; 8:45 am] 

BILLING CODE 4410–15–P 

DEPARTMENT OF JUSTICE 

Antitrust Division 

United States and State of Texas v. 

United Regional Health Care System; 

Proposed Final Judgment and 

Competitive Impact Statement 

Notice is hereby given pursuant to the 

Antitrust Procedures and Penalties Act, 

15 U.S.C. § 16(b)–(h), that a proposed 

Final Judgment, Stipulation and 

Competitive Impact Statement have 

been filed with the United States 

District Court for the Northern District 

of Texas, Wichita Falls Division, in 

United States of America and State of 

Texas v. United Regional Health Care 

System, Civil Action No. 7:11–cv– 

00030–O. On February 25, 2011, the 

United States filed a Complaint alleging 

that United Regional Health Care 

System has entered, maintained, and 

enforced exclusionary contracts with 

commercial insurers that effectively 

prevent those insurers from contracting 

with United Regional’s competitors in 

violation of Section 2 of the Sherman 

Act, 15 U.S.C. 2. The proposed Final 

Judgment, filed at the same time as the 

Complaint, prohibits United Regional 

from using agreements with commercial 

health insurers that improperly inhibit 

insurers from contracting with United 

Regional’s competitors. 

Copies of the Complaint, proposed 

Final Judgment, and Competitive Impact 

Statement are available for inspection at 

the Department of Justice, Antitrust 

Division, Antitrust Documents Group, 

450 Fifth Street, NW., Suite 1010, 

Washington, DC 20530 (telephone: 202– 

514–2481), on the Department of 

Justice’s Web site at http:// 

www.usdoj.gov/atr, and at the Office of 

the Clerk of the United States District 

Court for the Northern District of Texas, 

Wichita Falls Division. Copies of these 

materials may be obtained from the 

Antitrust Division upon request and 

payment of the copying fee set by 

Department of Justice regulations. 

Public comment is invited within 60 

days of the date of this notice. Such 

comments, and responses thereto, will 

be published in the Federal Register 

and filed with the Court. Comments 

should be directed to Joshua H. Soven, 

Chief, Litigation I Section, Antitrust 

Division, U.S. Department of Justice, 

450 Fifth Street, NW., Suite 4100, 

Washington, DC 20530 (telephone: 202– 

307–0827). 

Patricia A. Brink, 

Director of Civil Enforcement. 

In the United States District Court for 

the Northern District of Texas, Wichita 

Falls Division 

United States of America and State of 

Texas, Plaintiffs, v. United Regional 

Health Care System, Defendant. 

Case No.: 7:11–cv–00030. 

Judge: Reed C. O’Connor. 

Filed: Feb. 25, 2011. 

Description: Antitrust. 

Complaint 

The United States of America, acting 

under the direction of the Attorney 

General of the United States, and the 

State of Texas, by and through the Texas 

Attorney General, bring this civil 

antitrust action to enjoin defendant 

United Regional Health Care System 

(‘‘United Regional’’) from entering into, 

maintaining, or enforcing contracts with 

commercial health insurers that 

effectively prevent those insurers from 

contracting with United Regional’s 

competitors, in violation of Section 2 of 

the Sherman Act, 15 U.S.C. 2, and to 

remedy the effects of its unlawful 

conduct. Plaintiffs allege as follows: 

I. Nature of the Action 

1. United Regional has monopoly 

power in two relevant product markets 

in Wichita Falls, Texas and the 

surrounding area: (1) The sale of general 

acute-care inpatient hospital services 

(‘‘inpatient hospital services’’) to 

commercial health insurers, and (2) the 

sale of outpatient surgical services to 

commercial health insurers. United 

Regional has an approximately 90% 

share of the market for inpatient 

hospital services sold to commercial 

insurers and a greater than 65% share of 

the market for outpatient surgical 

services sold to commercial insurers. 

All health insurance companies in the 

relevant geographic market consider 

United Regional a ‘‘must-have’’ hospital 

for health plans because it is by far the 

largest hospital in the region and the 

only local provider of certain essential 

services. 

2. United Regional has maintained its 

monopoly power in the relevant markets 

by entering into contracts with 

commercial health insurers that exclude 

United Regional’s competitors in the 

Wichita Falls area from the insurers’ 

health-care provider networks 

(‘‘exclusionary contracts’’). These 

exclusionary contracts effectively 

prevent insurers from contracting with 

hospitals and other health-care facilities 


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13210 Federal Register / Vol. 76, No. 47 / Thursday, March 10, 2011 / Notices 

that compete with United Regional by 

requiring the insurers to pay a 

substantial pricing penalty if they also 

contract with United Regional’s 

competitors. Most commercial health 

insurers must pay United Regional 13% 

to 27% more for its services if they do 

not use United Regional exclusively. 

The effects of this pricing penalty are to 

make the cost of including a competing 

hospital or other health-care facility in 

an insurer’s network prohibitively 

expensive and not commercially viable, 

and to exclude equally-efficient rivals. 

3. United Regional’s exclusionary 

contracts have reduced competition and 

enabled United Regional to maintain its 

monopoly power in the provision of 

inpatient hospital services and 

outpatient surgical services. They have 

done so by (1) Delaying and preventing 

the expansion and entry of United 

Regional’s competitors, likely leading to 

higher health-care costs and higher 

health insurance premiums; (2) limiting 

price competition for price-sensitive 

patients, likely leading to higher healthcare costs for those patients; and (3) 

reducing quality competition between 

United Regional and its competitors. In 

this case, there is no valid 

procompetitive business justification for 

United Regional’s exclusionary 

contracts. 

4. United Regional’s exclusionary 

contracts unlawfully maintain United 

Regional’s monopoly power in the 

relevant markets in violation of Section 

2 of the Sherman Act, 15 U.S.C. 2. 

II. Defendant, Jurisdiction, Venue, and 

Interstate Commerce 

5. United Regional is a nonprofit 

corporation organized and existing 

under the laws of the State of Texas, 

with its principal place of business in 

Wichita Falls, Texas. 

6. Plaintiff United States brings this 

action pursuant to Section 4 of the 

Sherman Act, 15 U.S.C. 4, and plaintiff 

State of Texas brings this action 

pursuant to Section 16 of the Clayton 

Act, 15 U.S.C. 26, to prevent and 

restrain United Regional’s violations of 

Section 2 of the Sherman Act, 15 U.S.C. 

2. 

7. This Court has subject matter 

jurisdiction over this action under 

Section 4 of the Sherman Act, 15 U.S.C. 

4; Section 16 of the Clayton Act, 15 

U.S.C. 26; and 28 U.S.C. 1331, 1337(a), 

and 1345. 

8. United Regional maintains its 

principal place of business and transacts 

business in this District. United 

Regional entered into the agreements at 

issue in this District, and committed the 

acts complained of in this District. 

United Regional’s conduct has had 

anticompetitive effects and will 

continue to have anticompetitive effects 

in this District. Consequently, this Court 

has personal jurisdiction over the 

defendant, and venue is proper in this 

District under Section 12 of the Clayton 

Act, 15 U.S.C. 22, and 28 U.S.C. 1391. 

9. United Regional is engaged in, and 

its activities substantially affect, 

interstate trade and commerce. It 

contracts with providers of commercial 

health insurance located outside of 

Texas to be included in their provider 

networks. These providers of 

commercial health insurance make 

substantial payments to United Regional 

in interstate commerce. 

III. Relevant Markets 

A. Relevant Product Markets 

(1) The Sale of Inpatient Hospital 

Services to Commercial Health Insurers 

10. The sale of inpatient hospital 

services to commercial health insurers 

is a relevant product market. 

11. Inpatient hospital services are a 

broad group of medical and surgical 

diagnostic and treatment services that 

include an overnight stay in the hospital 

by the patient. Inpatient hospital 

services exclude (1) Services at 

hospitals that serve solely children, 

military personnel or veterans; (2) 

services at outpatient facilities that 

provide same-day service only; and (3) 

psychiatric, substance abuse, and 

rehabilitation services. Although 

individual inpatient hospital services 

are not substitutes for each other (e.g., 

obstetrics and cardiac services are not 

substitutes for each other), the various 

individual inpatient hospital services 

can be aggregated for analytic 

convenience. 

12. The market for the sale of 

inpatient hospital services to 

commercial health insurers excludes 

outpatient services because health plans 

and patients would not substitute 

outpatient services for inpatient services 

in response to a sustained price 

increase. There are no other reasonably 

interchangeable services for inpatient 

hospital services. 

13. Commercial health insurers 

include managed-care organizations 

(such as Blue Cross Blue Shield, Aetna, 

United Healthcare, CIGNA, 

Accountable, or other HMOs or PPOs), 

rental networks (such as Beech Street, 

Texas True Choice, Multiplan, and 

PHCS), and self-funded plans. Rental 

networks serve as a secondary network 

used by health insurance companies 

looking for network coverage or 

discounts outside of their own networks 

or by self-insured employers; they are 

used by small and mid-sized health 

insurance companies to offer clients 

national coverage. Self-funded plans 

may access provider networks through 

managed-care organizations or rental 

networks. Although not all of these are 

risk-bearing entities, they can be 

referred to collectively as ‘‘commercial 

health insurers.’’ Commercial health 

insurers do not include government 

payers (Medicare, Medicaid, and 

TRICARE). 

14. The market for the sale of 

inpatient hospital services to 

commercial health insurers excludes 

sales of such services to government 

payers. The primary government payers 

are the federal government’s Medicare 

program (coverage for the elderly and 

disabled), the joint federal and state 

Medicaid programs (coverage for lowincome persons), and the federal 

government’s TRICARE program 

(coverage for military personnel and 

families). The federal government sets 

the rates and schedules at which the 

government pays health-care providers 

for services provided to individuals 

covered by Medicare, Medicaid, and 

TRICARE. These rates are not subject to 

negotiation. 

15. In contrast, commercial health 

insurers negotiate rates with health-care 

providers and sell health insurance 

policies to organizations and 

individuals, who pay premiums for the 

policies. Generally, the rates that 

commercial health insurers pay healthcare providers are substantially higher 

than those paid by government payers 

(Medicare, Medicaid, and TRICARE). 

16. There are no reasonable 

substitutes or alternatives to inpatient 

hospital services sold to commercial 

health insurers. A health-care provider’s 

negotiations with commercial health 

insurers are separate from the process 

used to determine the rates paid by 

government payers, and health-care 

providers could, therefore, target a price 

increase just to commercial health 

insurers. Commercial health insurers 

cannot shift to government rates in 

response to an increase in rates for 

inpatient hospital services sold to 

commercial health insurers, and 

patients who are ineligible for Medicare, 

Medicaid, or TRICARE cannot substitute 

those programs for commercial health 

insurance in response to a price increase 

for commercial health insurance. 

Consequently, a hypothetical 

monopolist provider of inpatient 

hospital services sold to commercial 

health insurers could profitably 

maintain supracompetitive prices for 

those services over a sustained period of 

time. 


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(2) The Sale of Outpatient Surgical 

Services to Commercial Health Insurers 

17. The sale of outpatient surgical 

services to commercial health insurers 

is a relevant product market. 

18. Outpatient surgical services are a 

broad group of surgical diagnostic and 

surgical treatment services that do not 

require an overnight stay in a hospital. 

Outpatient surgical services are 

typically performed in a hospital or 

other specialized facility, such as a freestanding ambulatory surgery center that 

is licensed to perform outpatient 

surgery. Outpatient surgical services are 

distinct from procedures routinely 

performed in a doctor’s office. 

Outpatient surgical services exclude 

services at hospitals or other facilities 

that serve solely children, military 

personnel, or veterans. Although 

individual outpatient surgical services 

are not substitutes for each other (e.g., 

orthopedic and gastroenterological 

surgical services are not substitutes for 

one another), the various individual 

outpatient surgical services can be 

aggregated for analytic convenience. 

19. The market for the sale of 

outpatient surgical services to 

commercial health insurers excludes 

inpatient hospital services; because 

health plans and patients would not 

substitute inpatient care for outpatient 

surgical services in response to a 

sustained price increase. There are no 

other reasonably interchangeable 

services for outpatient surgical services. 

20. There are no reasonable 

substitutes or alternatives to outpatient 

surgical services sold to commercial 

health insurers. A health-care provider’s 

negotiations with commercial health 

insurers are separate from the process 

used to determine the rates paid by 

government payers, and health-care 

providers could, therefore, target a price 

increase just to commercial health 

insurers. Commercial health insurers 

cannot shift to government rates in 

response to an increase in rates for 

outpatient surgical services sold to 

commercial health insurers, and 

patients who are ineligible for Medicare, 

Medicaid, or TRICARE cannot substitute 

those programs for commercial health 

insurance in response to a price increase 

for commercial health insurance. 

Consequently, a hypothetical 

monopolist provider of outpatient 

surgical services sold to commercial 

health insurers could profitably 

maintain supracompetitive prices for 

those services over a sustained period of 

time. 

B. Relevant Geographic Market 

21. The relevant geographic market 

for each of the relevant product markets 

alleged above is no larger than the 

Wichita Falls Metropolitan Statistical 

Area (‘‘MSA’’). The Wichita Falls MSA is 

comprised of Archer, Clay, and Wichita 

counties. MSAs are geographic areas 

defined by the U.S. Office of 

Management and Budget for use in 

Federal statistical activities. 

22. Wichita Falls is the largest city in 

the Wichita Falls MSA. According to the 

2008 estimates of the Census Bureau, 

the Wichita Falls MSA has a population 

of about 150,000. About 100,000 of 

these people reside in the city of 

Wichita Falls, which is located in 

Wichita County near the border of the 

three counties that compose the Wichita 

Falls MSA. Wichita Falls is in north 

central Texas, about a two-hour drive 

from the nearest metropolitan areas: 

Dallas-Fort Worth, Texas, and 

Oklahoma City, Oklahoma. 

23. Commercial health insurers 

contract to purchase inpatient hospital 

services and outpatient surgical services 

in the geographic area in which their 

health plan beneficiaries are likely to 

seek medical care. Health plan 

beneficiaries typically seek medical care 

close to their homes or workplaces. Very 

few plan beneficiaries who live in the 

Wichita Falls MSA travel outside its 

borders to seek inpatient hospital 

services or outpatient surgical services. 

For example, in 2008, only about 10% 

of inpatient discharges of residents of 

the Wichita Falls MSA were from 

hospitals not located in the Wichita 

Falls MSA. Commercial health insurers 

that sell policies to beneficiaries in the 

Wichita Falls MSA cannot reasonably 

purchase inpatient hospital services or 

outpatient surgical services outside the 

Wichita Falls MSA as an alternative to 

serve those beneficiaries. Consequently, 

hospitals and health-care facilities 

outside the Wichita Falls MSA do not 

compete with health-care providers 

located in the Wichita Falls MSA for the 

sale of the relevant products in a 

manner that would constrain the pricing 

or other behavior of Wichita Falls 

health-care providers. 

