Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Notices 51183 

Patent No. 8,508,607 (‘‘the ’607 patent’’). 

The complaint further alleges that an 

industry in the United States exists as 

required by the applicable Federal 

Statute. The complainant requests that 

the Commission institute an 

investigation and, after the 

investigation, issue a limited exclusion 

order and cease and desist orders. 

ADDRESSES: The complaint, except for 

any confidential information contained 

therein, may be viewed on the 

Commission’s electronic docket (EDIS) 

at https://edis.usitc.gov. For help 

accessing EDIS, please email 

EDIS3Help@usitc.gov. Hearing impaired 

individuals are advised that information 

on this matter can be obtained by 

contacting the Commission’s TDD 

terminal on (202) 205–1810. Persons 

with mobility impairments who will 

need special assistance in gaining access 

to the Commission should contact the 

Office of the Secretary at (202) 205– 

2000. General information concerning 

the Commission may also be obtained 

by accessing its internet server at 

https://www.usitc.gov. 

FOR FURTHER INFORMATION CONTACT: 

Katherine Hiner, Office of the Secretary, 

Docket Services Division, U.S. 

International Trade Commission, 

telephone (202) 205–1802. 

SUPPLEMENTARY INFORMATION: Authority: 

The authority for institution of this 

investigation is contained in section 337 

of the Tariff Act of 1930, as amended, 

19 U.S.C. 1337, and in section 210.10 of 

the Commission’s Rules of Practice and 

Procedure, 19 CFR 210.10 (2020). 

Scope of Investigation: Having 

considered the complaint, the U.S. 

International Trade Commission, on 

September 8, 2021, Ordered that— 

(1) Pursuant to subsection (b) of 

section 337 of the Tariff Act of 1930, as 

amended, an investigation be instituted 

to determine whether there is a 

violation of subsection (a)(1)(B) of 

section 337 in the importation into the 

United States, the sale for importation, 

or the sale within the United States after 

importation of certain products 

identified in paragraph (2) by reason of 

infringement of one or more of claims 

1–4, and 6–36 of the ’912 patent; claims 

1–16 of the ’312 patent; and claims 1– 

4, 6–7, 10–13, 15–16, 19–21, 25–26, and 

29 of the ’607 patent, and whether an 

industry in the United States exists as 

required by subsection (a)(2) of section 

337; 

(2) Pursuant to section 210.10(b)(1) of 

the Commission’s Rules of Practice and 

Procedure, 19 CFR 210.10(b)(1), the 

plain language description of the 

accused products or category of accused 

products, which defines the scope of the 

investigation, is ‘‘IP security cameras 

and systems, as well as the software and 

components of those cameras and 

systems’’; 

(3) For the purpose of the 

investigation so instituted, the following 

are hereby named as parties upon which 

this notice of investigation shall be 

served: 

(a) The complainants are: 

Motorola Solutions, Inc., 500 W. 

Monroe St., Chicago, IL 60661 

Avigilon Corporation, 555 Robson St. 

3rd Floor, Vancouver, British 

Columbia, V6B 1A6, Canada 

Avigilon Fortress Corporation, 555 

Robson St. 3rd Floor, Vancouver, 

British Columbia, V6B 1A6, Canada 

Avigilon Patent Holding 1 Corporation, 

555 Robson St. 3rd Floor, Vancouver, 

British Columbia, V6B 1A6, Canada 

Avigilon Technologies Corporation, 555 

Robson St. 3rd Floor, Vancouver, 

British Columbia, V6B 1A6, Canada 

(b) The respondents are the following 

entities alleged to be in violation of 

section 337, and are the parties upon 

which the complaint is to be served: 

Verkada Inc., 405 E 4th Avenue, San 

Mateo, California 94401 

(c) The Office of Unfair Import 

Investigations, U.S. International Trade 

Commission, 500 E Street SW, Suite 

401, Washington, DC 20436; and 

(4) For the investigation so instituted, 

the Chief Administrative Law Judge, 

U.S. International Trade Commission, 

shall designate the presiding 

Administrative Law Judge. 

Responses to the complaint and the 

notice of investigation must be 

submitted by the named respondents in 

accordance with section 210.13 of the 

Commission’s Rules of Practice and 

Procedure, 19 CFR 210.13. Pursuant to 

19 CFR 201.16(e) and 210.13(a), as 

amended in 85 FR 15798 (March 19, 

2020), such responses will be 

considered by the Commission if 

received not later than 20 days after the 

date of service by the complainant of the 

complaint and the notice of 

investigation. Extensions of time for 

submitting responses to the complaint 

and the notice of investigation will not 

be granted unless good cause therefor is 

shown. 

Failure of a respondent to file a timely 

response to each allegation in the 

complaint and in this notice may be 

deemed to constitute a waiver of the 

right to appear and contest the 

allegations of the complaint and this 

notice, and to authorize the 

administrative law judge and the 

Commission, without further notice to 

the respondent, to find the facts to be as 

alleged in the complaint and this notice 

and to enter an initial determination 

and a final determination containing 

such findings, and may result in the 

issuance of an exclusion order or a cease 

and desist order or both directed against 

the respondent. 

