Federal Register / Vol. 77, No. 41 / Thursday, March 1, 2012 / Notices 12617 

reproduction cost): $7.50 for the Partial 

Consent Decree (without attachments). 

Henry S. Friedman, 

Assistant Section Chief, Environmental 

Enforcement Section, Environment and 

Natural Resources Division. 

[FR Doc. 2012–4866 Filed 2–29–12; 8:45 am] 

BILLING CODE 4410–15–P 

DEPARTMENT OF JUSTICE 

Antitrust Division 

United States et al. v. Blue Cross and 

Blue Shield of Montana, Inc., et al.; 

Public Comments and Response on 

Proposed Final Judgment 

Pursuant to the Antitrust Procedures 

and Penalties Act, 15 U.S.C. 16(b)–(h), 

the United States hereby publishes 

below the comments received on the 

proposed Final Judgment in United 

States et al. v. Blue Cross and Blue 

Shield of Montana, Inc. et al., Civil 

Action No. 1:11–CV–00123–RFC, which 

were filed in the United States District 

Court for the District of Montana on 

February 21, 2012, together with the 

response of the United States to the 

comments. 

Copies of the comments and the 

response are available for inspection at 

the Department of Justice Antitrust 

Division, 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 District of 

Montana, 316 N. 26th Street, Billings, 

MT 59101. Copies of any of these 

materials may be obtained upon request 

and payment of a copying fee. 

Patricia A. Brink, 

Director of Civil Enforcement. 

In the United States District Court for 

the District of Montana; Billings 

Division 

United States of America and State of 

Montana, Plaintiffs, v. Blue Cross and 

Blue Shield of Montana, Inc., et al., 

Defendants. 

Case No. 1:11–cv–00123–RFC. 

Response of Plaintiff United States to 

Public Comment on the Proposed Final 

Judgment 

Pursuant to the requirements of the 

Antitrust Procedures and Penalties Act, 

15 U.S.C. 16(b)–(h) (‘‘APPA’’ or 

‘‘Tunney Act’’), the United States 

hereby responds to the public comment 

received regarding the proposed Final 

Judgment in this case. The single 

comment received agrees that the 

proposed Final Judgment will provide 

an effective and appropriate remedy for 

the antitrust violations alleged in the 

Complaint. The United States will move 

the Court for entry of the proposed Final 

Judgment after the public comment and 

this response have been published in 

the Federal Register, pursuant to 15 

U.S.C. 16(d). 

I. Procedural History 

On November 8, 2011, the United 

States and the State of Montana filed a 

civil antitrust lawsuit challenging an 

agreement (the ‘‘Agreement’’) between 

defendant Blue Cross and Blue Shield of 

Montana, Inc. (‘‘Blue Cross’’) and 

defendants Billings Clinic; Bozeman 

Deaconess Health Services, Inc.; 

Community Medical Center, Inc.; 

Northern Montana Health Care, Inc.; 

and St. Peter’s Hospital (collectively, the 

‘‘hospital defendants’’). 

The hospital defendants are five of the 

six hospitals that own defendant New 

West Health Services, Inc. (‘‘New 

West’’), a health insurer that competes 

against Blue Cross to provide 

commercial health insurance to 

Montana consumers. In the Agreement, 

Blue Cross agreed to pay $26.3 million 

to the hospital defendants in exchange 

for their collectively agreeing to stop 

purchasing health insurance for their 

own employees from New West and 

instead buy insurance for their 

employees from Blue Cross exclusively 

for six years. Blue Cross also agreed to 

provide the hospital defendants with 

two seats on Blue Cross’s board of 

directors as long as the hospitals do not 

compete with Blue Cross in the sale of 

commercial health insurance. 

The Complaint alleged that the 

Agreement would likely cause New 

West to exit the markets for commercial 

health insurance, eliminating an 

important competitor to Blue Cross and 

ultimately leading to higher prices and 

lower-quality service for consumers. 