24. Competition for the sale of 

inpatient hospital services to 

commercial health insurers from 

providers located outside the Wichita 

Falls MSA would not be sufficient to 

prevent a hypothetical monopolist 

provider of inpatient hospital services to 

commercial health insurers located in 

the Wichita Falls MSA from profitably 

maintaining supracompetitive prices for 

those services over a sustained period of 

time. 

25. Competition for the sale of 

outpatient surgical services to 

commercial health insurers from 

providers located outside the Wichita 

Falls MSA would not be sufficient to 

prevent a hypothetical monopolist 

provider of outpatient surgical services 

to commercial health insurers located in 

the Wichita Falls MSA from profitably 

maintaining supracompetitive prices for 

those services over a sustained period of 

time. 

IV. Hospitals and Outpatient Surgical 

Facilities in the Wichita Falls MSA 

A. Acute-Care Hospitals 

26. There are two general acute-care 

hospitals in Wichita Falls—United 

Regional and Kell West Regional 

Hospital (‘‘Kell West’’). Two additional 

hospitals, Electra Memorial Hospital 

(‘‘Electra Memorial’’) and Clay County 

Memorial Hospital (‘‘Clay Memorial’’), 

are outside Wichita Falls, but within the 

Wichita Falls MSA. 

(1) United Regional 

27. United Regional is a 369-bed 

general acute-care hospital that offers a 

wide range of inpatient and outpatient 

services. United Regional has 14 

operating rooms, a laboratory, a 24-hour 

emergency department, and a Level III 

trauma center, among other facilities. It 

offers comprehensive cardiac care and 

has a childbirth center. United Regional 

is a private nonprofit hospital, not a 

public hospital. Its net patient revenues 

for 2009 were approximately $265 

million. 

28. Commercial health insurers that 

offer health insurance within the 

Wichita Falls MSA consider United 

Regional a ‘‘must have’’ hospital because 

it is by far the largest hospital in the 

region and the only provider of some 

essential services, such as cardiac 

surgery, obstetrics, and high-level 

trauma care. 

29. United Regional was formed in 

October 1997 by the merger of what 

were then the only two general acutecare hospitals in Wichita Falls—Wichita 

General Hospital (‘‘Wichita General’’) 

and Bethania Regional Health Care 

Center (‘‘Bethania’’). To complete the 

1997 merger, Wichita General and 

Bethania sought and obtained an 

antitrust exemption from the Texas 

Legislature. The Legislature enacted 

Tex. Health & Safety Code Ann. 

§ 265.037(d), which provides that a 

county-city hospital board ‘‘existing in a 

county with a population of more than 

100,000 and a municipality with a 

population of more than 75,000 * * * 

may purchase, construct, receive, lease, 

or otherwise acquire hospital facilities, 


jdjones on DSK8KYBLC1PROD with NOTICES
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including the sublease of one or more 

hospital facilities, regardless of whether 

the action might be considered 

anticompetitive under the antitrust laws 

of the United States or this state.’’ In an 

attempt to qualify for the antitrust 

exemption enacted by the legislature, 

Wichita General and Bethania Regional 

entered into a leasing arrangement that 

involved the Wichita County-City of 

Wichita Falls, Texas Hospital Board 

(‘‘County-City Board’’). 

(2) Kell West 

30. Kell West Regional is a 41-bed 

general acute-care hospital that opened 

in January 1999, partially as a 

competitive response to the merger that 

created United Regional. Kell West 

provides a wide range of inpatient and 

outpatient surgical and medical 

treatments. Kell West has eleven 

operating rooms, a laboratory, four 

intensive care beds, and a 24-hour 

emergency department. Kell West 

currently does not provide several 

services that United Regional provides, 

including, in particular, cardiac surgery 

and obstetrics. However, United 

Regional considers Kell West to be a 

significant competitor. 

(3) Other Inpatient Facilities 

31. Electra Memorial is a 22-bed 

hospital located in Electra, Texas, more 

than 30 miles west of Wichita Falls. 

Electra Memorial offers a much 

narrower range of inpatient hospital 

services and outpatient surgical services 

than either United Regional or Kell 

West. United Regional does not consider 

Electra Memorial to be a significant 

competitor, but instead as a source of 

referrals. 

32. Clay Memorial is a 25-bed hospital 

located in Henrietta, Texas, more than 

15 miles east of Wichita Falls. Clay 

Memorial offers a much narrower range 

of inpatient hospital services and 

outpatient surgical services than either 

United Regional or Kell West. United 

Regional does not consider Clay 

Memorial to be a significant competitor, 

but instead as a source of referrals. 

B. Outpatient Surgical Facilities 

33. United Regional, Kell West, 

Electra Memorial, and Clay Memorial all 

provide outpatient surgical services, 

although those provided by Electra 

Memorial and Clay Memorial are more 

limited than those provided by United 

Regional and Kell West. Maplewood 

Ambulatory Surgery Center 

(‘‘Maplewood’’) provides outpatient 

surgical services focusing solely on 

surgical procedures for pain 

remediation. Texoma Outpatient 

Surgery Center only performs eye 

surgeries. The North Texas Surgi-Center 

provided some outpatient surgical 

services in Wichita Falls from 1985 to 

2008. It was excluded from some 

commercial health insurers’ networks 

by United Regional’s exclusionary 

contracts. The Surgi-Center closed in 

December 2008. 

34. There are no other providers of 

outpatient surgical services in the 

Wichita Falls MSA. 

C. Potential Expansion by Competitors 

35. Both Kell West and Maplewood 

have significant excess capacity. Kell 

West has the capacity to more than 

double the number of total patients it 

serves without any additional physical 

expansion. In addition, Kell West was 

intended by its owners to become a fullservice hospital. To this end, Kell West 

has devoted most of its surplus funds to 

expansion projects. In 2002, Kell West 

nearly tripled in size, expanding from 

15 to 41 beds. In 2005, it added two 

emergency exam rooms; in 2007, a fourbed intensive care unit; in 2008, an onsite laundry facility; and in 2009, four 

additional operating rooms. 

36. Kell West’s owners originally 

intended to expand Kell West into a 70- 

bed hospital with an intensive care unit, 

OB suite, and cardiology department. 

Today, Kell West has 41 beds. As 

alleged below, likely because of United 

Regional’s exclusionary contracts, it has 

not been able to expand into several 

service lines that it has considered 

opening, including obstetrics, 

pediatrics, oncology, industrial 

medicine, and neurology. Doctors in the 

Wichita Falls community have 

expressed interest in treating additional 

patients at Kell West if it could expand 

into new services. 

37. Maplewood currently operates its 

outpatient surgery center only three 

days per week and could easily add at 

least one day more per week to its 

schedule to accommodate additional 

patients. 

V. United Regional’s Monopoly Power 

A. United Regional has monopoly power 

in the two relevant product markets in 

the Wichita Falls MSA: (1) The sale of 

inpatient hospital services to 

commercial health insurers and (2) the 

sale of outpatient surgical services to 

commercial health insurers. Since the 

1997 merger between Wichita General 

and Bethania, United Regional has 

dominated both product markets in the 

Wichita Falls MSA, and its prices have 

climbed. It is currently one of the most 

expensive hospitals in Texas. 

B. Inpatient Hospital Services 

38. United Regional is by far the 

largest provider of inpatient hospital 

services in the Wichita Falls MSA. 

United Regional’s share of inpatient 

hospital services sold to commercial 

health insurers is approximately 90% 

(based on admissions) in the Wichita 

Falls MSA. 

39. An analysis prepared for United 

Regional by a major insurer concluded 

that the payments from commercial 

health insurers for inpatient hospital 

services in Wichita Falls are at least 

50% higher than the average amounts 

paid in seven other comparable cities in 

Texas. Another commercial health 

insurer estimated that it pays United 

Regional almost 70% more than what it 

pays hospitals in the Dallas-Fort Worth 

area for inpatient hospital services. This 

insurer’s analysis found that the 

‘‘inpatient allowed per day adjusted for 

case mix’’ (a measure that adjusts for 

differences in the type and severity of 

services performed) was $4,143 on 

average in Wichita Falls, compared to 

$3,254 in Dallas-Fort Worth. The 

analysis also found that hospital prices 

in Wichita Falls are, on average, 

significantly higher for inpatient 

services than prices in five other 

comparable MSAs in Texas. United 

Regional is also significantly more 

expensive than Kell West, its primary 

competitor in Wichita Falls. For services 

that are offered by both hospitals, 

United Regional’s average per-day rate 

for inpatient services sold to 

commercial health insurers is about 

70% higher than Kell West’s. 

C. Outpatient Surgical Services 

40. United Regional is also by far the 

largest provider of outpatient surgical 

services in the Wichita Falls MSA. 

United Regional’s share of outpatient 

surgical services sold to commercial 

health insurers is more than 65% (based 

on visits) in the Wichita Falls MSA. 

41. United Regional’s prices for 

outpatient surgical services are also 

among the highest in Texas. One 


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commercial health insurer calculated 

that United Regional’s prices for all 

outpatient services were in the top 10% 

of the 279 Texas hospitals that 

submitted outpatient claims to that 

insurer. Of the 100 Texas hospitals 

submitting the largest number of 

outpatient claims to that insurer in 

2007, the insurer found that United 

Regional was the fourth most expensive 

outpatient provider in the state. Another 

analysis by a commercial health insurer 

shows that hospital prices in Wichita 

Falls are, on average, significantly 

higher for outpatient services than 

prices in five other comparable MSAs in 

Texas. Maplewood, a nearby competitor, 

charges much lower prices for 

outpatient surgical services than United 

Regional charges for the same services. 

Prices at the North Texas Surgi-Center, 

an ambulatory surgery center in Wichita 

Falls that performed a wide range of 

outpatient surgical services but closed 

in December 2008, were also 

significantly lower than prices charged 

by United Regional for identical 

procedures. 

42. In the Wichita Falls MSA, 

significant barriers to the entry of new 

hospital and outpatient facilities as well 

as barriers to the expansion of existing 

facilities help preserve United 

Regional’s monopoly power. For 

hospitals, barriers to entry include the 

expense and difficulty of building a 

hospital, recruiting and hiring qualified 

staff and physicians, building a 

reputation in the community, and 

gaining accreditation from relevant 

accrediting organizations. For outpatient 

facilities, the same barriers exist, but to 

a lesser extent. For both hospital and 

outpatient facilities, the barriers to entry 

are substantial when combined with the 

additional entry barriers imposed by 

United Regional’s exclusionary 

contracts. 

VI. United Regional Has Willfully 

Maintained Its Monopoly Power 

Through the Use of Anticompetitive 

Exclusionary Contracts 

A. The Exclusionary Contracts and 

Their Terms 

43. All of United Regional’s 

exclusionary contracts share the same 

anticompetitive feature: a pricing 

penalty ranging from 13% to 27% if an 

insurer contracts with Kell West or 

other competing facilities. Specifically, 

the contracts provide for a higher 

discount off billed charges (e.g., 25%) if 

United Regional is the only local 

hospital or outpatient surgical provider 

in the insurer’s network. The contracts 

provide for a much smaller discount 

(e.g., 5% off billed charges) if the 

commercial health insurer adds another 

competing local health-care facility, 

such as Kell West or Maplewood. A 

penalty that reduces an insurer’s 

discount from 25% to 5% (for adding a 

rival facility) increases the insurer’s 

price from 75% to 95% of billed 

charges—a 27% increase over the 

discounted price. 

44. The 13% to 27% pricing penalty 

applies if an insurer contracts with 

competing facilities within a specific 

geographic area delineated by each 

contract. Though the scope of the 

geographic limitation differs between 

contracts, every exclusionary contract 

designates an area that is no larger than 

Wichita County, and prevents 

commercial health insurers from 

contracting with competing facilities 

within that area. For example, one 

contract prevents the commercial health 

insurer from contracting with competing 

facilities within ten miles of the City of 

Wichita Falls. Two contracts describe 

the geographic limitation as within 15 

miles of the City of Wichita Falls. One 

contract designates certain zip codes 

located within Wichita County, and 

three contracts designate Wichita 

County in its entirety. In every case, 

Kell West, Maplewood, and the nowclosed Surgi-Center fall within the 

geographic zone of exclusion defined by 

the contracts. 

45. United Regional adopted the 

exclusionary contracts in direct 

response to the competitive threat 

presented by Kell West, the North Texas 

Surgi-Center, and other local outpatient 

surgical facilities to United Regional’s 

monopoly position in the Wichita Falls 

MSA. United Regional began 

considering the possibility of moving to 

exclusionary contracts at around the 

time Kell West began operations. 

Shortly thereafter, United Regional 

began entering contracts with 

commercial health insurers that 

effectively prevented them from 

contracting with Kell West and other 

local health-care facilities for both 

inpatient and outpatient services. 

46. By 1999, within three months after 

Kell West opened for business, United 

Regional had obtained exclusionary 

contracts from five commercial health 

insurers. United Regional has continued 

to enter into exclusionary contracts with 

insurers up to the present day. As of 

2010, United Regional had entered into 

exclusionary contracts with a total of 

eight commercial health insurers. In 

each instance, it was United Regional 

that required the exclusionary 

provisions in the contract—not the 

insurer. 

47. One of the earlier contracts 

provides as follows: 

Exclusive Agreement. The rates set forth in 

Exhibit A [80% of billed charges] are 

contingent upon [INSURER] not entering into 

another agreement with an acute care facility, 

hospital or ambulatory surgery center, 

directly or indirectly, for the provision of 

inpatient services and/or outpatient services 

in Wichita Falls, Texas or within ten miles 

of Wichita Falls, Texas. If [INSURER] enters 

into another agreement with an acute care 

facility, hospital, or ambulatory surgery 

Center for the provision of inpatient services 

and/or outpatient services in Wichita Falls, 

Texas or within a ten mile radius of Wichita 

Falls, Texas, Clients shall immediately and 

automatically begin reimbursing Hospital, for 

Covered Services rendered by Hospital to 

Participants, one hundred percent (100%) of 

Hospital’s billed charges . * * * 

48. A more recent agreement between 

United Regional and another insurer 

describes a similar arrangement: 

At this time, [INSURER] elects the Tier 1 

Option (defined below). Hospital shall be 

compensated at seventy-five percent (75%) of 

billed charges for covered services. However, 

upon the Effective Date and during the term 

of this Agreement, if [INSURER] elects to 

enter into a new contract with another 

general acute care facility, ambulatory 

surgery center or radiology center in [a] 15 

mile radius of United Regional Health Care 

System (‘‘Hospital’’) located at 1600 11th St., 

Wichita Falls, Texas, [INSURER] shall notify 

Hospital thirty (30) days in advance of the 

effective date of such new contract. On the 

effective date of such contract, the Tier 1 

Option Hospital Reimbursement Schedule 

shall be void and the reimbursement rates 

will revert to 95% of billed charges for all 

inpatient and outpatient services at United 

Regional Health Care System, its affiliates, 

and joint ventures [] where United Regional 

has a majority ownership interest. 