By order of the Commission. 

Issued: September 8, 2021. 

Lisa Barton, 

Secretary to the Commission. 

[FR Doc. 2021–19740 Filed 9–13–21; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Antitrust Division 

United States v. Evangelical 

Community Hospital, et ano; Response 

to Public Comments 

Pursuant to the Antitrust Procedures 

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

the United States hereby publishes 

below the Response to Public Comments 

on the Proposed Final in United States 

v. Evangelical Community Hospital and 

Geisinger Health, Civil Action No. 4:20– 

cv–01383–MWB, which was filed in the 

United States District Court for the 

Middle District of Pennsylvania on 

August 31, 2021, together with a copy 

of the five comments received by the 

United States. 

A copy of the comments and the 

United States’ response to the comments 

is available at https://www.justice.gov/ 

atr/case/us-v-geisinger-health-andevangelical-community-hospital. Copies 

of the comments and the United States’ 

response are available for inspection at 

the Office of the Clerk of the United 

States District Court for the Middle 

District of Pennsylvania. Copies of these 

materials may also be obtained from the 

Antitrust Division upon request and 

payment of the copying fee set by 

Department of Justice regulations. 

Suzanne Morris, 

Chief, Premerger and Division Statistics, 

Antitrust Division. 

United States District Court for the 

Middle District of Pennsylvania 

United States of America, Plaintiff, v. 

Evangelical Community Hospital and 

Geisinger Health, Defendants. 

Civil Action No.: 4:20–cv–01383–MWB 

Response of Plaintiff United States 

To Public Comments on the Proposed 

Final Judgment 

Pursuant to the requirements of the 

Antitrust Procedures and Penalties Act 

(the ‘‘APPA’’ or ‘‘Tunney Act’’), 15 

U.S.C. 16(b)–(h), the United States 

submits this response to the five public 


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51184 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Notices 

comments received regarding the 

proposed Final Judgment, as amended, 

in this case. After carefully considering 

the submitted comments, the United 

States continues to believe that the 

amended proposed Final Judgment will 

provide 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 the Court for 

entry of the amended proposed Final 

Judgment (Dkt. 51–1) after the public 

comments and this response have been 

published pursuant to 15 U.S.C. 16(d). 

I. Procedural History 

On February 1, 2019, Defendant 

Geisinger Health (‘‘Geisinger’’) and 

Defendant Evangelical Community 

Hospital (‘‘Evangelical’’) entered into a 

partial-acquisition agreement (the 

‘‘Collaboration Agreement’’) pursuant to 

which Geisinger would, among other 

things, acquire 30% of Evangelical. 

After a thorough and comprehensive 

investigation, the United States filed a 

civil antitrust Complaint (Dkt. 1) on 

August 5, 2020, seeking to rescind and 

enjoin the Collaboration Agreement, 

which Defendants had twice amended 

before the United States filed its 

Complaint. 

On March 3, 2021, the United States 

filed a proposed Final Judgment (Dkt. 

45–2) and a Stipulation and Order (Dkt. 

45–1), signed by the parties, that 

consents to entry of the proposed Final 

Judgment after compliance with the 

requirements of the APPA. At the same 

time, the United States filed a 

Competitive Impact Statement, 

describing the transaction and the 

proposed Final Judgment (Dkt. 46). The 

Court entered the Stipulation and Order 

on March 10, 2021 (Dkt. 47). 

On March 10, 2021, the United States 

published the Complaint, proposed 

Final Judgment, and Competitive Impact 

Statement in the Federal Register, see 

15 U.S.C. 16(b)–(c); 86 FR 13,735 

(March 10, 2021), and caused notice 

regarding the same, together with 

directions for the submission of written 

comments relating to the proposed Final 

Judgment, to be published in the 

Washington Post on March 8–14 and in 

The Daily Item on March 9–14 and 

March 16. 

On May 17, 2021, the United States 

and Defendants filed a Joint Notice of 

Amended Proposed Final Judgment (the 

‘‘Joint Notice’’), attaching an amended 

proposed Final Judgment (Dkts. 51, 51– 

1). As stated in the Joint Notice, the 

amended proposed Final Judgment 

removed provisions from the 

Collaboration Agreement (including its 

attachments) that did not conform with 

the proposed Final Judgment and 

corrected typographical errors in those 

documents. The amended proposed 

Final Judgment is identical in all 

respects to the original proposed Final 

Judgment except for a change to the 

definition of the ‘‘Amended and 

Restated Collaboration Agreement’’ to 

reflect the date of execution and title of 

the revised, updated agreement—the 

Second Amended and Restated 

Collaboration Agreement (the 

‘‘Amended Agreement’’). 