Consequently, the Complaint alleged 

that the Agreement unreasonably 

restrained trade in the sale of 

commercial health insurance within 

Montana in the Billings Metropolitan 

Statistical Area (‘‘MSA’’), Bozeman 

Micropolitan Statistical Area (‘‘MiSA’’), 

Helena MiSA, and Missoula MSA, in 

violation of Section 1 of the Sherman 

Act, 15 U.S.C. 1; and that the Agreement 

substantially lessened competition in 

the sale of commercial health insurance 

in those same areas, and would likely 

continue to do so, in violation of 

Section 7 of the Clayton Act, 15 U.S.C. 

18, and the Montana Unfair Trade 

Practices Act, Mont. Code Ann. § 30– 

14–205. 

Simultaneously with the filing of the 

Complaint, the United States and the 

State of Montana filed a proposed Final 

Judgment and Stipulation signed by the 

plaintiffs and the defendants consenting 

to entry of the proposed Final Judgment 

after compliance with the requirements 

of the Tunney Act, 15 U.S.C. 16. 

Pursuant to those requirements, the 

United States also filed its Competitive 

Impact Statement (‘‘CIS’’) with the Court 

on November 8, 2011; published the 

proposed Final Judgment and CIS in the 

Federal Register on November 18, 2011, 

see 76 FR 71355; and had summaries of 

the terms of the proposed Final 

Judgment and CIS, together with 

directions for the submission of written 

comments relating to the proposed Final 

Judgment, published in The Washington 

Post on alternating days from November 

17 to November 29, 2011, and in the 

Billings Gazette on November 14, 17, 19, 

21, 23, 25, and 28. The sixty-day period 

for public comment ended on January 

28, 2011. One comment was received, as 

described below and attached hereto. 

II. The Investigation and Proposed 

Resolution 

The proposed Final Judgment is the 

culmination of an investigation by the 

Antitrust Division of the United States 

Department of Justice (‘‘Department’’) of 

the Agreement among defendants 

described above. As part of its 

investigation, the Department issued 

eight Civil Investigative Demands and 

conducted more than 30 interviews of 

health-insurance competitors, brokers, 

customers, and other individuals with 

knowledge of the health-insurance 

industry in Montana. The Department 

carefully analyzed the information 

obtained and thoroughly considered all 

of the issues presented. 

The Department found that the 

Agreement would effectively eliminate 

New West as a viable competitor in the 

sale of commercial health insurance for 

several reasons. First, news that none of 

New West’s owners would buy health 

insurance for their own employees from 

New West created a perception that 

New West was exiting the commercial 

health-insurance market, likely causing 

many existing and potential customers 

to stop purchasing (or decline to 

purchase) insurance from New West. 

Second, the Agreement would have led 

New West and its hospital owners to 

significantly reduce their support for 

and efforts to win commercial healthinsurance customers, further hindering 

its ability to compete. Furthermore, 

because the hospital defendants agreed 

to act collectively, the Agreement with 

Blue Cross ensured that New West 

would lose the support of all its owners 

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12618 Federal Register / Vol. 77, No. 41 / Thursday, March 1, 2012 / Notices 

1Cf 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’ ’’). 

and likely exit the market. The 

Agreement further deterred the 

hospitals from supporting New West by 

granting them two positions on Blue 

Cross’s board of directors as long as the 

hospitals do not own or belong to a 

competing insurer. 

By eliminating New West as an 

effective competitor, the Agreement 

would have significantly increased 

concentration in the markets for 

commercial health insurance in 

Montana. In the four relevant areas, 

Blue Cross’s share of commercial health 

insurance ranged from approximately 

43% to 75% at the time the Agreement 

was signed, and New West’s share 

ranged from 7% to 12%. 

The Agreement also would have 

eliminated vigorous head-to-head 

competition between Blue Cross and 

New West. For the past several years, 

New West had been one of only two 

significant alternatives to Blue Cross for 

commercial health insurance in the 

relevant areas. Many consumers viewed 

Blue Cross and New West as the two 

most significant insurers in the relevant 

areas and each other’s main competitor. 

Without New West as an effective 

competitor, Blue Cross would likely 

have increased prices and reduced the 

quality and service of commercial 

health-insurance plans to employers 

and individuals in the relevant areas. 