1. Tier One Option: Hospital is the sole innetwork facility (including only general acute 

care facilities, ambulatory surgery centers or 

radiology center[s]) within a 15 mile radius 

of Hospital located at 1600 11th St., Wichita 

Falls, Texas and Hospital shall be 

compensated at seventy-five percent (75%) of 

billed charges for covered services. Payor 

will deduct any applicable Copayments, 

Deductibles, or Coinsurance from payment 

due to Hospital. 

2. Tier 2 Option: Hospital is not the sole 

in-network facility for general acute care, 

ambulatory surgery center or radiology center 

within a 15 mile radius of Hospital located 

at 1600 11th St., Wichita Falls, Texas and 

Hospital shall be compensated at ninety-five 

percent (95%) of billed charges for covered 

services. Payor will deduct any applicable 

Copayment, Deductibles, or Coinsurance 

from payment due to Hospital. 

49. United Regional has broadened 

the scope of the exclusionary provisions 

over time. All eight of the exclusionary 

contracts effectively prevent the 

commercial health insurer from 

contracting with hospital competitors 

(for inpatient or outpatient services) 

within a certain geographic proximity to 

United Regional. Seven of the eight 


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exclusionary contracts also effectively 

prevent the commercial health insurer 

from contracting with outpatient surgery 

centers. United Regional added 

provisions excluding additional 

outpatient facilities such as radiology 

centers to five of the more recent 

contracts. 

50. Although the earlier contracts 

(signed before 2001) describe the pricing 

in these agreements in terms of 

‘‘exclusivity’’ or an ‘‘exclusive 

agreement,’’ more recent contracts use 

the phrase ‘‘tiered compensation 

schedule.’’ Regardless of the label, the 

contracts share the same 

anticompetitive feature; they impose a 

significant pricing penalty if an insurer 

does not enter into an exclusive 

arrangement with United Regional. 

51. Every commercial health insurer 

that has entered into one of United 

Regional’s exclusionary contracts would 

prefer an open network in which its 

customers have a choice of hospitals 

and outpatient surgical facilities. Most, 

if not all, of these insurers have sought 

to add Kell West or another outpatient 

provider to their networks. In every 

case, United Regional has threatened the 

insurer with prices so high that the 

insurer would not be able to compete 

with other health insurers offering 

insurance in the Wichita Falls area. As 

a result, notwithstanding their 

preferences, each health insurer 

contracted exclusively with United 

Regional because the insurer could not 

offer a commercially viable product if it 

paid the higher prices that United 

Regional would charge if the insurer 

chose to include in its network one or 

more of United Regional’s competitors. 

One national commercial health insurer, 

for example, agreed to enter into an 

exclusionary contract in 2010 because it 

determined that it could not otherwise 

offer a commercially viable product in 

the Wichita Falls MSA. 

52. United Regional has entered into 

exclusionary contracts with most 

commercial health insurers currently 

providing health insurance to residents 

of the Wichita Falls area. For more than 

twelve years, the only major insurer 

without an exclusionary contract has 

been Blue Cross Blue Shield of Texas 

(‘‘Blue Cross’’), the largest commercial 

health insurer in Wichita Falls and in 

Texas. For two rental networks, which 

combined account for less than 5% of 

the commercially insured lives in 

Wichita Falls, United Regional offered 

only the higher nonexclusive rates 

without an exclusive provision. In late 

2010, after plaintiffs began their 

investigation, one other rental network 

switched from an exclusive agreement 

with United Regional to a non-exclusive 

arrangement. 

53. All exclusionary contracts entered 

into between 1998 and 2010 are still in 

force and are essentially ‘‘evergreen’’ 

contracts, automatically renewed yearly 

unless terminated by one of the parties. 

B. United Regional’s Exclusionary 

Contracts Foreclosed Its Rivals From the 

Most Profitable Health-Insurance 

Contracts 

54. United Regional has effectively 

foreclosed its rivals from many of the 

most profitable health-insurance 

contracts in Wichita Falls—contracts 

that are crucial for its rivals to 

effectively compete. 

55. Inclusion in health insurer 

networks is critical because patients 

generally seek health-care services from 

‘‘in-network’’ providers and thereby 

incur substantially lower out-of-pocket 

costs than if the patients use out-ofnetwork providers. Patients do so 

because, typically, a health insurer 

charges a member substantially lower 

co-payments or other charges when the 

member uses an in-network provider. 

56. By effectively denying its 

competitors critical in-network status, 

United Regional likely substantially 

reduces the number of patients who 

would otherwise use Kell West and 

other United Regional competitors. 

More importantly, United Regional’s 

contracts effectively deny access to a 

substantial percentage of the most 

profitable patients—those with 

commercial health insurance. 

57. It is substantially more profitable 

for hospitals to serve patients with 

commercial health insurance than 

Medicare, Medicaid, or TRICARE 

patients, because government plans pay 

significantly less than commercial 

health insurers. This is true in the 

Wichita Falls MSA. All commercial 

health plans in the Wichita Falls MSA 

pay United Regional at least double the 

Medicare payment rate, and all but one 

insurer (Blue Cross) pay United 

Regional more than triple the Medicare 

payment rate. 

58. Consequently, patients covered by 

government plans are not adequate 

substitutes for commercially insured 

patients. In fact, United Regional, like 

many other hospitals, depends on 

payments from commercial health 

insurers to compensate for the 

comparatively low payments it receives 

from government payers. The low 

payment rates from government payers 

provide little or no contribution margin 

to offset United Regional’s overhead 

expenses. 

59. By 2010, the insurers that had 

exclusionary contracts with United 

Regional accounted for approximately 

35% to 40% of all payments that United 

Regional received from commercial 

health insurers. 

60. Most of the remaining commercial 

payments are attributable to a single 

commercial health insurer—Blue 

Cross—which has a 55% to 65% share 

of the commercially insured lives in the 

Wichita Falls MSA. In the relevant 

market, serving Blue Cross patients is 

far less profitable than serving patients 

covered by other commercial health 

insurers. Because of its size, Blue Cross 

negotiates the deepest discounts; thus, it 

pays United Regional and other 

providers in the relevant market 

substantially less than other commercial 

health insurers. 

61. Because the insurers that have 

exclusionary contracts with United 

Regional pay the highest rates, these 

insurers account for a substantial share 

of the profits that would otherwise be 

available to competing health-care 

providers. In particular, these insurers 

account for approximately 30% to 35% 

of the profits that United Regional earns 

from all payers—including government 

payers such as Medicare, Medicaid, and 

TRICARE—even though they account 

for only about 8% of United Regional’s 

total patient volume. 

62. If the commercial health insurers 

that have exclusionary contracts with 

United Regional added Kell West and 

other health-care providers to their 

networks, these providers would earn 

substantially higher profits than they do 

now. For example, if only 10% of these 

insurers’ patients switched from United 

Regional to Kell West, and these 

insurers paid Kell West 30% less than 

they currently pay United Regional, Kell 

West’s profits would still likely increase 

by more than 40%. 

C. United Regional’s Exclusionary 

Contracts Likely Have Caused 

Substantial Anticompetitive Effects 

63. United Regional’s exclusionary 

contracts have reduced competition and 

enabled United Regional to maintain its 

monopoly power in the provision of 

inpatient hospital services and 

outpatient surgical services. By 

effectively preventing most commercial 

health insurers from including in their 

networks other inpatient and outpatient 

facilities, such as Kell West, the North 

Texas Surgi-Center, Maplewood, and 

others, United Regional has (1) delayed 

and prevented the expansion and entry 

of United Regional’s competitors, likely 

leading to higher health-care costs and 

higher health insurance premiums; (2) 

limited price competition for pricesensitive patients, likely leading to 

higher health-care costs for those 


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patients; and (3) reduced quality 

competition between United Regional 

and its competitors. 

(1) The Exclusionary Contracts Likely 

Delayed and Prevented Expansion and 

Entry 

64. The exclusionary contracts have 

likely delayed and prevented 

competitors from expanding in or 

entering the relevant markets, leading to 

higher health-care costs and higher 

health-insurance premiums. As alleged 

above, United Regional’s exclusionary 

contracts effectively prevent virtually all 

commercial health insurers from 

contracting with many of United 

Regional’s competitors, including Kell 

West. If United Regional had not 

imposed its exclusionary contracts, 

these insurers likely would have 

contracted with Kell West, Maplewood, 

and other competitors in the Wichita 

Falls MSA (and with providers that 

otherwise might have entered the 

market), giving the competitors innetwork access to the patients covered 

by commercial health insurers—the 

patients that are the most profitable to 

health-care providers. 

65. Furthermore, physicians treating 

patients covered by commercial health 

insurers that have been effectively 

prevented from contracting with United 

Regional’s competitors would likely 

have referred more patients to these 

competitors, and more patients would 

likely have chosen to use them. In 

addition to referrals of patients insured 

by commercial health insurers with 

exclusionary contracts, such referrals 

would have likely included additional 

referrals of Blue Cross patients and 

patients covered by Medicare, Medicaid, 

and TRICARE. Many doctors engage in 

‘‘block-booking,’’ finding it most 

efficient to perform all of a given day’s 

surgeries and other procedures at the 

same facility. This, in turn, would have 

given United Regional’s competitors 

higher patient volumes and utilization, 

increased revenues, and substantially 

higher profits. 

66. The higher volumes and profits 

obtained from serving additional 

patients insured by commercial health 

insurers—the patients that are the most 

profitable to health-care providers—as 

well as additional Blue Cross patients 

and additional Medicare, Medicaid or 

TRICARE patients, likely would have 

allowed Kell West and other 

competitors to expand. This expansion 

would enable the competitors to 

compete more effectively with United 

Regional, likely resulting in more 

competition and lower health-care costs. 

67. Kell West likely would have 

expanded sooner into certain services, 

and would also likely have added more 

beds and additional services, such as 

additional intensive care capabilities, 

cardiology services, and obstetric 

services. Kell West has considered 

expansion into these additional services 

on numerous occasions, but has been 

limited in its ability to expand due to its 

lack of in-network access to 

commercially insured patients. Kell 

West also would likely fill its significant 

excess capacity for the services it 

already provides if it had access to the 

commercial health insurers that 

currently have exclusionary contracts 

with United Regional. 

68. If Maplewood had similar innetwork access to those commercial 

health insurers, it would likely add one 

or more days to its schedule in order to 

serve additional patients. Maplewood 

currently operates only three days a 

week. 

69. The lack of in-network access to 

commercially insured patients also 

likely has delayed and prevented Kell 

West from expanding by attracting an 

outside investor or buyer. For example, 

with in-network access to commercial 

health insurance contracts, Kell West 

would be more attractive to a larger 

hospital system, which would invest in 

the expansion of Kell West’s services. 

As a physician-owned hospital, Kell 

West became subject in March 2010 to 

certain restrictions on expansion 

imposed by federal health-care reform 

legislation, see 42 U.S.C. 

1395nn(i)(1)(B), that would not apply if 

Kell West were acquired by a nonphysician investor. The existence of the 

exclusionary contracts makes such an 

acquisition less likely. 

70. United Regional’s exclusionary 

contracts also inhibit new providers 

from entering the market. Potential 

entrants are dissuaded from entering the 

market because they cannot obtain 

contracts with many of the commercial 

health insurers who have customers in 

that market. At least one potential 

entrant that is considering entering the 

outpatient surgical services market 

believes that it will not be able to do so 

without contracts with virtually all area 

commercial health insurers. United 

Regional’s exclusionary contracts 

currently prevent such access. 

71. By limiting the expansion or entry 

of competitors, United Regional’s 

exclusionary contracts have helped it to 

maintain its monopoly and likely 

increased the cost of providing medical 

care to residents in the Wichita Falls 

area. Because the exclusionary contracts 

likely limited competitors’ expansion 

and entry, and thereby reduced insurers’ 

bargaining leverage with United 

Regional, the contracts likely have 

enabled United Regional to continue to 

demand higher prices from commercial 

health insurers free from competitive 

discipline. 

72. The costs of medical care are 

typically 80% or more of an insurer’s 

costs, and hospital costs are a 

substantial portion of medical care 

costs. The price of hospital services at 

individual hospitals directly affects 

health insurance premiums for the 

customers that use those hospitals. 

Accordingly, insurers’ hospital costs are 

an important element of insurers’ ability 

to offer competitive prices. 

73. The higher payment rates 

demanded by United Regional from 

commercial health insurers are borne in 

part by Wichita Falls employers and 

residents in the form of higher 

insurance premiums. Insurance 

premiums in Wichita Falls are among 

the highest in Texas. Blue Cross’s 

premiums in Wichita Falls exceed its 

premiums anywhere else in the state, 

including Dallas, and its employee 

premium rate in Wichita Falls is 

significantly higher than in Amarillo 

and Odessa, two cities similar in size to 

Wichita Falls. 

(2) The Exclusionary Contracts Likely 

Have Limited Price Competition for 

Price-Sensitive Patients 

74. United Regional’s contracts have 

also likely reduced competition for 

price-sensitive patients in the relevant 

markets. Certain patients select a 

hospital based on price because the 

prices charged can affect the patient’s 

out-of-pocket costs. For example, in 

2008, United Regional lowered its list 

price for gynecological surgeries 

because it was concerned that too many 

price-sensitive patients were choosing 

Kell West or the North Texas SurgiCenter for these surgeries to avoid 

United Regional’s high prices. 

Exclusionary contracts that effectively 

prevent insurers from including 

providers such as Kell West in 

commercial health insurers’ networks 

make it less likely that a commercially 

insured patient would switch to Kell 

West in response to a price increase by 

United Regional, and hence reduce this 

constraint on United Regional’s prices. 

Consequently, the exclusionary 

contracts likely enable United Regional 

to charge higher prices for many 

services. 

(3) The Exclusionary Contracts Likely 

Have Reduced Quality Competition 

Between United Regional and Its 

Competitors 

75. Patients and physicians often 

choose among hospitals and other 

health-care providers based on the 


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provider’s quality and reputation, 

including quality of care (reflected in 

past performance on clinical measures 

such as mortality rates) and quality of 

service (reflected in non-clinical 

characteristics that may appeal to 

patients, including amenities such as 

physical surroundings, staff hospitality, 

and other services). Because there is a 

financial penalty for using out-ofnetwork providers, patients with health 

insurance provided by insurers with 

exclusionary contracts are less likely to 

choose out-of-network providers, even if 

the patient believes the out-of-network 

provider offers superior quality to 

United Regional. 

76. If United Regional’s competitors 

became in-network providers for more 

commercially insured patients, each of 

those competitors would have the 

incentive to make additional 

improvements in quality to attract those 

patients to its facility. United Regional, 

in turn, would also have the incentive 

to improve its quality in order to keep 

patients from choosing Kell West or 

another competitor. Therefore, without 

the exclusionary contracts, United 

Regional and its competitors would 

have increased incentives to make 

additional quality improvements, and 

the overall level of quality of health care 

in the Wichita Falls area likely would be 

higher. Moreover, such quality 

improvements would benefit all 

patients, not just those with commercial 

health insurance. 