The 60-day period for public 

comment ended on May 17, 2021. The 

United States determined that it would 

consider any additional comments that 

were received by June 7, 2021, in order 

to afford the public time to review the 

Joint Notice and the amended proposed 

Final Judgment. The United States 

received five comments. As required by 

the APPA, the comments, with the 

authors’ addresses removed, and this 

response will be published in the 

Federal Register. 

II. Standard of Judicial Review 

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 60-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); United States v. U.S. 

Airways Grp., Inc., 38 F. Supp. 3d 69, 

75 (D.D.C. 2014) (explaining that the 

‘‘court’s inquiry is limited’’ in APPA 

settlements); 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 a 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 mechanism to enforce the final 

judgment are clear and manageable’’). 

As the U.S. Court of Appeals for the 

District of Columbia Circuit has held, 

under the APPA a court considers, 

among other things, the relationship 

between the remedy secured and the 

specific allegations in the government’s 

complaint, whether the proposed Final 

Judgment is sufficiently clear, whether 

its enforcement mechanisms are 

sufficient, and whether it may positively 

harm third parties. See Microsoft, 56 

F.3d at 1458–62. With respect to the 

adequacy of the relief secured by the 

proposed Final Judgment, a court may 

not ‘‘make de novo determination of 

facts and issues.’’ United States v. W. 

Elec. Co., 993 F.2d 1572, 1577 (D.C. Cir. 

1993) (quotation marks omitted); see 

also Microsoft, 56 F.3d at 1460–62; 

United States v. Alcoa, Inc., 152 F. 

Supp. 2d 37, 40 (D.D.C. 2001); United 

States v. Enova Corp., 107 F. Supp. 2d 

10, 16 (D.D.C. 2000); InBev, 2009 U.S. 

Dist. LEXIS 84787, at *3. Instead, ‘‘[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.’’ W. Elec. Co., 993 

F.2d at 1577 (quotation marks omitted). 

‘‘The court should bear in mind the 

flexibility of the public interest inquiry: 

The court’s function is not to determine 

whether the resulting array of rights and 

liabilities is one that will best serve 

society, but only to confirm that the 

resulting settlement is within the 

reaches of the public interest.’’ 

Microsoft, 56 F.3d at 1460 (quotation 

marks omitted); see also United States v. 

Deutsche Telekom AG, No. 19–2232 

(TJK), 2020 WL 1873555, at *7 (D.D.C. 

Apr. 14, 2020). More demanding 

requirements would ‘‘have enormous 

practical consequences for the 

government’s ability to negotiate future 

settlements,’’ contrary to congressional 

intent. Microsoft, 56 F.3d at 1456. ‘‘The 

Tunney Act was not intended to create 

a disincentive to the use of the consent 

decree.’’ Id. 

The United States’ predictions about 

the efficacy of the remedy are to be 

afforded deference by the Court. See, 

e.g., Microsoft, 56 F.3d at 1461 

(recognizing courts should give ‘‘due 


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Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Notices 51185 

1Amended proposed Final Judgment ¶ IV.B.2. 

2Amended proposed Final Judgment ¶ V.A. 

3Amended proposed Final Judgment ¶¶ IV.B.3, 6. 

respect to the Justice Department’s . . . 

view of the nature of its case’’); United 

States v. Iron Mountain, Inc., 217 F. 

Supp. 3d 146, 152–53 (D.D.C. 2016) (‘‘In 

evaluating objections to settlement 

agreements under the Tunney Act, a 

court must be mindful that [t]he 

government need not prove that the 

settlements will perfectly remedy the 

alleged antitrust harms[;] it need only 

provide a factual basis for concluding 

that the settlements are reasonably 

adequate remedies for the alleged 

harms.’’ (internal citations omitted)); 

United States v. Republic Servs., Inc., 

723 F. Supp. 2d 157, 160 (D.D.C. 2010) 

(noting ‘‘the deferential review to which 

the government’s proposed remedy is 

accorded’’); United States v. ArcherDaniels-Midland Co., 272 F. Supp. 2d 1, 

6 (D.D.C. 2003) (‘‘A district court must 

accord due respect to the government’s 

prediction as to the effect of proposed 

remedies, its perception of the market 

structure, and its view of the nature of 

the case.’’). The ultimate question is 

whether ‘‘the remedies [obtained by the 

Final Judgment are] so inconsonant with 

the allegations charged as to fall outside 

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

Microsoft, 56 F.3d at 1461 (quoting W. 

Elec. Co., 900 F.2d at 309). 

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 U.S. Airways, 38 

F. Supp. 3d at 75 (noting that the court 

must simply determine whether there is 

a factual foundation for the 

government’s decisions such that its 

conclusions regarding the proposed 

settlements are reasonable); InBev, 2009 

U.S. Dist. LEXIS 84787, at *20 (‘‘[T]he 

‘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. 