After reviewing the investigative 

materials, the Department determined 

that the defendants’ conduct violated 

Section 1 of the Sherman Act, 15 U.S.C. 

1, and Section 7 of the Clayton Act, 15 

U.S.C. 18, as alleged in the Complaint. 

The proposed Final Judgment will 

eliminate the anticompetitive effects 

identified in the Complaint by requiring 

New West and the hospital defendants 

to divest New West’s commercial 

health-insurance business, including its 

administrative-services-only contracts 

and its fully-insured business, but 

excluding the contracts that cover the 

hospital defendants’ employees and 

their dependents. 

Other provisions of the proposed 

Final Judgment will enable the acquirer 

of the divested assets to compete 

promptly and effectively in the market 

for commercial health insurance. Most 

importantly, Sections IV(G)–(I) ensure 

that the acquirer has a cost-competitive 

health-care provider network. Section 

IV(G) requires the hospital defendants to 

sign three-year contracts with the 

acquirer on terms that are substantially 

similar to their existing contractual 

terms with New West. To address 

health-care provider contracts that are 

not under the hospital defendants’ 

control, Sections IV(H) and IV(I) require 

New West and the hospital 

defendants—at the acquirer’s option—to 

(1) use their best efforts to assign the 

contracts that are not under their control 

to the acquirer, or (2) lease New West’s 

provider network to the acquirer for up 

to three years, using their best efforts to 

maintain the network, including 

maintaining contracts with substantially 

similar terms. 

New West and the hospital 

defendants proposed to sell the 

Divestiture Assets to PacificSource 

Health Plans, and the United States, 

after consulting with the State of 

Montana, has approved PacificSource as 

the acquirer. New West and 

PacificSource have entered into a 

definitive sale agreement and filed the 

necessary notification and request for 

approval with the Montana 

Commissioner of Securities and 

Insurance. 

III. Standard of Judicial Review 

The APPA requires that proposed 

consent judgments in antitrust cases 

brought by the United States be subject 

to a sixty-day 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.’’). 

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 

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.D.C. 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).1 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 

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Federal Register / Vol. 77, No. 41 / Thursday, March 1, 2012 / Notices 12619 

2The 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). 

3See United States v. Enova Corp., 107 F. Supp. 

2d 10, 17 (D.D.C. 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) (if 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.’’). 

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.D.C. 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 COMMCTIS, 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 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 to the 

Tunney Act,2 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: ‘‘[the] 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 11.3

IV. Summary of Public Comment and 

the United States’ Response 

During the sixty-day comment period, 

the United States received only one 

comment, submitted by the American 

Medical Association (‘‘AMA’’), which is 

attached to this Response. In its January 

13, 2012 comment, the AMA expressed 

its support for the United States’ and the 

State of Montana’s analysis as well as 

the remedy articulated in the proposed 

Final Judgment, stating that the action 

against the defendants ‘‘represents an 

important step towards reining in health 

insurers and hospitals whose actions 

conspire to restrain competition and 

maintain monopolized health insurance 

markets.’’ AMA Comment at 1. The 

United States has carefully reviewed the 

comment and has determined that the 

proposed Final Judgment remains in the 

public interest. 

The AMA is the largest association of 

physicians and medical students in the 

United States. The AMA’s comment 

states that the AMA ‘‘applauds the DOJ 

for its vigilance in recognizing the 

anticompetitive conduct’’ of the 

defendants and for ‘‘fashioning a 

remedy that holds the promise of 

nurturing competition in Montana.’’ Id. 

The AMA views the proposed Final 

Judgment as creating a ‘‘pro-competitive 

remedy that addresses the entry barriers 

faced by small Blue Cross rivals such as 

New West.’’ Id. The comment concludes 

that ‘‘the proposed consent decree will 

reverse the anticompetitive effects of the 

challenged Agreement.’’ Id. 

V. Conclusion 

After reviewing the AMA’s public 

comment, the United States continues to 

believe that the proposed Final 

Judgment, as drafted, provides an 

effective and appropriate remedy for the 

antitrust violations alleged in the 

Complaint, and is therefore in the 

public interest. The United States will 

move this Court to enter the proposed 

Final Judgment after the AMA’s 

comment and this response are 

published in the Federal Register. 