D. United Regional’s Exclusionary 

Contracts Have the Potential To Exclude 

Equally-Efficient Competitors 

77. United Regional’s exclusionary 

contracts have likely excluded equallyefficient competitors. When the entire 

‘‘discount’’ that a commercial health 

insurer receives in exchange for 

agreeing to exclusivity is allocated to 

the patient volume that United Regional 

would likely lose to a competitor in the 

absence of the exclusionary contracts 

(the ‘‘contestable patient volume’’), it is 

clear that United Regional is selling 

services to commercial health insurers 

for the contestable volume at a price 

below its own marginal costs. A 

competing hospital, therefore, would 

need to offer a price below United 

Regional’s marginal cost to induce a 

commercial health insurer to turn down 

exclusivity. 

78. Put differently, because the 

contestable patient volume is likely a 

small portion of a commercial health 

insurer’s total volume at United 

Regional and because the pricing 

penalty in United Regional’s contracts is 

so large, a commercial health insurer 

would not find it commercially 

reasonable to enter into a contract with 

a competing hospital in the Wichita 

Falls area, unless that hospital were to 

offer a price below United Regional’s 

marginal cost. As a result, United 

Regional’s exclusionary contracts likely 

exclude equally-efficient competitors. 

E. The Exclusionary Contracts Lack a 

Valid Procompetitive Business 

Justification 

79. In this case, there is no valid 

procompetitive business justification for 

United Regional’s exclusionary 

contracts. United Regional did not use 

the contracts to achieve any economies 

of scale or other efficiencies as a result 

of any additional patient volume that it 

obtained from the contracts. Moreover, 

as alleged above, United Regional’s 

contracts set prices for the contestable 

patient volume at a level below its own 

incremental costs, which (1) illustrates 

that the contracts are not simply lower 

prices in exchange for volume, and (2) 

cannot be justified by economies of 

scale in any event. 

VII. Violations Alleged 

Monopolization in Violation of Sherman 

Act § 2 

80. Plaintiffs repeat and reallege the 

allegations of paragraphs 1 through 80 

above with the same force and effect as 

though said paragraphs were set forth 

here in full. 

81. United Regional possesses 

monopoly power in the relevant product 

markets in the Wichita Falls MSA. 

82. United Regional has willfully 

maintained and abused its monopoly 

power in the relevant markets through 

its exclusionary contracts with 

commercial health insurers. 

83. Each exclusionary contract 

between United Regional and a 

commercial health insurer constitutes 

an act by which United Regional 

willfully exploits and maintains its 

monopoly power in the relevant product 

markets in the Wichita Falls MSA. 

84. In this case, there is no valid 

procompetitive business justification for 

United Regional’s use of the 

exclusionary contracts described above. 

85. United Regional’s exclusionary 

contracts violate Section 2 of the 

Sherman Act, 15 U.S.C. 2. 

VIII. Request For Relief 

Wherefore, Plaintiffs request: 

(a) That the Court adjudge and decree 

that United Regional acted unlawfully 

to maintain a monopoly in violation of 

Section 2 of the Sherman Act, 15 U.S.C. 

2; 

(b) That the Court permanently enjoin 

United Regional, its officers, directors, 

agents, employees, and successors, and 

all other persons acting or claiming to 

act on its behalf, directly or indirectly, 

from seeking, negotiating for, agreeing 

to, continuing, maintaining, renewing, 

using, or enforcing, or attempting to 

enforce exclusionary contracts with 

health insurance companies and others; 

(c) That the Court reform existing 

contracts to remove the exclusionary 

provisions; and 

(d) That Plaintiffs be awarded the 

costs of this action and such other relief 

as may be appropriate and as the Court 

may deem just and proper. 

Dated: February 25, 2011. 

Respectfully submitted, 

FOR PLAINTIFF UNITED STATES OF 

AMERICA 

Christine A. Varney, 

Assistant Attorney General for Antitrust. 

Joseph F. Wayland, 

Deputy Assistant Attorney General. 

Patricia A. Brink, 

Director of Civil Enforcement. 

Joshua H. Soven, 

Chief Litigation I Section. 

Peter J. Mucchetti, 

Assistant Chief Litigation I Section. 

Scott I. Fitzgerald (WA Bar #39716) 

Andrea V. Arias, 

Amy R. Fitzpatrick, 

Adam Gitlin, 

Steven B. Kramer, 

Richard Liebeskind, 

Richard D. Mosier, 

Mark Tobey, 

Kevin Yeh, 

Attorneys for the United States, United States 

Department of Justice, Antitrust Division, 

Litigation I Section, 450 Fifth Street, NW., 

Suite 4100, Washington, DC 20530. 

Telephone: (202) 353–3863. 

Facsimile: (202) 307–5802. 

FOR PLAINTIFF STATE OF TEXAS 

Greg Abbott, 

Attorney General of Texas. 

Daniel T. Hodge, 

First Assistant Attorney General. 

Bill Cobb, 

Deputy Attorney General for Civil Litigation. 

John T. Prud’homme, Jr., 

Chief, Antitrust Division, Office of the 

Attorney General, 300 W. 15th St., 7th floor, 

Austin, TX 78701. 

Telephone: (512) 936–1697. 

Facsimile: (512) 320–0975. 

In the United States District Court for 

the Northern District of Texas, Wichita 

Falls Division 

United States of America and State of 

Texas, Plaintiffs, v. United Regional 

Health Care System, Defendant. 

Case No.: 7:11–cv–00030. 

Judge: Reed C. O’Connor. 

Filed: Feb. 25, 2011. 

Description: Antitrust. 


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1One contract excludes facilities within ten miles 

of the City of Wichita Falls; two contracts exclude 

facilities within fifteen miles of the City of Wichita 

Falls; one contract excludes facilities within certain 

zip codes in Wichita County; and three contracts 

exclude facilities located anywhere in Wichita 

County. Some contracts also exempt specific 

facilities that would otherwise be covered by the 

exclusionary provisions; for example, some 

contracts allow insurers to contract with Electra 

Memorial Hospital, a small hospital located more 

than 30 miles from Wichita Falls (but within 

Wichita County) that would have otherwise been 

excluded. 

2Hospitals and insurers often negotiate contracts 

in which the price that the insurer pays is expressed 

as a discount off the hospital’s list prices (also 

called ‘‘chargemaster’’ or ‘‘billed charges’’). Thus, a 

penalty that reduces an insurer’s discount from 

25% to 5% (for adding a rival facility) increases the 

insurer’s price from 75% to 95% of billed charges— 

a 27% increase. 

Competitive Impact Statement 

Plaintiff United States of America 

(‘‘United States’’), pursuant to Section 

2(b) of the Antitrust Procedures and 

Penalties Act (‘‘APPA’’ or ‘‘Tunney Act’’), 

15 U.S.C. § 16(b)–(h), files this 

Competitive Impact Statement relating 

to the proposed Final Judgment 

submitted for entry in this civil antitrust 

proceeding. 

I. Nature and Purpose of the Proceeding 

On February 25, 2011, the United 

States and the State of Texas filed a civil 

antitrust lawsuit against Defendant 

United Regional Health Care System 

(‘‘United Regional’’) challenging United 

Regional’s contracts with commercial 

health insurers that effectively prevent 

insurers from contracting with United 

Regional’s competitors (‘‘exclusionary 

contracts’’). The Complaint alleges that 

United Regional has unlawfully used 

these contracts to maintain its 

monopoly for hospital services, in 

violation of Section 2 of the Sherman 

Act, 15 U.S.C. 2. 

With the Complaint, the United States 

and the State of Texas filed a proposed 

Final Judgment that enjoins United 

Regional from using exclusionary 

contracts. The United States, the State of 

Texas, and United Regional have 

stipulated that the proposed Final 

Judgment may be entered after 

compliance with the APPA, unless the 

United States withdraws its consent. 

Entry of the proposed Final Judgment 

would terminate this action, except that 

the Court would retain jurisdiction to 

construe, modify, or enforce the 

provisions of the proposed Final 

Judgment and to punish violations 

thereof. 

II. Description of the Events Giving Rise 

to the Alleged Violation 

A. The Defendant and the Challenged 

Conduct 

This case is about competition for the 

sale of hospital services in Wichita 

Falls, Texas, and its surrounding areas. 

The Defendant, United Regional, is a 

general acute-care hospital located in 

Wichita Falls. With 369 beds, United 

Regional is by far the largest hospital in 

the region and the only provider of 

some essential services, such as cardiac 

surgery, obstetrics, and high-level 

trauma care. 

United Regional was formed in 

October 1997 by the merger of Wichita 

General Hospital and Bethania Regional 

Health Care Center. At the time of that 

merger, there were no other general 

acute-care hospitals in Wichita Falls 

and only one small outpatient surgery 

center. Soon after the merger, however, 

a group of doctors began planning for a 

competing hospital called Kell West 

Regional Hospital (‘‘Kell West’’). Kell 

West opened in January 1999 and is 

now a 41-bed general acute-care 

hospital, located about six miles from 

United Regional. Kell West provides a 

wide range of inpatient and outpatient 

procedures, but does not provide some 

key services offered by United Regional 

such as cardiac surgery and obstetrics. 

Beginning in 1998, United Regional 

responded to the competitive threat 

posed by Kell West and other 

outpatient-surgery facilities by 

systematically entering into 

exclusionary contracts with commercial 

health insurers. The precise terms of 

these contracts vary, but all share the 

same anticompetitive feature: a 

significant pricing penalty if an insurer 

contracts with competing facilities 

within a region that is no larger than 

Wichita County.1 In general, the 

contracts offer a substantially larger 

discount off billed charges (e.g., 25%) if 

United Regional is the only local 

hospital or outpatient surgical provider 

in the insurer’s network; and the 

contracts provide for a much smaller 

discount (e.g., 5% off billed charges) if 

the insurer contracts with one of United 

Regional’s rivals.2

Within three months after Kell West 

opened in January 1999, United 

Regional had entered into exclusionary 

contracts with five commercial health 

insurers, and by 2010, it had 

exclusionary contracts with eight 

insurers. In each instance, it was United 

Regional that required the exclusionary 

provisions in the contract—not the 

insurer. The only major insurer that did 

not sign an exclusionary contract with 

United Regional was Blue Cross Blue 

Shield of Texas (‘‘Blue Cross’’), by far the 

largest insurer in Wichita Falls and in 

Texas. 

The Complaint alleges that because 

United Regional is a ‘‘must have’’ 

hospital for any insurer that wants to 

sell health insurance in the Wichita 

Falls area, and because the penalty for 

contracting with United Regional’s 

rivals was so significant, most insurers 

entered into exclusionary contracts with 

United Regional. Consequently, United 

Regional’s rivals could not obtain 

contracts with most insurers, except 

Blue Cross, which substantially 

hindered their ability to compete and 

helped United Regional maintain its 

monopoly in the relevant markets, to the 

detriment of consumers. 

The Complaint alleges that by 

effectively preventing most commercial 

health insurers from including in their 

networks other inpatient and outpatient 

facilities, United Regional has (1) 

Delayed and prevented the expansion 

and entry of United Regional’s 

competitors, likely leading to higher 

health-care costs and higher health 

insurance premiums; (2) limited price 

competition for price-sensitive patients, 

likely leading to higher health-care costs 

for those patients; and (3) reduced 

quality competition between United 

Regional and its competitors. 

B. The Relevant Markets 

The Complaint alleges two distinct 

relevant product markets: (1) the market 

for general acute-care inpatient hospital 

services (‘‘inpatient hospital services’’) 

sold to commercial health insurers, and 

(2) the market for outpatient surgical 

services sold to commercial health 

insurers. In each case, the relevant 

geographic market is no larger than the 

Wichita Falls Metropolitan Statistical 

Area (‘‘MSA’’). 

1. The Sale of Inpatient Hospital 

Services to Commercial Health Insurers 

The sale of inpatient hospital services 

to commercial health insurers is a 

relevant product market. Inpatient 

hospital services are a broad group of 

medical and surgical diagnostic and 

treatment services that include an 

overnight stay in the hospital by the 

patient. For purposes of the Complaint, 

inpatient hospital services exclude (1) 

Services at hospitals that serve solely 

children, military personnel or veterans; 

(2) services at outpatient facilities that 

provide same-day service only; and (3) 

psychiatric, substance abuse, and 

rehabilitation services. There are no 

reasonable substitutes for inpatient 

hospital services. 

As alleged in the Complaint, the term 

‘‘commercial health insurers’’ refers to 

private third-party payers that provide 

access to health-care providers, such as 

managed-care organizations, rental 

networks, and self-funded plans. The 

term does not include sales to public 


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third-party payers—Medicare, 

Medicaid, and TRICARE. 

There is a key difference between the 

government plans and commercial 

health insurers. The government 

unilaterally sets the rates that it pays for 

Medicare, Medicaid, and TRICARE 

beneficiaries—rates that are nonnegotiable. In contrast, commercial 

health insurers negotiate their rates with 

individual health-care providers. 

Therefore, health-care providers can 

target a price increase to commercial 

health insurers, and these insurers 

cannot avoid the price increase by 

shifting to government rates. 

Furthermore, patients who are ineligible 

for Medicare, Medicaid, or TRICARE 

cannot substitute into those programs in 

response to a price increase for 

commercial health insurance. Thus, a 

hypothetical monopolist provider of 

inpatient hospital services sold to 

commercial health insurers could 

profitably maintain supracompetitive 

prices for those services over a 

sustained period of time. 

2. The Sale of Outpatient Surgical 

Services to Commercial Health Insurers 

The sale of outpatient surgical 

services to commercial health insurers 

is also a relevant product market. This 

market is distinct from the market for 

inpatient hospital services because, as 

alleged in the Complaint, inpatient 

hospital services are not reasonable 

substitutes for outpatient surgical 

services, and there are no other 

reasonable substitutes for outpatient 

surgical services. Furthermore, as with 

inpatient hospital services, the prices of 

outpatient surgical services sold to 

commercial health insurers are 

determined by negotiations between 

health-care providers and insurers, 

while the government unilaterally sets 

the rates that it pays for outpatient 

surgical services for Medicare, 

Medicaid, and TRICARE beneficiaries. 

Thus, a hypothetical monopolist 

provider of outpatient surgical services 

sold to commercial health insurers 

could profitably maintain 

supracompetitive prices for those 

services over a sustained period of time. 

3. Relevant Geographic Market: No 

Larger Than the Wichita Falls MSA 

The relevant geographic market for 

both inpatient hospital services and 

outpatient surgical services is no larger 

than the Wichita Falls MSA, which 

comprises three counties in north 

central Texas: Archer, Clay, and 

Wichita. Wichita Falls—the largest city 

in the MSA, with a population of about 

100,000—is more than a two-hour drive 

and at least 100 miles from the nearest 

metropolitan areas: Dallas-Ft. Worth, 

Texas, and Oklahoma City, Oklahoma. 