In its 2004 amendments to the APPA, 

Congress made clear its intent to 

preserve the practical benefits of using 

consent judgments proposed by the 

United States in antitrust enforcement, 

Public Law 108–237, 221, and added 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); see also U.S. Airways, 

38 F. Supp. 3d at 76 (indicating that a 

court is not required to hold an 

evidentiary hearing or to permit 

intervenors as part of its review under 

the APPA). This language explicitly 

wrote into the statute what Congress 

intended when it first enacted the APPA 

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 Sen. 

Tunney). ‘‘A court can make its public 

interest determination based on the 

competitive impact statement and 

response to public comments alone.’’ 

U.S. Airways, 38 F. Supp. 3d at 76 

(citing Enova Corp., 107 F. Supp. 2d at 

17). 

III. The Harm Alleged in the Complaint 

and the Amended Proposed Final 

Judgment 

The amended proposed Final 

Judgment is the culmination of a 

thorough, comprehensive investigation 

conducted by the Antitrust Division of 

the United States Department of Justice. 

Based on the evidence gathered during 

the investigation, the United States 

concluded that the likely effect of 

Geisinger’s partial acquisition of 

Evangelical resulting from the 

Collaboration Agreement would be to 

substantially lessen competition and 

unreasonably restrain trade in the 

market for the provision of inpatient 

general acute-care services in a sixcounty region in central Pennsylvania. 

The partial acquisition was not a 

passive investment by Geisinger. The 

Collaboration Agreement created certain 

entanglements between Defendants that 

provided opportunities for Geisinger to 

influence Evangelical, which would 

likely lead to higher prices, lower 

quality, and reduced access to inpatient 

general acute-care services in central 

Pennsylvania. Accordingly, the United 

States filed a civil antitrust lawsuit that 

alleged that certain features of the 

Collaboration Agreement, taken 

together, were likely to substantially 

lessen competition between Defendants, 

and sought to rescind and enjoin the 

Collaboration Agreement because it 

violated Section 1 of the Sherman Act, 

15 U.S.C. 1, and Section 7 of the Clayton 

Act, 15 U.S.C. 18. 

The amended proposed Final 

Judgment provides an effective and 

appropriate remedy for the likely 

competitive harm the United States 

alleges would result from the 

Collaboration Agreement and maintains 

Evangelical’s independence as a 

competitor in the market for inpatient 

general acute-care services in central 

Pennsylvania. The amended proposed 

Final Judgment restores competition by: 

(1) Capping Geisinger’s ownership 

interest in Evangelical; (2) preventing 

Geisinger from exerting control or 

influence over Evangelical through the 

mechanisms alleged in the Complaint; 

and (3) requiring an antitrust 

compliance program and prohibiting 

Geisinger and Evangelical from sharing 

competitively sensitive information—all 

of which restore Defendants’ incentives 

to compete with each other on quality, 

access, and price. At the same time, the 

amended proposed Final Judgment 

permits Evangelical to use Geisinger’s 

passive investment to fund specific 

projects that will benefit patients and 

the community. 

A. Reduction of Ownership Interest and 

Investment 

The amended proposed Final 

Judgment caps Geisinger’s ownership 

interest in Evangelical to a 7.5% passive 

investment and prohibits Geisinger from 

increasing its ownership interest in 

Evangelical.1 The amended proposed 

Final Judgment permits Evangelical to 

spend the money that it has already 

received from Geisinger only on two 

specific projects that will benefit 

patients in central Pennsylvania: (1) 

Improving Evangelical’s patient rooms 

and (2) sponsoring a local recreation 

and wellness center.2 It also prohibits 

Geisinger from making any loan, 

providing any line of credit, or 

providing a guaranty to Evangelical 

against any financial loss.3 These 

provisions of the amended proposed 

Final Judgment, along with the others 

described below, eliminate mechanisms 

for Geisinger to influence Evangelical 

through its investment and restore the 

incentives of both hospitals to compete 

with each other for the benefit of 

patients and health insurers. 

B. Prohibitions Against Geisinger’s 

Influence and Control Over Evangelical 

The amended proposed Final 

Judgment maintains Evangelical’s 

independence as a competitor in the 

relevant market because it prevents 

Geisinger from exercising influence over 


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4Amended proposed Final Judgment ¶¶ IV.B.1, 4. 

5Amended proposed Final Judgment ¶ IV.B.6. 

6Amended proposed Final Judgment ¶ IV.B.5. 

7Amended proposed Final Judgment ¶¶ IV.E, F. 

8Amended proposed Final Judgment ¶ IV.B.7. 

9Amended proposed Final Judgment ¶ IV.G. 

10Amended proposed Final Judgment ¶ IV.G, 

VII.A. 

11Amended proposed Final Judgment § VI. 

12Amended proposed Final Judgment §§ VIII, XI. 

13Comment from Sandy Young, attached as 

Exhibit E. 

14Comment from Carol Barsh, attached as Exhibit 

A. 

15Comment from Keith Young, attached as 

Exhibit D. 

16Comment from Dr. Steve Karp, attached as 

Exhibit B. Dr. Karp’s comment also raised questions 

about Evangelical’s receiving financial support for 

information technology systems from Geisinger. 