Dated: February 10, 2012 

Respectfully submitted, 

/s/ Scott I. Fitzgerald 

Scott I. Fitzgerald (WA Bar #39716), 

Claudia H. Dulmage. 

Attorneys for the United States, U.S. 

Department of Justice, Antitrust Division, 

Litigation I Section, 450 Fifth Street NW., 

Suite 4100, Washington, DC 20530. 

CERTIFICATE OF SERVICE 

I hereby certify that, on February 10, 

2012, a copy of the foregoing document 

was served on the following persons by 

the following means: 

1, 2, 3 CM/ECF 

llll Hand Delivery 

llll U.S. Mail 

llll Overnight Delivery Service 

llll Fax 

llll E-Mail 

1. Clerk, U.S. District Court 

2. Counsel for Defendant Blue Cross and 

Blue Shield of Montana: 

David C. Lundsgaard 

Graham & Dunn PC 

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12620 Federal Register / Vol. 77, No. 41 / Thursday, March 1, 2012 / Notices 

1See, Speech by Christine Varney, Assistant 

Attorney General Antitrust Division, U.S. 

Department of Justice at American Bar Association/ 

American Health Lawyers Association Antitrust in 

Healthcare Conference, May 24, 2010. 

2801 Alaskan Way Suite 300—Pier 70 

Seattle, WA 98121–1128 

dlundsgaard@grahamdunn.com 

3. Counsel for Billings Clinic; Bozeman 

Deaconess Health Services, Inc.; 

Community Medical Center, Inc.; 

New West Health Services, Inc.; 

Northern Montana Health Care, 

Inc.; and St. Peter’s Hospital: 

Kevin P. Heaney 

Crowley Fleck PLLP 

Transwestern Plaza II 

490 N. 31st St., Suite 500 

Billings, MT 59101 

kheaney@crowleyfleck.com 

/s/ Scott I. Fitzgerald 

Scott I. Fitzgerald, 

Antitrust Division, U.S. Department of 

Justice, 450 Fifth Street NW., Suite 4100, 

Washington, DC 20530, (202) 353–3863, 

scott.fitzgerald@usdoj.gov. 

AMA—AMERICAN MEDICAL 

ASSOCIATION 

James Madara, Executive Vice President, 

CEO 

American Medical Association 

515 N. State Street 

Chicago, Illinois 60654 

amarassn.org 

(p) 312.464.5000 

(f) 312.464.4184 

January 13, 2012 

Mr. Joshua H. Soven, 

Chief, Litigation I Section, 

Antitrust Division, 

United States Department of Justice, 

450 5th Street, N, Suite 4700, 

Washington, DC 20530. 

Re: Comments to Proposed Consent 

Judgment in U.S. v. Blue Cross and 

Blue Shield of Montana, Inc., et al. 

[FR Doc. 2011–29656] 

Dear Mr. Soven: 

On behalf of the physician and 

medical student members of the 

American Medical Association (AMA), I 

appreciate the opportunity to provide 

comments in response to the action by 

the Antitrust Division of the Department 

of Justice (DOJ) in the matter of Blue 

Cross and Blue Shield of Montana, Inc. 

(Blue Cross) and several Montana-area 

hospitals (the Hospital Defendants) in 

U.S. v. Blue Cross and Blue Shield of 

Montana, Inc., et al., Civil Action No. 

1:11–cv–00123–RFC. This action 

represents an important step towards 

reining in health insurers and hospitals 

whose actions conspire to restrain 

competition and maintain monopolized 

health insurance markets. 

Accordingly, the DOJ has acted in the 

public interest with the proposed 

decree, and the AMA submits the 

following comments in support. 

According to the DOJ’s complaint, Blue 

Cross agreed to pay $26.3 million to the 

Hospital Defendants in exchange for 

their agreement to collectively stop 

purchasing health insurance from New 

West Health Services, an insurer owned 

by the Hospital Defendants, and instead 

buy from Blue Cross exclusively for six 

years (the Agreement). The Agreement, 

it is alleged, would likely cause New 

West to exit the relevant Montana 

markets for commercial health 

insurance. Because New West is Blue 

Cross’s only viable competitor, the 

Agreement would have eliminated all 

competition. Accordingly, as the 

Complaint alleges, the Agreement 

would have led to higher prices and 

lower quality service for consumers. 