Because patients typically seek medical 

care close to their homes or workplaces, 

very few patients who live in the 

Wichita Falls MSA travel outside its 

borders to seek inpatient hospital 

services or outpatient surgical services; 

and providers of those services located 

outside the Wichita Falls MSA do not 

compete to any substantial degree in the 

Wichita Falls MSA for the sale of those 

services. Thus, as the Complaint alleges, 

competition for the sale of inpatient 

hospital services and outpatient surgical 

services to commercial health insurers 

from providers located outside the 

Wichita Falls MSA would not be 

sufficient to prevent a hypothetical 

monopolist provider of those services in 

the Wichita Falls MSA from profitably 

maintaining supracompetitive prices for 

those services over a sustained period of 

time. 

C. Monopoly Power 

Section 2 of the Sherman Act, 15 

U.S.C. 2, makes it unlawful for a firm to 

‘‘monopolize.’’ The offense of 

monopolization under Section 2 has two 

elements: ‘‘(1) the possession of 

monopoly power in the relevant market 

and (2) the willful * * * maintenance 

of that power as distinguished from 

growth or development as a 

consequence of a superior product, 

business acumen, or historic accident.’’ 

United States v. Grinnell Corp., 384 U.S. 

563, 570–71 (1966). The Supreme Court 

has defined monopoly power as ‘‘the 

power to control prices or exclude 

competition.’’ United States v. E. I. du 

Pont de Nemours & Co., 351 U.S. 377, 

391 (1956). 

Monopoly power may be established 

by evidence that a firm has profitably 

raised prices above the competitive 

level. See United States v. Microsoft 

Corp., 253 F.3d 34, 51 (D.C. Cir. 2001). 

In the absence of such direct proof, 

monopoly power may be inferred from 

circumstantial evidence, including ‘‘a 

firm’s possession of a dominant share of 

a relevant market that is protected by 

entry barriers.’’ Id. When evaluating 

monopoly power, relying on current 

market share alone can sometimes be 

misleading. But generally, evidence of 

dominant market share, without 

countervailing evidence of the 

possibility of competition from new 

entrants, is sufficient to show monopoly 

power. Id. 

In this case, there is strong direct and 

circumstantial evidence that United 

Regional has monopoly power in the 

relevant markets. First, there is direct 

evidence that United Regional has 

charged supracompetitive prices for a 

sustained period of time. As explained 

above, United Regional was formed in 

1997 by the merger of Wichita General 

Hospital and Bethania Regional Health 

Care Center, a merger that eliminated 

competition between what were then 

the only two general acute-care 

hospitals in Wichita Falls. Since that 

merger, United Regional has been the 

‘‘must-have’’ hospital for insurers in the 

Wichita Falls MSA and has increased its 

prices to the point that it is now one of 

the most expensive hospitals in Texas. 

One commercial health insurer 

estimated that it pays United Regional 

almost 70% more than what it pays 

hospitals in the Dallas-Fort Worth area 

for inpatient hospital services. In 

Wichita Falls, United Regional’s average 

per-day rate for inpatient hospital 

services sold to commercial health 

insurers is about 70% higher than Kell 

West’s for the services that are offered 

by both hospitals. Similarly, the 

Complaint alleges that United 

Regional’s prices for outpatient surgical 

services are also among the highest in 

Texas. Yet, despite United Regional’s 

supracompetitive prices, neither Kell 

West nor other smaller facilities has had 

a significant competitive impact on 

United Regional. 

Second, market-share data provide 

circumstantial evidence of United 

Regional’s monopoly power. The 

Complaint alleges that United Regional 

has a dominant share of the markets for 

both inpatient hospital services and 

outpatient surgical services sold to 

commercial health insurers. United 

Regional’s share of inpatient hospital 

services sold to commercial health 

insurers is approximately 90% in the 

Wichita Falls MSA, and its share of 

outpatient surgical services sold to 

commercial health insurers is more than 

65% in that same region. These shares 

have remained relatively constant for 

more than a decade while United 

Regional’s prices have risen. 

Furthermore, as the Complaint alleges, 

both relevant product markets have 

significant barriers to entry—including 

United Regional’s exclusionary 

contracts. During the last twelve years, 

no new firms other than Kell West have 

entered the relevant product markets in 

the Wichita Falls MSA. 

D. Exclusionary Conduct 

Possessing monopoly power does not 

by itself constitute ‘‘monopolization.’’ 

See Grinnell, 384 U.S. at 570–71. Rather, 

Section 2 of the Sherman Act makes it 

unlawful to maintain monopoly power 

through exclusionary conduct. See 

Verizon Commc’ns, Inc. v. Law Offices 

of Curtis V. Trinko, LLP, 540 U.S. 398, 

407 (2004); Microsoft, 253 F.3d at 58. 


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3These ‘‘foreclosure’’ percentages likely 

underestimate the impact of the exclusionary 

contracts on United Regional’s competitors. As the 

Complaint alleges, some doctors engage in ‘‘block 

booking,’’ performing surgeries and other 

procedures at the same facility on a given day. 

Without the exclusionary contracts, these doctors 

could be able to refer all their patients on a given 

day—including patients covered by Blue Cross or 

the government payers—to one of United Regional’s 

rivals. 

The general test for exclusionary 

conduct is set forth in United States v. 

Microsoft Corp. First, a plaintiff must 

show that a monopolist’s conduct has 

had an ‘‘anticompetitive effect.’’ Id. 

Second, if a plaintiff proves an 

anticompetitive effect, the monopolist 

may proffer a non-pretextual 

‘‘procompetitive justification’’ for its 

conduct. Id. at 59. Third, if the 

monopolist’s procompetitive 

justification is unrebutted, the plaintiff 

‘‘must demonstrate that the 

anticompetitive harm of the conduct 

outweighs the procompetitive benefit.’’ 

Id. 

The Complaint alleges that United 

Regional’s exclusionary contracts 

reduced competition and enabled 

United Regional to maintain its 

monopoly in the relevant markets by 

foreclosing its rivals from many of the 

most profitable health-insurance 

contracts in Wichita Falls—contracts 

that are crucial for its rivals to 

effectively compete. 

1. The Exclusionary Contracts Likely 

Caused Anticompetitive Effects by 

Foreclosing United Regional’s Rivals 

From the Most Profitable HealthInsurance Contracts 

A competitor is ‘‘foreclosed’’ from 

competition when it is denied or 

disadvantaged in its access to significant 

sources of input or distribution. See 

United States v. Dentsply Int’l, Inc., 399 

F.3d 181, 189–90 (3d Cir. 2005). In this 

case, the foreclosure analysis properly 

focuses on the profitability of the 

various payment sources available to 

health-care providers. Thus, while the 

relevant product markets are limited to 

hospital services sold to commercial 

patients, the foreclosure analysis in this 

case must account for the ability of 

health-care providers to serve patients 

covered by other sources of payment 

(most significantly, the government 

plans). If United Regional’s competitors 

could easily replace the profits lost by 

the exclusionary contracts with 

additional profits from patients covered 

by government plans or other payment 

sources, it is unlikely that the 

exclusionary contracts would produce 

anticompetitive effects. 

But as the Complaint explains, profits 

from the government plans are not an 

adequate substitute for the lost profits 

from the excluded insurers, making the 

excluded insurers ‘‘significant sources of 

input or distribution.’’ Id. Commercial 

health insurers pay hospitals and other 

health-care providers substantially more 

than the government plans: in the 

Wichita Falls MSA, all commercial 

health insurers pay United Regional at 

least double the Medicare payment rate, 

and all but one insurer (Blue Cross) pay 

United Regional more than triple the 

Medicare payment rate. Consequently, 

to simply calculate the percentage of the 

total commercial and public-payer lives 

that the exclusionary contracts deny 

United Regional’s competitors is not an 

accurate method to assess the contracts’ 

effect on competition. Rather, a more 

appropriate approach is to assess the 

degree to which the contracts have 

foreclosed access to payments for 

commercially insured patients and 

account for the foreclosed percentage of 

profits from all payers. 

As the Complaint alleges, by 2010, the 

insurers that had exclusionary contracts 

with United Regional accounted for 

approximately 35% to 40% of all 

payments United Regional received 

from commercial health insurers.3 Most 

of the remaining commercial payments 

are attributable to just one insurer—Blue 

Cross, which pays the lowest rates due 

to its size. 

Because the excluded insurers pay the 

highest rates, these insurers account for 

a substantial share of the profits that 

would otherwise be available to 

competing health-care providers. In 

particular, these insurers account for 

approximately 30% to 35% of the 

profits that United Regional earns from 

all payers—including the government 

payers—even though they account for 

only about 8% of United Regional’s total 

patient volume. The Complaint alleges 

that if the excluded insurers added Kell 

West and other health-care providers to 

their networks, these providers would 

earn substantially higher profits than 

they do now, increasing their ability to 

compete against United Regional. For 

example, if only 10% of these insurers’ 

patients switched from United Regional 

to Kell West, and these insurers paid 

Kell West 30% less than they currently 

pay United Regional, Kell West’s profits 

would still likely increase by more than 

40%. 

2. The Exclusionary Contracts Have Led 

to Higher Prices and Reduced Quality 

Competition in the Relevant Markets 

By denying United Regional’s 

competitors access to the most 

profitable commercial insurance 

contracts, United Regional has increased 

prices and reduced quality competition 

in the relevant markets in three ways. 

First, the exclusionary contracts have 

likely delayed and prevented the 

expansion and entry of United 

Regional’s competitors. For example, 

without the exclusionary contracts, Kell 

West likely would have used the profits 

that it obtained from contracts with the 

excluded commercial health insurers to 

expand sooner, and would also likely 

have added more beds and additional 

services, such as additional intensivecare capabilities, cardiology services, 

and obstetric services. Kell West has 

considered expansion into additional 

services on numerous occasions, but has 

been limited in its ability to expand due 

to its lack of access to commercially 

insured patients. This effect on entry 

and expansion has reduced the options 

available to insurers, likely leading to 

higher prices for hospital services and 

higher health-insurance premiums. 

Second, the exclusionary contracts 

have likely limited price competition for 

price-sensitive patients. Even with the 

exclusionary contracts, some price 

competition has already occurred. For 

example, in 2008 United Regional 

lowered its list price for gynecological 

surgeries because it was concerned that 

too many price-sensitive patients were 

choosing Kell West and the North Texas 

Surgi-Center to avoid United Regional’s 

high prices. But because insured 

patients generally avoid obtaining 

health-care services from out-of-network 

providers, the exclusionary contracts 

make it less likely that many 

commercially insured patients would 

switch to another provider in response 

to a price increase by United Regional. 

In the absence of the exclusionary 

contracts—with the risk that United 

Regional would lose some of its most 

profitable patients—this type of price 

competition would likely increase. 

Third, the contracts have likely 

reduced quality competition between 

United Regional and its competitors. 

Just as the exclusionary contracts make 

it less likely that some patients will 

choose rival facilities based on price, 

they have also made it less likely that 

some patients will choose other 

providers based on quality. If United 

Regional’s competitors became innetwork providers for more 

commercially insured patients, each of 

those competitors would have the 

incentive to make additional 

improvements in quality to attract those 

patients to its facility; and United 

Regional, in turn, would also have the 

incentive to improve its quality in order 

to keep patients from choosing Kell 

West or another competitor. Therefore, 

as the Complaint alleges, without the 


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4See Gianluca Faella, The Antitrust Assessment 

of Loyalty Discounts and Rebates, 4(2) J. Compet. 

L. & Econ. 375, 379 (2008) (‘‘A useful indicator of 

the practice’s foreclosure effect is the incremental 

price of the contestable portion of the customer’s 

demand.’’). 

exclusionary contracts, United Regional 

and its competitors would have 

increased incentives to make additional 

quality improvements, and the overall 

level of quality of health care in the 

Wichita Falls area likely would be 

higher. 

3. The Exclusionary Contracts Fail an 

Appropriate Price-Cost Test 

The exclusionary contracts challenged 

in this case closely resemble de facto 

exclusive-dealing arrangements. 

Although the contracts technically offer 

commercial health insurers a choice 

between non-exclusivity and 

exclusivity, in reality the non-exclusive 

rates were not a commercially feasible 

option for insurers, and not one insurer 

opted for the non-exclusive rate for 

more than twelve years. Thus, as with 

exclusive dealing, the primary concern 

is not with the relationship between 

United Regional’s prices and costs, but 

with the degree of economic foreclosure 

caused by its contracting practices. 

Yet, while United Regional’s contracts 

resemble exclusive dealing, they do not 

achieve economic foreclosure through 

purely exclusive contracts, but through 

pricing terms—discounts tied to 

exclusivity. In general, these types of 

discounts can be either procompetitive 

or anticompetitive. Discounts tied to 

exclusivity can be procompetitive if 

they result from ‘‘competition on the 

merits,’’ in which rival suppliers 

compete on price so that the most 

efficient firm will win additional 

consumers. In contrast, they can be 

anticompetitive if they would prevent 

equally or more efficient rivals from 

attracting additional consumers. Given 

that such discounts can either benefit or 

harm consumers, it is useful to analyze 

them with a ‘‘price-cost’’ test, which 

helps distinguish between 

procompetitive and anticompetitive 

discounts. 

In this case, the appropriate price-cost 

test resembles the ‘‘discount-attribution’’ 

test adopted in Cascade Health 

Solutions v. PeaceHealth, 515 F.3d 883 

(9th Cir. 2008). The discount-attribution 

test applies when a defendant faces 

competition for only a portion of the 

services that it sells, but offers a 

discount that applies to all of its 

services. In PeaceHealth, the court 

warned that such discounts ‘‘can 

exclude a rival [] who is equally 

efficient at producing the competitive 

product simply because the rival does 

not sell as many products as the 

bundled discounter.’’ Id. at 909. Thus, in 

the context of bundled discounts, the 

court held that the proper test requires 

‘‘the full amount of the discounts given 

by the defendant on the bundle [to be] 

allocated to the competitive product or 

products.’’ Id. at 906. If the resulting 

prices are still above the defendant’s 

incremental cost for providing those 

services, the discount is likely 

procompetitive. By contrast, if the 

prices are below the defendant’s 

incremental cost—and would therefore 

tend to exclude an equally-efficient 

provider of those services—the 

‘‘anticompetitive-effects’’ prong of the 

Microsoft framework would be satisfied. 

To accurately determine whether 

United Regional’s discounted prices are 

above cost, however, the entire discount 

should be attributed not to the entire 

volume of the ‘‘competitive product[s],’’ 

as suggested by the court in 

PeaceHealth, id. at 909, but rather to the 

patients that United Regional would 

actually be at risk of losing if an insurer 

were to choose non-exclusivity (the 

‘‘contestable volume’’).4 Under some 

factual circumstances, the contestable 

volume may consist of the entire 

volume of the overlap services (those 

services that both the defendant and its 

competitors provide). This would be the 

case if a customer that chooses nonexclusivity would likely obtain all of its 

purchases of the competitive products 

from a rival supplier. Under other 

circumstances, however, such as in this 

case, the contestable volume is likely 

smaller than the entire volume of the 

‘‘competitive product’’ because ‘‘the rival 

producer of the competitive product 

cannot contest all of the monopolist’s 

sales of that product.’’ See Mark S. 