This concern was also raised by UPMC and is 

discussed in Section IV.B.2, infra. 

Evangelical through participation in 

Evangelical’s governance, management, 

or strategic decision-making. For 

example, the amended proposed Final 

Judgment prohibits Geisinger from 

appointing any directors to 

Evangelical’s board of directors and 

prohibits Geisinger from obtaining any 

management or leadership position with 

Evangelical that would provide 

Geisinger with the ability to influence 

its strategic or competitive decisionmaking.4 In addition, it prohibits 

Geisinger from controlling Evangelical’s 

expenditure of funds.5 The amended 

proposed Final Judgment also prevents 

Geisinger from having any right of first 

offer or first refusal regarding any 

proposal or offer made to Evangelical, 

such as proposals to enter into future 

joint ventures with other entities or to 

enter into competitively significant asset 

sales.6 In addition, the amended 

proposed Final Judgment prohibits 

Defendants from entering into joint 

ventures with each other or making 

changes to the Amended Agreement 

without obtaining the approval of the 

United States.7 The amended proposed 

Final Judgment also prohibits Geisinger 

from licensing its information 

technology systems to Evangelical 

without the consent of the United 

States, except as expressly permitted in 

the amended proposed Final Judgment.8

C. Compliance Program and 

Prohibitions Against Sharing 

Competitively Sensitive Information 

The amended proposed Final 

Judgment eliminates the provisions of 

the Collaboration Agreement that would 

have provided Geisinger with the ability 

to access Evangelical’s competitively 

sensitive information and prohibits 

Defendants from providing each other 

with non-public information, including 

information about strategic projects 

being considered by either Defendant.9

It also prevents Defendants from having 

access to each other’s financial records 

and requires that Defendants implement 

and maintain a firewall to prevent them 

from sharing competitively sensitive 

information.10

In addition, the amended proposed 

Final Judgment requires Defendants to 

institute a robust antitrust compliance 

program.11 Finally, the amended 

proposed Final Judgment provides the 

United States with the ability to 

investigate Defendants’ compliance with 

the Final Judgment and expressly 

retains and reserves all rights for the 

United States to enforce provisions of 

the Final Judgment. 12

In sum, the amended proposed Final 

Judgment prevents Geisinger from 

increasing its ownership interest in 

Evangelical, eliminates the 

anticompetitive portions of the 

Collaboration Agreement that were 

challenged in the Complaint, and 

prevents Defendants from reinstituting 

those anticompetitive provisions. It 

restores Defendants’ incentives to 

compete with each other on quality, 

access, and price, and maintains 

Evangelical as an independent 

competitor for inpatient general acutecare services in central Pennsylvania. 

IV. Summary of Public Comments and 

the United States’ Response 

The United States received five public 

comments. Four comments are from 

community members who live in central 

Pennsylvania. The fifth comment is 

from a competitor to Geisinger and 

Evangelical, the University of Pittsburgh 

Medical Center (‘‘UPMC’’). UPMC is an 

integrated healthcare system that 

operates two hospitals and UPMC 

Health Plan, an insurance company that 

sells commercial health insurance in 

competition with a Geisinger-operated 

insurance company, Geisinger Health 

Plan, in central Pennsylvania. 

The United States summarizes the 

comments and responds below. The 

comments do not support a finding that 

the amended proposed Final Judgment 

is not in the public interest, and the 

modifications that UPMC proposes to 

the amended proposed Final Judgment 

are not necessary or appropriate to 

address the loss of competition alleged 

in the Complaint. 

A. The Amended Proposed Final 

Judgment Resolves the Concerns 

Expressed by Four Community Members 

Four community members express 

concern that, if Geisinger were allowed 

to control Evangelical, it could 

negatively affect patient care and reduce 

choices for consumers. One commenter 

states that ‘‘Evangelical can give 

patients the best care by remaining an 

independent community hospital.’’ 13

Another commenter states that she has 

‘‘all of [her] care given at Evangelical,’’ 

and ‘‘would hate to have that spoiled’’ 

by having Evangelical controlled by 

Geisinger, and believes that they should 

not merge.14 Another commenter notes 

that prior mergers in the area left the 

community with ‘‘few options [for] 

quality and affordable healthcare’’ and 

urges the United States ‘‘to make sure 

[that] people looking for good affordable 

health care have that choice.’’ 15 The 

United States agrees with these 

commenters that consumers are best 

served by preserving Evangelical’s 

independence, which is why the United 

States initiated this litigation and has 

required Geisinger to relinquish its 

ability to influence or control 

Evangelical through the terms of the 

amended proposed Final Judgment. 

Because the amended proposed Final 

Judgment preserves Evangelical’s 

independence, and prohibits Geisinger 

from acquiring Evangelical, it fully 

addresses these commenters’ concerns. 

These comments, therefore, provide no 

basis to conclude that the amended 

proposed Final Judgment is not in the 

public interest. 