The AMA applauds the DOJ for its 

vigilance in recognizing the 

anticompetitive conduct described 

above and for fashioning a remedy that 

holds the promise of nurturing 

competition in Montana. For years, the 

AMA has been expressing its concern 

over the lack of competition in health 

insurance markets nationally. In its 

most recent study of health insurance 

markets, the AMA found that 83% of 

the 368 metropolitan areas studied 

qualify as highly concentrated areas, 

while in 95% of these markets, at least 

one insurer has a market share of 30% 

or greater. See, ‘‘Competition in Health 

Insurance: A Comprehensive Study of 

U.S. Markets,’’ American Medical 

Association (AMA) (2011 update). 

Health insurance markets that are 

monopolized not only hurt consumers 

directly, they also enable health insurers 

to exercise monopsony power in 

physician markets, eventually leading to 

reductions in service levels and quality 

of care. The market conditions in 

Montana are consistent with what the 

AMA has found nationally. 

Blue Cross’ dominance in Montana 

health insurance markets presents a 

significant barrier to the market success 

of smaller rivals such as New West, 

even assuming the absence of 

exclusionary conduct such as that 

alleged in this case. In 2010, then 

Assistant Attorney General Christine 

Varney reported that the DOJ found that 

new health insurer entrants cannot 

compete with incumbents for potential 

purchasers of their products unless the 

new entrants can offer similar provider 

discounts to their enrollees—but they 

cannot offer these competitive discounts 

without being able to promise providers 

a significant number of enrollees to 

make such an arrangement viable. In 

turn, these barriers of entry create an 

anticompetitive environment in which 

the dominant insurer can achieve lower 

input prices by demanding lower rates 

from providers (who face a significant 

loss of revenue if they refuse such 

demands), without having to lower their 

consumer output prices (the cost of their 

premiums).1

In the instant case, the DOJ has 

fashioned a pro-competitive remedy that 

addresses the entry barriers faced by 

small Blue Cross rivals such as New 

West. First, the proposed final judgment 

would eliminate the anticompetitive 

effects of the challenged Agreement by 

requiring New West and the Hospital 

Defendants to divest New West’s 

commercial health insurance business. 

Tentative arrangements call for the 

acquiring entity to be PacificSource, 

which is an established health insurer 

in the Pacific Northwest. To overcome 

Blue Cross’ advantage in obtaining 

discounts from the Hospital Defendants 

because of its size, the proposed consent 

decree creatively requires New West 

and the Hospital Defendants to help 

provide PacificSource with a costcompetitive provider network. The 

Hospital Defendants are required to sign 

three-year hospital contracts with 

PacificSource on terms substantially 

similar to the existing contractual terms 

with New West. The decree also 

requires Blue Cross to provide thirty 

days’ written notice to the DOJ before 

entering into any exclusive contracts 

with health insurance brokers— 

contracts that might hinder important 

health insurer access to brokers. These 

provisions will help ensure that 

PacificSource will be able to compete as 

effectively as New West before the 

parties entered the Agreement. 

In sum, the divestiture of New West 

mandated in the proposed consent 

decree will reverse the anticompetitive 

effects of the challenged Agreement, 

while the additional provisions may 

foster an even more robust competition 

within the market than existed before 

the Agreement. Given the weak state of 

health insurer competition in Montana, 

we applaud the DOJ for creating this 

remedy in the public interest. 

Sincerely, 

James L. Madara, MD. 

[FR Doc. 2012–4862 Filed 2–29–12; 8:45 am] 

BILLING CODE M 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

Importer of Controlled Substances, 

Notice of Application, Mylan 

Pharmaceuticals, Inc. 

Pursuant to 21 U.S.C. 958(i), the 

Attorney General shall, prior to issuing 

mstockstill on DSK4VPTVN1PROD with NOTICES