Popofsky, Section 2, Safe Harbors, and 

the Rule of Reason, 15 Geo. Mason L. 

Rev. 1265, 1294 (2008). 

Though measuring the contestable 

volume may in some cases be 

impractical, here the contestable volume 

can be estimated by examining patient 

usage patterns from Blue Cross and 

Medicare, two major payers that are not 

subject to exclusivity. Based on the 

share of patient volume that United 

Regional receives from Blue Cross and 

Medicare, the likely contestable volume 

is approximately 10% of the patient 

volume that United Regional receives 

from the payers that have signed 

exclusionary contracts. This is partly 

because competing providers offer a 

more limited portfolio of services, and 

partly because, as usage patterns from 

Blue Cross and Medicare patients 

suggest, many patients are likely to 

choose care at United Regional even for 

services that competing providers offer. 

When, for each of United Regional’s 

exclusionary contracts, the entire 

discount that the insurer receives in 

exchange for exclusivity is applied to 

the contestable volume, the resulting 

price is below any plausible measure of 

United Regional’s incremental costs. In 

other words, because the contestable 

volume is small relative to the large 

difference between the exclusive and 

non-exclusive rates in United Regional’s 

contracts, a competing hospital would 

need to offer a price below United 

Regional’s incremental costs for an 

insurer to profitably turn down United 

Regional’s offer of exclusivity. As a 

result, United Regional’s discounts 

would likely exclude an equallyefficient competitor. 

4. The Exclusionary Contracts Lack a 

Valid Procompetitive Business 

Justification 

As stated above, ‘‘even if a company 

exerts monopoly power, it may defend 

its practices by establishing a business 

justification.’’ Dentsply, 399 F.3d at 196. 

The plaintiff bears the burden of 

establishing that ‘‘the monopolist’s 

conduct * * * has the requisite 

anticompetitive effect’’; when that 

burden is met, it shifts to the defendant 

to ‘‘proffer a ‘procompetitive 

justification’ for its conduct.’’ Microsoft, 

253 F.3d at 58–59. A business 

justification will not be accepted where 

it is pretextual, see, e.g., Eastman Kodak 

Co. v. Image Technical Servs., Inc., 504 

U.S. 451, 484 (1992), nor is the fact that 

the action was taken ‘‘in furtherance of 

[the company’s] economic interests’’ 

sufficient to meet this burden, see, e.g., 

LePage’s Inc. v. 3M, 324 F.3d 141, 163 

(3d Cir. 2003) (en banc). 

Here, the Complaint alleges that there 

is no valid procompetitive business 

justification for United Regional’s 

exclusionary contracts, making it 

unnecessary to determine whether ‘‘the 

anticompetitive harm of the conduct 

outweighs the procompetitive benefit.’’ 

Microsoft, 253 F.3d at 59. United 

Regional did not use the contracts to 

achieve any economies of scale or other 

efficiencies as a result of the additional 

patient volume that it obtained from the 

contracts. Moreover, as described above, 

United Regional’s contracts set prices 

for the contestable patient volume at a 

level below its own incremental costs, 

which (1) illustrates that the contracts 

are not simply lower prices in exchange 

for volume, and (2) cannot be justified 

by economies of scale in any event. 

III. Explanation of the Proposed Final 

Judgment 

The prohibitions and required 

conduct in the proposed Final Judgment 


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5As specified in Section II.F, however, an 

incremental volume discount may not be a marketshare discount. 

achieve all the relief sought from United 

Regional in the Complaint, and thus 

fully resolve the competitive concerns 

raised by the exclusionary contracts 

challenged in this lawsuit. 

A. Prohibited Conduct 

Section IV of the proposed Final 

Judgment seeks to restore competition 

between health-care providers in the 

Wichita Falls MSA by prohibiting 

United Regional from using exclusivity 

terms in its contracts. In particular, 

Section IV.A prohibits United Regional 

from (1) conditioning the prices or 

discounts that it offers to commercial 

health insurers on whether those 

insurers contract with other health-care 

providers, such as Kell West; and (2) 

preventing insurers from entering into 

agreements with United Regional’s 

rivals. Section IV.B prohibits United 

Regional from taking any retaliatory 

actions against an insurer that enters (or 

seeks to enter) into an agreement with 

a rival health-care provider. 

In addition to prohibiting United 

Regional from conditioning its 

discounts on exclusivity, Section IV.C 

prohibits United Regional from offering 

other types of ‘‘conditional volume 

discounts’’ that could have the same 

anticompetitive effects as the challenged 

conduct. ‘‘Conditional volume 

discounts’’ are prices, discounts, or 

rebates offered to a commercial health 

insurer on condition that the volume of 

that insurer’s purchases from United 

Regional meets or exceeds a specified 

threshold. For example, United Regional 

may not offer discounts that are applied 

retroactively when a customer reaches a 

specified threshold (sometimes referred 

to as ‘‘first-dollar’’ discounts). The 

retroactive nature of these discounts can 

disguise below-cost pricing that 

excludes equally-efficient competitors 

and smaller entrants, resulting in a loss 

of competition and harm to consumers. 

Similarly, United Regional may not offer 

market-share discounts, i.e. discounts 

conditioned on an insurer’s purchases at 

United Regional meeting a specified 

percentage of that insurer’s total 

purchases, whether they apply 

retroactively or not, because such 

discounts can also be a form of 

anticompetitive pricing. By contrast, as 

explained further below, United 

Regional may offer incremental 

discounts that apply solely to purchases 

above a specified threshold if those 

discounts are above cost.5

Finally, United Regional may not use 

provisions in its insurance contracts 

that discourage insurers from offering 

products that encourage members to use 

other in-network providers (besides 

United Regional). Although United 

Regional did not include these types of 

provisions in the contracts at issue in 

this case, this section of the proposed 

Final Judgment is designed to make the 

proposed remedy more effective. 

B. Permissible Conduct 

To ensure that United Regional can 

engage in procompetitive discounting 

and other pricing practices, Section 

V.A(1) of the proposed Final Judgment 

allows United Regional to sell its 

hospital services at any price or 

discount, provided that such prices or 

discounts do not violate the 

prohibitions in Section IV. United 

Regional may still offer different prices 

to different commercial health insurers, 

and it may consider an insurer’s 

previous or anticipated overall size or 

volume when negotiating prices or 

discounts. 

Section V.A(2) allows United 

Regional to offer above-cost incremental 

volume discounts, a certain type of 

conditional volume discount that is 

unlikely to cause anticompetitive harm. 

By permitting above-cost incremental 

volume discounts, the Final Judgment 

ensures that United Regional can engage 

in procompetitive efforts to compete for 

additional patient volume, while 

preventing United Regional from 

offering discounts that have the 

potential to exclude an equally-efficient 

competitor. Furthermore, unlike other 

kinds of conditional discounts, it is 

feasible to determine whether an 

incremental volume discount is above 

cost simply by comparing the 

incremental prices with the incremental 

costs without also having to determine 

the magnitude of the contestable 

volume. 

Under the terms of the proposed Final 

Judgment, an incremental volume 

discount is deemed above cost if the 

discounted prices for each service line, 

expressed as a percentage of billed 

charges, are greater than United 

Regional’s Cost-to-Charge Ratio, defined 

as the ratio of total costs (for all 

services) to total charges, as reported to 

the Centers for Medicare and Medicaid 

Services. For example, United Regional 

may offer to accept payments equal to 

75% of billed charges for the first $10 

million of gross charges from a 

particular insurer, and 40% of billed 

charges for any charges in excess of $10 

million. In 2009, United Regional 

reported total charges of approximately 

$807 million, and total costs of 

approximately $207 million, implying a 

Cost-to-Charge Ratio of approximately 

26%. Because the discounted prices for 

each service line (40% of billed charges) 

exceed the hospital’s Cost-to-Charge 

Ratio (26% of billed charges), this offer 

would be above cost and permitted 

under the proposed Final Judgment. 

Section V.D allows United Regional to 

renegotiate or terminate its contracts 

according to the provisions in those 

contracts. However, United Regional 

may not terminate a contract because an 

insurer contracted with another healthcare facility, and, as required in VI.B, 

United Regional must honor the 

discounts conditioned on exclusivity— 

regardless of whether an insurer 

contracts with another health-care 

facility—unless or until United 

Regional’s existing contracts are 

renegotiated or terminated. If United 

Regional notifies the insurer of its intent 

to renegotiate, United Regional is not 

required to provide that discount for 

more than 270 days after the notice is 

given. 

C. Required Conduct 

Section VI.A requires United Regional 

to (1) notify in writing each commercial 

health insurer that has an agreement 

with United Regional that the Final 

Judgment has been entered, and (2) send 

each of these insurers a copy of the 

Final Judgment. 

As discussed above, Section VI.B 

requires United Regional to honor its 

current discounts conditioned on 

exclusivity unless or until such 

contracts are renegotiated or terminated. 

For example, if, when the Complaint is 

filed, an agreement allowed for a 25% 

discount with exclusivity and a 5% 

discount without exclusivity, United 

Regional must offer its services to that 

insurer at the 25% discount—even if the 

insurer contracts with other health-care 

facilities—until the agreement is 

renegotiated or terminated. However, as 

explained above, if United Regional 

notifies the insurer of its intent to 

renegotiate, United Regional is not 

required to provide the discount for 

longer than 270 days after the notice is 

given. 

D. Compliance 

Section VII of the proposed Final 

Judgment contains several provisions to 

ensure United Regional’s compliance 

with the proposed Final Judgment. First, 

under Section VII.A, United Regional is 

required to designate an antitrust 

compliance officer. That officer is 

required to provide a copy of the Final 

Judgment to key United Regional 

personnel and develop procedures to 

ensure United Regional’s compliance 

with the Final Judgment. 


jdjones on DSK8KYBLC1PROD with NOTICES
13222 Federal Register / Vol. 76, No. 47 / Thursday, March 10, 2011 / Notices 

6The 2004 amendments substituted ‘‘shall’’ for 

‘‘may’’ in directing relevant factors for courts to 

consider and amended the list of factors to focus on 

competitive considerations and to address 

potentially ambiguous judgment terms. Compare 15 

U.S.C. 16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); 

see also SBC Commc’ns, 489 F. Supp. 2d at 11 

(concluding that the 2004 amendments ‘‘effected 

minimal changes’’ to Tunney Act review). 

Second, to facilitate monitoring of 

United Regional’s compliance with the 

proposed Final Judgment, Section VII 

grants the United States and the State of 

Texas access, upon reasonable notice, to 

United Regional’s records and 

documents relating to matters contained 

in the proposed Final Judgment. Within 

270 days after the entry of the Final 

Judgment, United Regional is required 

to submit a written report explaining the 

actions it has taken to comply with the 

Final Judgment, including the status 

and results of its negotiations with 

commercial health insurers. 

Furthermore, for one year after entry of 

the Final Judgment, United Regional 

must provide the Department of Justice 

and the State of Texas copies of all new 

or revised agreements with insurers 

within fourteen days of such agreements 

being executed. United Regional must 

make its employees available for 

interviews or depositions about such 

matters. Moreover, upon request, United 

Regional must answer interrogatories 

and prepare written reports relating to 

matters contained in the proposed Final 

Judgment. 

IV. Remedies Available to Potential 

Private Litigants 

Section 4 of the Clayton Act, 15 

U.S.C. 15, provides that any person who 

has been injured as a result of conduct 

prohibited by the antitrust laws may 

bring suit in federal court to recover 

three times the damages the person has 

suffered, as well as costs and reasonable 

attorneys’ fees. Entry of the proposed 

Final Judgment will neither impair nor 

assist the bringing of any private 

antitrust damage action. Under the 

provisions of Section 5(a) of the Clayton 

Act, 15 U.S.C. 16(a), the proposed Final 

Judgment has no prima facie effect in 

any subsequent private lawsuit that may 

be brought against Defendants. 

V. Procedures Available for 

Modification of the Proposed Final 

Judgment 

The United States, the State of Texas, 

and United Regional have stipulated 

that the proposed Final Judgment may 

be entered by the Court after compliance 

with the provisions of the APPA, 

provided that the United States has not 

withdrawn its consent. The APPA 

conditions entry upon the Court’s 

determination that the proposed Final 

Judgment is in the public interest. 

The APPA provides a period of at 

least sixty days preceding the effective 

date of the proposed Final Judgment 

within which any person may submit to 

the United States written comments 

regarding the proposed Final Judgment. 

Any person who wishes to comment 

should do so within sixty days of the 

date of publication of this Competitive 

Impact Statement in the Federal 

Register, or the last date of publication 

in a newspaper of the summary of this 

Competitive Impact Statement, 

whichever is later. All comments 

received during this period will be 

considered by the United States 

Department of Justice, which remains 

free to withdraw its consent to the 

proposed Final Judgment at any time 

before the Court’s entry of judgment. 

The comments and the response of the 

United States will be filed with the 

Court and published in the Federal 

Register. 

Written comments should be 

submitted to: Joshua H. Soven, Chief, 

Litigation I Section, Antitrust Division, 

United States Department of Justice, 450 

Fifth Street, NW., Suite 4100, 

Washington, DC 20530. 

The proposed Final Judgment 

provides that the Court retains 

jurisdiction over this action, and the 

parties may apply to the Court for any 

order necessary or appropriate for the 

modification, interpretation, or 

enforcement of the Final Judgment. 

VI. Alternatives to the Proposed Final 

Judgment 

As an alternative to the proposed 

Final Judgment, the United States 

considered proceeding to a full trial on 

the merits against United Regional. The 

United States is satisfied, however, that 

the prohibitions and requirements 

contained in the proposed Final 

Judgment will fully address the 

competitive concerns set forth in the 

Complaint against United Regional. The 

proposed Final Judgment achieves all or 

substantially all of the relief the United 

States would have obtained through 

litigation against United Regional and 

avoids the time, expense, and 

uncertainty of a full trial on the merits 

of the Complaint. 

VII. Standard of Review Under the 

APPA for the Proposed Final Judgment 

The Clayton Act, as amended by the 

APPA, requires that proposed consent 

judgments in antitrust cases brought by 

the United States be subject to a sixtyday comment period, after which the 

court shall determine whether entry of 

the proposed Final Judgment ‘‘is in the 

public interest.’’ 15 U.S.C. 16(e)(1). In 

making that determination, the court, in 

accordance with the statute as amended 

in 2004, is required to consider: 

(A) The competitive impact of such 

judgment, including termination of 

alleged violations, provisions for 

enforcement and modification, duration 

of relief sought, anticipated effects of 

alternative remedies actually 

considered, whether its terms are 

ambiguous, and any other competitive 

considerations bearing upon the 

adequacy of such judgment that the 

court deems necessary to a 

determination of whether the consent 

judgment is in the public interest; and 

(B) The impact of entry of such 

judgment upon competition in the 

relevant market or markets, upon the 

public generally and individuals 

alleging specific injury from the 

violations set forth in the complaint 

including consideration of the public 

benefit, if any, to be derived from a 

determination of the issues at trial. 