One of the community members 

expresses concern about Geisinger’s 

7.5% interest in Evangelical and raises 

questions about Evangelical’s financial 

circumstances. The commenter also 

notes that the settlement addresses harm 

the United States alleged with respect to 

inpatient services and asks what would 

prevent Geisinger from expanding 

outpatient services to compete with 

those offered by Evangelical.16 This 

commenter does not ask the Court to 

reject the proposed remedy and does not 

propose any specific measures to be 

incorporated into the amended 

proposed Final Judgment. 

This comment likewise provides no 

basis to conclude that the amended 

proposed Final Judgment is not in the 

public interest. First, as discussed 

above, the amended proposed Final 

Judgment ensures that Evangelical will 

remain an independent competitor by 

capping Geisinger’s interest in 

Evangelical and stripping Geisinger of 

the ability to influence or control 

Evangelical. Second, the proposed 

remedy does not place Evangelical on 

insecure financial footing as Evangelical 

was in a strong financial position before 

it executed the agreement with 

Geisinger (see Complaint ¶ 65), and 

nothing in the amended proposed Final 

Judgment changes its financial status. 


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17UPMC Comment, attached as Exhibit C. 

18Second Amended and Restated Collaboration 

Agreement (Dkt. 51–3) at Exh. D. If the volume of 

GHP insured patients is not sufficient on its own 

to maintain Evangelical’s current level of 

profitability, GHP, under the Margin Guarantee, 

will adjust the rates it pays Evangelical to reach this 

threshold, which will not impact Evangelical’s 

preferred tier status. 

19The only allegation in the Complaint that 

relates to the Margin Guarantee is that 

‘‘Evangelical’s placement in the most favored tier of 

Geisinger Health Plan’s commercial insurance 

products does not require the partial-acquisition 

agreement.’’ Complaint ¶ 66. 

20UPMC Comment at 10. 

21Amended proposed Final Judgment ¶ VII.A. 

Third, the commenter’s concern about 

Geisinger expanding in the outpatient 

market is outside the scope of this 

Court’s review under the APPA as the 

United States did not allege harm in an 

outpatient services market. See 

Microsoft, 56 F.3d at 1459; U.S. 

Airways, 38 F. Supp. 3d at 76. It is also 

misplaced as the proposed remedy 

maintains Evangelical’s independence 

and preserves Defendants’ incentives to 

compete for both inpatient and 

outpatient services. Indeed, if Geisinger 

expands outpatient services to compete 

with those offered by Evangelical, that 

would increase competition and benefit 

patients in central Pennsylvania. 

B. UPMC’s Comment Provides No Basis 

To Conclude That the Amended 

Proposed Final Judgment Is Not in the 

Public Interest 

UPMC’s comment raises concerns 

regarding two aspects of the Amended 

Agreement.17 First, UPMC questions 

provisions that establish the terms 

under which Evangelical, a small 

community hospital, provides medical 

services to patients insured by Geisinger 

Health Plan (‘‘GHP’’), a health insurance 

company owned by Geisinger. UPMC 

claims these provisions will reduce 

competition between Evangelical and 

Geisinger to provide medical and 

hospital services and create an incentive 

for Evangelical to charge higher prices 

to third-party insurance companies such 

as UPMC Health plan (UPMC, like 

Geisinger, is vertically integrated, 

offering both health insurance and 

hospital services). Second, UPMC 

expresses concerns about Geisinger’s 

providing subsidized electronic medical 

records systems and associated support 

to Evangelical, as permitted in 

Paragraph V.B of the amended proposed 

Final Judgment (the ‘‘IT Subsidy’’). As 

discussed below, these provisions do 

not undermine the remedy in the 

amended proposed Final Judgment. 

1. The Margin Guarantee 

UPMC questions provisions that 

establish the terms under which 

Evangelical provides hospital and 

medical services to patients insured by 

GHP. Specifically, Evangelical and GHP 

have agreed that Evangelical will lower 

its prices to GHP for treating GHP 

insured patients, and GHP will, in 

return, place Evangelical in the most 

favorable tier of its fully insured, tiered 

commercial insurance plans. This sort 

of arrangement is common in the 

healthcare industry. By placing 

Evangelical in the most favorable tier, 

the expectation is that more GHP 

members will seek treatment from 

Evangelical, allowing Evangelical to 

maintain or increase its profit on these 

patients notwithstanding its lower 

prices. To further guarantee that 

Evangelical’s lower prices will not 

reduce Evangelical’s profits from 

treating GHP members, GHP has 

committed that Evangelical’s profit (in 

dollars) on GHP’s fully insured 

commercial business will remain the 

same or increase during the time that 

Evangelical provides these lower prices 

to GHP.18 This ‘‘Margin Guarantee’’ thus 

protects Evangelical, a small hospital, 

from losing money as a result of offering 

GHP lower prices. UPMC, however, 

claims these provisions will reduce 

competition between Evangelical and 

Geisinger and create an incentive for 

Evangelical to charge higher prices to 

third-party insurance companies such as 

UPMC Health Plan. 