15 U.S.C. 16(e)(1)(A) & (B). In 

considering these statutory factors, the 

court’s inquiry is necessarily a limited 

one as the government is entitled to 

‘‘broad discretion to settle with the 

defendant within the reaches of the 

public interest.’’ United States v. 

Microsoft Corp., 56 F.3d 1448, 1461 

(D.C. Cir. 1995); see also United States 

v. SBC Commc’ns, Inc., 489 F. Supp. 2d 

1 (D.D.C. 2007) (assessing publicinterest standard under the Tunney 

Act); United States v. InBev N.V./S.A., 

No. 08–1965 (JR), 2009 U.S. Dist. LEXIS 

84787, at *3 (D.D.C. Aug. 11, 2009) 

(noting that the court’s review of a 

consent judgment is limited and only 

inquires ‘‘into whether the government’s 

determination that the proposed 

remedies will cure the antitrust 

violations alleged in the complaint was 

reasonable, and whether the 

mechanisms to enforce the final 

judgment are clear and manageable.’’).6

As the United States Court of Appeals 

for the District of Columbia Circuit has 

held, a court considers under the APPA, 

among other things, the relationship 

between the remedy secured and the 

specific allegations set forth in the 

United States’ complaint, whether the 

decree is sufficiently clear, whether 

enforcement mechanisms are sufficient, 

and whether the decree may positively 

harm third parties. See Microsoft, 56 

F.3d at 1458–62. With respect to the 

adequacy of the relief secured by the 

decree, a court may not ‘‘engage in an 

unrestricted evaluation of what relief 

would best serve the public.’’ United 

States v. BNS Inc., 858 F.2d 456, 462 

(9th Cir. 1988) (citing United States v. 

Bechtel Corp., 648 F.2d 660, 666 (9th 


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7Cf. BNS, 858 F.2d at 464 (holding that the 

court’s ‘‘ultimate authority under the [APPA] is 

limited to approving or disapproving the consent 

decree’’); United States v. Gillette Co., 406 F. Supp. 

713, 716 (D. Mass. 1975) (noting that, in this way, 

the court is constrained to ‘‘look at the overall 

picture not hypercritically, nor with a microscope, 

but with an artist’s reducing glass’’); see generally 

Microsoft, 56 F.3d at 1461 (discussing whether ‘‘the 

remedies [obtained in the decree are] so 

inconsonant with the allegations charged as to fall 

outside of the ‘reaches of the public interest’ ’’). 

8See United States v. Enova Corp., 107 F. Supp. 

2d 10, 17 (D.DC 2000) (noting that the ‘‘Tunney Act 

expressly allows the court to make its public 

interest determination on the basis of the 

competitive impact statement and response to 

comments alone’’); United States v. Mid-Am. 

Dairymen, Inc., 1977–1 Trade Cas. (CCH) ¶ 61,508, 

at 71,980 (W.D. Mo. 1977) (‘‘Absent a showing of 

corrupt failure of the government to discharge its 

duty, the Court, in making its public interest 

finding, should * * * carefully consider the 

explanations of the government in the competitive 

impact statement and its responses to comments in 

order to determine whether those explanations are 

reasonable under the circumstances.’’); S. Rep. No. 

93–298 at 6 (1973) (‘‘Where the public interest can 

be meaningfully evaluated simply on the basis of 

briefs and oral arguments, that is the approach that 

should be utilized.’’). 

Cir. 1981)); see also Microsoft, 56 F.3d 

at 1460–62; InBev, 2009 U.S. Dist. 

LEXIS 84787, at *3; United States v. 

Alcoa, Inc., 152 F. Supp. 2d 37, 40 

(D.DC 2001). Courts have held that: 

[t]he balancing of competing social and 

political interests affected by a proposed 

antitrust consent decree must be left, in the 

first instance, to the discretion of the 

Attorney General. The court’s role in 

protecting the public interest is one of 

insuring that the government has not 

breached its duty to the public in consenting 

to the decree. The court is required to 

determine not whether a particular decree is 

the one that will best serve society, but 

whether the settlement is ‘‘within the reaches 

of the public interest.’’ More elaborate 

requirements might undermine the 

effectiveness of antitrust enforcement by 

consent decree. 

Bechtel, 648 F.2d at 666 (emphasis 

added) (citations omitted).7 In 

determining whether a proposed 

settlement is in the public interest, a 

district court ‘‘must accord deference to 

the government’s predictions about the 

efficacy of its remedies, and may not 

require that the remedies perfectly 

match the alleged violations.’’ SBC 

Commc’ns, 489 F. Supp. 2d at 17; see 

also Microsoft, 56 F.3d at 1461 (noting 

the need for courts to be ‘‘deferential to 

the government’s predictions as to the 

effect of the proposed remedies’’); 

United States v. Archer-DanielsMidland Co., 272 F. Supp. 2d 1, 6 (D.DC 

2003) (noting that the court should grant 

due respect to the United States’ 

‘‘prediction as to the effect of proposed 

remedies, its perception of the market 

structure, and its views of the nature of 

the case’’). 

Courts have greater flexibility in 

approving proposed consent decrees 

than in crafting their own decrees 

following a finding of liability in a 

litigated matter. ‘‘[A] proposed decree 

must be approved even if it falls short 

of the remedy the court would impose 

on its own, as long as it falls within the 

range of acceptability or is ‘within the 

reaches of public interest.’’’ United 

States v. Am. Tel. & Tel. Co., 552 F. 

Supp. 131, 151 (D.D.C. 1982) (citations 

omitted) (quoting United States v. 

Gillette Co., 406 F. Supp. 713, 716 (D. 

Mass. 1975)), aff’d sub nom. Maryland 

v. United States, 460 U.S. 1001 (1983); 

see also United States v. Alcan 

Aluminum Ltd., 605 F. Supp. 619, 622 

(W.D. Ky. 1985) (approving the consent 

decree even though the court would 

have imposed a greater remedy). To 

meet this standard, the United States 

‘‘need only provide a factual basis for 

concluding that the settlements are 

reasonably adequate remedies for the 

alleged harms.’’ SBC Commc’ns, 489 F. 

Supp. 2d at 17. 

Moreover, the court’s role under the 

APPA is limited to reviewing the 

remedy in relationship to the violations 

that the United States has alleged in its 

complaint, and does not authorize the 

court to ‘‘construct [its] own 

hypothetical case and then evaluate the 

decree against that case.’’ Microsoft, 56 

F.3d at 1459; see also InBev, 2009 U.S. 

Dist. LEXIS 84787, at *20 (‘‘the ‘public 

interest’ is not to be measured by 

comparing the violations alleged in the 

complaint against those the court 

believes could have, or even should 

have, been alleged’’). Because the 

‘‘court’s authority to review the decree 

depends entirely on the government’s 

exercising its prosecutorial discretion by 

bringing a case in the first place,’’ it 

follows that ‘‘the court is only 

authorized to review the decree itself,’’ 

and not to ‘‘effectively redraft the 

complaint’’ to inquire into other matters 

that the United States did not pursue. 

Microsoft, 56 F.3d at 1459–60. As the 

United States District Court for the 

District of Columbia recently confirmed 

in SBC Communications, courts ‘‘cannot 

look beyond the complaint in making 

the public interest determination unless 

the complaint is drafted so narrowly as 

to make a mockery of judicial power.’’ 

SBC Commc’ns, 489 F. Supp. 2d at 15. 

In its 2004 amendments, Congress 

made clear its intent to preserve the 

practical benefits of using consent 

decrees in antitrust enforcement, adding 

the unambiguous instruction that 

‘‘[n]othing in this section shall be 

construed to require the court to 

conduct an evidentiary hearing or to 

require the court to permit anyone to 

intervene.’’ 15 U.S.C. 16(e)(2). This 

language effectuates what Congress 

intended when it enacted the Tunney 

Act in 1974. As Senator Tunney 

explained: ‘‘[t]he court is nowhere 

compelled to go to trial or to engage in 

extended proceedings which might have 

the effect of vitiating the benefits of 

prompt and less costly settlement 

through the consent decree process.’’ 

119 Cong. Rec. 24,598 (1973) (statement 

of Senator Tunney). Rather, the 

procedure for the public-interest 

determination is left to the discretion of 

the court, with the recognition that the 

court’s ‘‘scope of review remains sharply 

proscribed by precedent and the nature 

of Tunney Act proceedings.’’ SBC 

Commc’ns, 489 F. Supp. 2d at 11.8

VIII. Determinative Documents 

There are no determinative materials 

or documents within the meaning of the 

APPA that were considered by the 

United States in formulating the 

proposed Final Judgment. 

Respectfully submitted, 

Scott I. Fitzgerald (WA Bar #39716), 

Andrea V. Arias, 

Amy R. Fitzpatrick, 

Adam Gitlin, 

Steven B. Kramer, 

Richard L. Liebeskind, 

Richard D. Mosier, 

Mark Tobey, 

Kevin Yeh, 

Attorneys for the United States, U.S. 

Department of Justice, Antitrust Division, 

Litigation I, 450 Fifth Street, NW., Suite 4100, 

Washington, DC 20530. 

Dated: February 25, 2011. 

Certificate of Service 

On February 25, 2011, I, Scott I. 

Fitzgerald, electronically submitted a 

copy of the foregoing document with the 

clerk of court for the U.S. District Court, 

Northern District of Texas, using the 

electronic case filing system for the 

court. I hereby certify that I caused a 

copy of the foregoing document to be 

served upon Defendant United Regional 

Health Care System electronically or by 

another means authorized by the Court 

of the Federal Rules of Civil Procedure. 

Scott I. Fitzgerald (WA Bar #39716), 

Attorney for the United States, U.S. 

Department of Justice, Antitrust Division, 

Litigation I, 450 Fifth Street, NW., Suite 4100, 

Washington, DC 20530. 

In the United States District Court for 

the Northern District of Texas, Wichita 

Falls Division 

United States of America and State of 

Texas, Plaintiffs, v. United Regional 

Health Care System, Defendant. 

Case No.: 7:11-cv-00030. 

Judge: Reed C. O’Connor. 


jdjones on DSK8KYBLC1PROD with NOTICES
13224 Federal Register / Vol. 76, No. 47 / Thursday, March 10, 2011 / Notices 

Filed: Feb. 25, 2011. 

Description: Antitrust. 

[Proposed] Final Judgment 

Whereas, Plaintiffs, the United States 

of America and the State of Texas, filed 

their Complaint on February 25, 2011, 

alleging that Defendant, United Regional 

Health Care System, has unlawfully 

maintained its monopoly by entering 

into exclusionary agreements with 

commercial health insurers, harming 

competition and consumers in violation 

of Section 2 of the Sherman Act, 15 

U.S.C. 2; and 

Whereas, Plaintiffs and Defendant, by 

their respective attorneys, have 

consented to the entry of this Final 

Judgment without trial or adjudication 

of any issue of fact or law; and 

Whereas, Plaintiffs require Defendant 

to agree to undertake certain actions and 

refrain from certain conduct for the 

purpose of remedying the 

anticompetitive effects alleged in the 

Complaint; 

Now therefore, before any testimony 

is taken, without trial or adjudication of 

any issue of fact or law, without this 

Final Judgment constituting any 

evidence against or admission by 

Defendant regarding any issue of fact or 

law, and upon consent of the parties to 

this action, it is ordered, adjudged, and 

decreed: 

I. Jurisdiction 

This Court has jurisdiction over the 

subject matter of this action and over 

Defendant. The Complaint states a claim 

upon which relief may be granted 

against Defendant under Section 2 of the 

Sherman Act, 15 U.S.C. 2. 

II. Definitions 

As used in this Final Judgment: 

A. ‘‘Commercial Health Insurer’’ (or 

‘‘Insurer’’) means a Person providing 

commercial health insurance or access 

to health-care provider networks, 

including but not limited to managedcare organizations, rental networks (i.e., 

Persons that lease, rent, or otherwise 

provide direct or indirect access to a 

proprietary network of healthcare 

providers), and self-funded plans, 

regardless of whether that Person bears 

any risk or makes any payment relating 

to the provision of health care. The term 

‘‘Commercial Health Insurer’’ (or 

‘‘Insurer’’) includes Insurers that provide 

Medicare Advantage plans, but does not 

include Medicare, Medicaid, or 

TRICARE, or entities that otherwise 

contract on their behalf. 

B. ‘‘Conditional Volume Discount’’ 

means a price, discount, or rebate that 

is offered to a Commercial Health 

Insurer on condition that the volume of 

that Insurer’s Purchases from Defendant 

meets or exceeds a specified threshold. 

C. ‘‘Cost-to-Charge Ratio’’ means the 

ratio of Defendant’s total operating 

expenses to its total patient charges, for 

all service lines in aggregate, as reported 

to the Centers for Medicare & Medicaid 

Services pursuant to 42 U.S.C. 1395g 

and 42 CFR 413.20(b). 

D. ‘‘Hospital Services’’ include (1) 

acute-care diagnostic and therapeutic 

inpatient services and (2) acute-care 

diagnostic and therapeutic outpatient 

services, including but not limited to 

ambulatory surgery and radiology 

services. 

E. ‘‘Hospital-Services Provider’’ means 

any provider of Hospital Services, 

including but not limited to facilities 

that provide Hospital Services solely on 

an outpatient basis. 

F. ‘‘Incremental Volume Discount’’ 

means a Conditional Volume Discount 

that is offered to a Commercial Health 

Insurer for which the price, discount, or 

rebate applies only to Purchases above 

the specified threshold. For purposes of 

this Final Judgment, the term 

‘‘Incremental Volume Discount’’ does 

not include any price, discount, or 

rebate that is offered on condition that 

the Insurer’s Purchases of Hospital 

Services from Defendant meet or exceed 

a specified percentage threshold of that 

Insurer’s Purchases of Hospital Services 

in a defined geographic area. 

G. ‘‘Person’’ means any natural person, 

corporation, company, partnership, joint 

venture, firm, association, 

proprietorship, agency, board, authority, 

commission, office, or other business or 

legal entity, whether private or 

governmental. 

H. ‘‘Purchase,’’ when used in reference 

to a Commercial Health Insurer’s 

purchase of Hospital Services, includes 

but is not limited to arrangements 

between Commercial Health Insurers 

and Hospital-Services Providers 

pursuant to which the parties agree to 

the prices, discounts, and other terms 

on which Hospital Services are to be 

provided to patients, insurers, and selffunded employers, regardless of 

whether the Commercial Health Insurer 

that is party to the arrangement directly 

receives or pays for the Hospital 

Service. 

I. ‘‘Service Line’’ means (1) for 

inpatient services, each of the mutuallyexclusive major diagnosis categories 

(MDCs) as defined by the Centers for 

Medicare & Medicaid Services, and (2) 

for outpatient services, the ‘‘admit 

service area’’ as used in the Defendant’s 

course of business to identify outpatient 

service lines. 

J. The terms ‘‘and’’ and ‘‘or’’ have both 

conjunctive and disjunctive meanings. 