In its Complaint, the United States 

did not allege competitive harm 

resulting from the Margin Guarantee.19

Therefore, UPMC’s concerns regarding 

the Margin Guarantee are outside the 

scope of the Court’s review under the 

APPA. See Microsoft, 56 F.3d at 1459; 

U.S. Airways, 38 F. Supp. 3d at 76. 

Moreover, UPMC’s concerns regarding 

the Margin Guarantee are unfounded for 

the following reasons. First, UPMC 

argues that the Margin Guarantee 

reduces competition between 

Evangelical and Geisinger because, 

absent the Margin Guarantee, GHP 

would have tried to steer patients 

toward Geisinger hospitals and 

physicians, while the Margin Guarantee 

gives GHP an incentive to have more 

patients treated at Evangelical. UPMC’s 

argument, however, would apply to any 

arrangement that made Evangelical a 

more attractive or lower cost option for 

patients who are commercially insured 

by GHP. Under UPMC’s reasoning, 

arrangements that are standard in the 

health insurance industry, such as a 

tiered network arrangement with a 

health insurance company that places 

Evangelical in the most favorable tier, 

would be improper, which is not the 

case. The Margin Guarantee simply 

ensures that Evangelical’s profitability 

on GHP patients will not decrease as a 

result of offering GHP lower prices; at 

the same time, this arrangement is 

designed to save GHP money and 

benefit its members (e.g., through lower 

copays). Additionally, the amended 

proposed Final Judgment ensures that 

Geisinger and Evangelical will remain 

independent, and will thus have the 

incentive to compete against one 

another. 

Second, UPMC speculates that the 

Margin Guarantee gives Evangelical the 

incentive to raise rates to third-party 

insurers like UPMC Health Plan. If 

anything, however, the Margin 

Guarantee is likely to incentivize 

Evangelical to maximize the share of its 

patients that are insured by third-party 

insurers such as UPMC Health Plan, 

rather than incentivize it to increase 

prices to these entities. This is because 

any profit from third-party insurers 

would be in addition to the profit that 

Evangelical is already guaranteed to 

earn from GHP. UPMC argues that 

Evangelical’s increasing the number of 

patients it sees from third-party insurers 

would violate the ‘‘spirit’’ of the 

Amended Agreement,20 but this is 

incorrect because the amended 

proposed Final Judgment maintains 

Evangelical’s independence, preventing 

Geisinger from controlling or 

influencing Evangelical’s negotiations 

with third-party insurers. 

Finally, to the extent UPMC raises 

concerns about potential information 

sharing between Evangelical and 

Geisinger relating to the Margin 

Guarantee, those concerns are 

unwarranted. Integrated insurer-hospital 

systems like Geisinger and UPMC 

routinely obtain sensitive information 

from insurer negotiations with thirdparty hospital systems like Evangelical 

and must assure those hospital systems 

that the information will not be shared 

more broadly throughout the integrated 

organization. To the extent that UPMC 

is concerned that Evangelical will share 

sensitive information about the UPMCEvangelical contract with GHP, UPMC, 

a large, sophisticated hospital system, 

can protect itself through its contract 

with Evangelical. Moreover, in this 

instance, the amended proposed Final 

Judgment requires Defendants to 

implement a firewall to prevent 

competitively sensitive information 

from being disclosed between Geisinger 

and Evangelical, providing an 

additional level of protection to prevent 

such improper disclosure.21 Should 

Defendants bypass the firewall and 

share competitively sensitive 


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51188 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Notices 

22See Brunswick Corp. v. Pueblo Bowl–O–Mat, 

Inc., 429 U.S. 477, 488 (1977) (‘‘[A]ntitrust laws 

. . . were enacted for the protection of competition 

not competitors.’’) (internal quotation marks 

removed). 

23Amended proposed Final Judgment ¶ V.B. 

24UPMC Comment at 15. 

25Office of the Nat’l Coordinator for Health Info. 

Tech. (part of the U.S. Department of Health and 

Human Services), EHR Contracts Untangled: 

Selecting Wisely, Negotiating Terms, and 

Understanding the Fine Print 6 (2016), https://

www.healthit.gov/sites/default/files/EHR_

Contracts_Untangled.pdf. 

information, the United States can seek 

relief from the Court under the Final 

Judgment or through antitrust laws that 

will continue to apply to Defendants. 

UPMC’s concerns as to the Margin 

Guarantee, which go beyond the 

allegations in the Complaint and thus 

are beyond the scope of the Court’s 

APPA review, do not undermine the 

amended proposed Final Judgment. 