III. Applicability and Interpretation 

A. This Final Judgment applies to the 

Defendant; its directors, officers, 

managers, agents, employees, 

successors, and assigns; its controlled 

subsidiaries, divisions, groups, 

affiliates, and partnerships; and all other 

Persons in active concert or 

participation with the Defendant who 

receive actual notice of this Final 

Judgment by personal service or 

otherwise. For purposes of this Final 

Judgment, an entity is controlled by 

Defendant if Defendant holds 50% or 

more of the entity’s voting securities, 

has the right to 50% or more of the 

entity’s profits, has the right to 50% or 

more of the entity’s assets on 

dissolution, or has the contractual 

power to designate 50% or more of the 

directors or trustees of the entity. 

B. The purpose of this Final Judgment 

is to prevent and remedy the use by 

Defendant of allegedly unlawful 

exclusionary agreements that limit 

competition for the sale of Hospital 

Services. This Final Judgment shall be 

interpreted to promote that purpose and 

not to limit it. 

IV. Prohibited Conduct 

A. Defendant shall not enter into, 

adopt, maintain, or enforce any term in 

any agreement that directly or 

indirectly: 

(1) Conditions any price or discount 

offered to or paid by any Commercial 

Health Insurer on that Insurer’s not 

entering into an agreement for the 

Purchase of Hospital Services from, or 

including in a provider network, 

another Hospital-Services Provider; or 

(2) Prohibits any Commercial Health 

Insurer from entering into an agreement 

for the Purchase of Hospital Services 

from, or including in a provider 

network, another Hospital-Services 

Provider. 

B. Defendant shall not take, or 

threaten to take, any actions to 

discriminate, retaliate, or punish any 

Commercial Health Insurer because that 

Insurer agrees, obtains, or seeks to agree 

or obtain Hospital Services from another 

Hospital-Services Provider, including 

but not limited to: 

(1) Terminating any agreement with 

the Commercial Health Insurer; 

(2) Offering less favorable terms and 

conditions to the Commercial Health 

Insurer; or 

(3) Refusing to enter into an 

agreement with the Commercial Health 

Insurer. 

C. Defendant shall not offer or agree 

to sell Hospital Services to any 

Commercial Health Insurer at a 

Conditional Volume Discount, except as 

allowed by Section V.A(3). 


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D. Defendant shall not offer or agree 

to any term in an agreement with a 

Commercial Health Insurer that 

prohibits the Insurer from offering 

products that encourage members to use 

other in-network Hospital-Services 

Providers; nor shall Defendant take, or 

threaten to take, any actions to 

discriminate, retaliate, or punish any 

Commercial Health Insurer for offering 

such products, including but not limited 

to the retaliatory actions listed in 

Section IV.B(1)–(3). 

V. Permitted Conduct 

A. Nothing in this Final Judgment 

shall prohibit Defendant from offering 

or agreeing to sell Hospital Services to: 

(1) Any Commercial Health Insurer at 

any price or discount, provided that 

such prices or discounts do not violate 

the prohibitions in Section IV; 

(2) Different Commercial Health 

Insurers at different prices or discounts, 

provided that such prices or discounts 

do not violate the prohibitions in 

Section IV; 

(3) Any Commercial Health Insurer at 

an Incremental Volume Discount, 

provided that the discounted prices are 

above cost. For purposes of this decree, 

this above-cost requirement is satisfied 

if the discounted prices for each Service 

Line that apply to purchases above the 

specified threshold, expressed as a 

percentage of billed charges (the 

‘‘discounted prices’’), are greater than 

the Defendant’s Cost-to-Charge Ratio 

based on the most recent report 

submitted to the Centers for Medicare & 

Medicaid Services before the date on 

which the Insurer and Defendant 

executed the contract. Provided, 

however, that after three years from the 

date the contract is effective, and for 

every three-year period thereafter, the 

discounted prices must be greater than 

the Defendant’s Cost-to-Charge Ratio 

based on the most recent report 

submitted to the Centers for Medicare & 

Medicaid Services before the beginning 

of the three-year period. 

B. Nothing in this Final Judgment 

shall prohibit Defendant from 

considering a Commercial Health 

Insurer’s previous or anticipated overall 

size or volume when negotiating a price 

or discount. 

C. Nothing in this Final Judgment 

shall prohibit Defendant from 

participating in a Commercial Health 

Insurer’s preferred provider network or 

other forms of limited-provider panels 

provided that such activity does not 

violate the prohibitions in Section IV. 

D. Except as prohibited by Section 

IV.B, and subject to the requirement in 

Section VI.B, Defendant and any 

Commercial Health Insurer may 

renegotiate or terminate their 

agreements according to the notice and 

termination provisions in such 

agreements. 

VI. Required Conduct 

A. Within 15 days after entry of this 

Final Judgment, Defendant shall notify 

in writing each Commercial Health 

Insurer with which Defendant has an 

agreement that this Final Judgment has 

been entered, enclosing a copy of this 

Final Judgment. 

B. Defendant shall provide Hospital 

Services to each Commercial Health 

Insurer at the discount previously 

conditioned on exclusivity, even if any 

such Insurer enters into agreements 

with other Hospital-Services Providers, 

unless and until such discount is 

renegotiated according to Section V.D; 

provided, however, that Defendant is 

not required to provide such discount 

for greater than 270 days after Defendant 

notifies Insurer of its intent to 

renegotiate the contract. 

VII. Compliance and Access 

A. Defendant shall appoint an 

Antitrust Compliance Officer within 

seven days of entry of this Final 

Judgment, and a successor within thirty 

days of a predecessor’s vacating the 

appointment, with responsibility for 

implementing an antitrust compliance 

program to ensure Defendant’s 

compliance with this Final Judgment. 

B. Each Antitrust Compliance Officer 

appointed pursuant to Section VII.A 

shall: 

(1) Within 15 days after this Final 

Judgment takes effect, provide a copy of 

this Final Judgment to each of 

Defendant’s directors and officers, and 

to each employee whose job 

responsibilities relate in any substantive 

way to negotiating or reviewing 

agreements with Commercial Health 

Insurers for the Purchase of Hospital 

Services; 

(2) Distribute in a timely manner a 

copy of this Final Judgment to any 

Person who succeeds to, or 

subsequently holds, a position of 

director or officer or an employee whose 

job responsibilities relate in any 

substantive way to negotiating or 

reviewing agreements with Commercial 

Health Insurers for the Purchase of 

Hospital Services; and 

(3) Within 60 days after this Final 

Judgment takes effect, develop and 

implement the procedures necessary to 

ensure Defendant’s compliance with 

this Final Judgment. Such procedures 

shall ensure that questions from any of 

Defendant’s directors, officers, or 

employees about this Final Judgment 

can be answered by counsel as the need 

arises. 

C. For purposes of determining or 

securing compliance with this Final 

Judgment, or of determining whether 

the Final Judgment should be modified 

or vacated, and subject to any legallyrecognized privilege, from time to time 

authorized representatives of the U.S. 

Department of Justice or the Office of 

the Texas Attorney General (including 

their consultants and other retained 

persons) shall, upon written request of 

an authorized representative of the 

Assistant Attorney General in charge of 

the Antitrust Division or the Office of 

the Texas Attorney General and on 

reasonable notice to Defendant, be 

permitted: 

(1) access during Defendant’s office 

hours to inspect and copy, or, at the 

option of the United States or the State 

of Texas, to require Defendant to 

provide hard copy or electronic copies 

of all books, ledgers, accounts, records, 

data, and documents in the possession, 

custody, or control of Defendant, 

relating to any matters contained in this 

Final Judgment; and 

(2) to interview, either informally or 

on the record, Defendant’s officers, 

employees, or agents, who may have 

their counsel present, regarding such 

matters. The interviews shall be subject 

to the reasonable convenience of the 

interviewee without restraint or 

interference by Defendant. 

D. Within 270 days after the entry of 

this Final Judgment, Defendant shall 

submit to the United States and the 

State of Texas a written report setting 

forth its actions in compliance with this 

Final Judgment, specifically describing 

(1) the status and results of all 

negotiations with Commercial Health 

Insurers, and (2) the compliance 

procedures adopted pursuant Section 

VII.B(3) of this Final Judgment. For any 

new or revised agreement with any 

Commercial Health Insurer that is 

executed within one year of the entry of 

this Final Judgment, Defendant shall 

submit to the United States and the 

State of Texas a copy of such agreement 

within fourteen days from the date the 

agreement is executed. 

E. Upon the written request of an 

authorized representative of the 

Assistant Attorney General in charge of 

the Antitrust Division or the Office of 

the Texas Attorney General, Defendant 

shall submit written reports or respond 

to written interrogatories, under oath if 

requested, relating to any of the matters 

contained in this Final Judgment. 

Written reports authorized under this 

paragraph may, at the sole discretion of 

the United States, require Defendant to 

conduct, at its cost, an independent 


jdjones on DSK8KYBLC1PROD with NOTICES
13226 Federal Register / Vol. 76, No. 47 / Thursday, March 10, 2011 / Notices 

audit or analysis relating to any of the 

matters contained in this Final 

Judgment. 

F. No information or documents 

obtained by the means provided in this 

section shall be divulged by the United 

States or the State of Texas to any 

Person other than an authorized 

representative of (1) the executive 

branch of the United States or (2) the 

Office of the Texas Attorney General, 

except in the course of legal proceedings 

to which the United States or the Office 

of the Texas Attorney General is a party 

(including grand jury proceedings), or 

for the purpose of securing compliance 

with this Final Judgment, or as 

otherwise required by law. 

G. If at the time information or 

documents are furnished by Defendant 

to the United States or the State of 

Texas, Defendant represents and 

identifies in writing the material in any 

such information or documents to 

which a claim of protection may be 

asserted under Rule 26(c)(1)(G) of the 

Federal Rules of Civil Procedure, and 

Defendant marks each pertinent page of 

such material, ‘‘Subject to claim of 

protection under Rule 26(c)(1)(G) of the 

Federal Rules of Civil Procedure,’’ then 

the United States and the State of Texas 

shall give Defendant fourteen days’ 

notice prior to divulging such material 

in any legal proceeding (other than a 

grand jury proceeding), except as 

otherwise required by law or court 

order. 

VIII. Retention of Jurisdiction 

This Court retains jurisdiction to 

enable any party to this Final Judgment 

to apply to this Court at any time for 

further orders and directions as may be 

necessary or appropriate to carry out or 

construe this Final Judgment, to modify 

any of its provisions, to enforce 

compliance, and to punish violations of 

its provisions. 

IX. Expiration of Final Judgment 

Unless this Court grants an extension, 

this Final Judgment shall expire seven 

years from the date of its entry. 

X. Public-Interest Determination 

Entry of this Final Judgment is in the 

public interest. The parties have 

complied with the requirements of the 

Antitrust Procedures and Penalties Act, 

15 U.S.C. 16, including making copies 

available to the public of this Final 

Judgment, the Competitive Impact 

Statement, any comments thereon, and 

the United States’ response to 

comments. Based upon the record 

before the Court, which includes the 

Competitive Impact Statement and any 

comments and response to comments 

filed with the Court, entry of this Final 

Judgment is in the public interest. 

Date: llllllllllllllllll

Court approval subject to procedures set forth 

in the Antitrust Procedures and Penalties 

Act, 15 U.S.C. 16. 

lllllllllllllllllllll

United States District Judge 

[FR Doc. 2011–5529 Filed 3–9–11; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF JUSTICE 

Office of Justice Programs 

[OJP (BJA) Docket No. 1547] 

Meeting of the Department of Justice 

Global Justice Information Sharing 

Initiative Federal Advisory Committee 

AGENCY: Office of Justice Programs 

(OJP), Justice. 

ACTION: Notice of meeting. 

SUMMARY: This is an announcement of a 

meeting of the Department of Justice 

(DOJ) Global Justice Information Sharing 

Initiative (Global) Federal Advisory 

Committee (GAC) to discuss the Global 

Initiative, as described at http:// 

www.it.ojp.gov/global. 

DATES: The meeting will take place on 

Wednesday, April 20, 2011, from 

8:30 a.m. to 4 p.m. ET. 

ADDRESSES: The meeting will take place 

at the Embassy Suites Washington, DC— 

Convention Center Hotel, 900 Tenth 

Street, NW., Washington, DC 20001, 

Phone: (202) 739–2001. 

FOR FURTHER INFORMATION CONTACT: J. 

Patrick McCreary, Global Designated 

Federal Employee (DFE), Bureau of 

Justice Assistance, Office of Justice 

Programs, 810 Seventh Street, 

Washington, DC 20531; Phone: (202) 

616–0532 [Note: This is not a toll-free 

number]; E-mail: 

James.P.McCreary@usdoj.gov. 

SUPPLEMENTARY INFORMATION: This 

meeting is open to the public. Due to 

security measures, however, members of 

the public who wish to attend this 

meeting must register with Mr. J. Patrick 

McCreary at the above address at least 

(7) days in advance of the meeting. 

Registrations will be accepted on a 

space available basis. Access to the 

meeting will not be allowed without 

registration. All attendees will be 

required to sign in at the meeting 

registration desk. Please bring photo 

identification and allow extra time prior 

to the meeting. 

Anyone requiring special 

accommodations should notify Mr. 

McCreary at least seven (7) days in 

advance of the meeting. 

Purpose 

The GAC will act as the focal point for 

justice information systems integration 

activities to help facilitate development 

and coordination of national policy, 

practices, and technical solutions in 

support of the Administration’s justice 

priorities. 

The GAC will guide and monitor the 

development of the Global information 

sharing concept. It will advise the 

Assistant Attorney General, OJP; the 

Attorney General; the President 

(through the Attorney General); and 

local, state, tribal, and federal 

policymakers. The GAC will also 

advocate for strategies for 

accomplishing a Global information 

sharing capability. 

Interested persons whose registrations 

have been accepted may be permitted to 

participate in the discussions at the 

discretion of the meeting chairman and 

with approval of the DFE. 

J. Patrick McCreary, 

Global DFE, Bureau of Justice Assistance, 

Office of Justice Programs. 

[FR Doc. 2011–5452 Filed 3–9–11; 8:45 am] 

BILLING CODE 4410–18–P 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

Amended Certification Regarding 

Eligibility To Apply for Worker 

Adjustment Assistance 

TA–W–71,287 ....................................................................... MASCO BUILDER CABINET GROUP INCLUDING ON–SITE LEASED WORKERS 

FROM RESERVES NETWORK AND RELIABLE STAFFING, JACKSON, OHIO. 

TA–W–71,287A ..................................................................... MASCO BUILDER CABINET GROUP INCLUDING ON–SITE LEASED WORKERS 

FROM RESERVES NETWORK AND RELIABLE STAFFING WAVERLY, OHIO. 

TA–W–71,287B ..................................................................... MASCO BUILDER CABINET GROUP INCLUDING ON–SITE LEASED WORKERS 

FROM RESERVES NETWORK AND RELIABLE STAFFING SEAL TOWNSHIP, 

OHIO. 


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