Moreover, UPMC’s request, in 

connection with the Margin Guarantee, 

to modify the amended proposed Final 

Judgment to have the Court mandate 

specific contractual practices between 

Defendants, or to have the United States 

oversee contractual negotiations 

between them, is unnecessary and 

would involve the Court and the United 

States inappropriately in private 

contractual negotiations.22

2. The IT Subsidy 

UPMC also objects to Paragraph V.B 

of the amended proposed Final 

Judgment, under which Geisinger may 

provide Evangelical with electronic 

medical records systems and support at 

a subsidized cost—the IT Subsidy.23

The IT Subsidy will enable 

Evangelical to adopt health information 

technology to improve the delivery of 

care to patients in central Pennsylvania. 

Indeed, as UPMC acknowledges, 

Defendants’ sharing of electronic 

medical records software is likely to 

improve the experience for patients who 

receive care at both Geisinger and 

Evangelical. Even if UPMC is correct 

that having Geisinger and Evangelical 

on an integrated platform would 

increase interoperability by making 

patient records easier to access, patient 

scheduling more fluid, and patient 

referrals easier across the 

organizations,24 those features will 

benefit patients without harming 

competition. Moreover, it is not 

uncommon in the health care industry 

for large health care systems to offer to 

subsidize a portion of the costs for 

smaller health care organizations to 

acquire electronic health records 

systems.25

UPMC appears to object to the IT 

Subsidy because it may increase 

Evangelical’s independence and, by 

virtue of meeting its business needs, 

may make Evangelical less likely to 

partner with others in the market, such 

as UPMC. This outcome, however, 

would not harm competition. 

Finally, UPMC’s attempt to analogize 

the IT Subsidy to so-called ‘‘reverse 

payment’’ cases is misplaced, as the IT 

Subsidy lacks an essential component of 

an agreement to delay competition. In a 

typical ‘‘reverse payment’’ case, a 

pharmaceutical company that 

manufactures a brand-name drug settles 

a claim of patent infringement with a 

generic competitor by agreeing to pay 

the generic competitor in exchange for 

the generic competitor’s agreement to 

delay launching a competing generic 

drug. Here, by contrast, there is no 

agreement between Defendants to delay 

or restrain competition. UPMC’s 

comment thus provides no reason for 

concluding that the amended proposed 

Final Judgment is not in the public 

interest. 

V. Conclusion 

After carefully reviewing the public 

comments, the United States continues 

to believe that the amended proposed 

Final Judgment 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 Final Judgment after the 

comments and this response are 

published as required by 15 U.S.C. 

16(d). 

Dated: August 31, 2021 

Respectfully submitted, 

FOR PLAINTIFF UNITED STATES OF 

AMERICA 

/s/David M. Stoltzfus 

DAVID M. STOLTZFUS 

NATALIE MELADA 

CHRIS HONG 

DAVID C. KELLY 

GARRETT LISKEY 

Attorneys for the United States 

U.S. Department of Justice, Antitrust 

Division, 450 Fifth Street NW, Suite 4100, 

Washington, DC 20530, Tel: (202) 598–2978, 

Email: david.stoltzfus@usdoj.gov 

[REDACTED] 

March 8, 2021 

U.S. Dept of Justice, 450 Fifth St. NW, Suite 

4100, Washington, DC 20530 

Dear Mr. Welsh, 

I am commenting about the settlement 

between Geisinger and Evangelical Hospital 

I agree with your conclusion that they do not 

merge because of the monopoly the Geisinger 

will have and all the bad effects that will 

occur. 

I live in Danville, one mile from the 

Geisinger but have all of my care given at 

Evangelical. I would hate to have that 

spoiled. 

Sincerely, 

Carol A. Barsh 

Eric Welsh, Chief 

Healthcare and Consumer Products Section 

Antitrust Division 

U.S. Department of Justice 

450 Fifth St. NW 

Suite 4100 

Washington, DC 20530 

Mr. Welsh: 

I am writing to express my concerns 

regarding the DOJ’s recent proposed 

settlement for the partial acquisition of 

Evangelical Community Hospital by 

Geisinger Health. 

As it stands, the settlement limits 

Geisinger’s ownership interest in Evangelical 

to 7.5%, described as passive. Additionally, 

loans/lines of credit to Evangelical are 

forbidden, as is exerting any control over 

Evangelical’s expenditures. Kendra Aucker, 

Evangelical’s CEO, has stated that 

Evangelical will use Geisinger’s financial 

support to fund facilities, technology and 

services while simultaneously describing 

Evangelical Hospital as ‘‘independent’’. From 

this, arise the following questions and issues: 

How is Evangelical independent if it 

depends upon Geisinger’s 7.5% involvement 

without which we must assume Evangelical 

could not fund upgrades to what Ms. Aucker 

describes as facilities, technology and 

services? 

What benefit does Geisinger obtain in the 

arrangement proposed by the DOJ since it 

represents only a fraction of what Geisinger 

sought in both monetary interest and 

strategic control? It appears that had 

Geisinger walked away from the proposed 

settlement it would have made plain their 

strategy of assuming sufficient control of a 

competitor without an outright takeover. This 

strategy was long evident to some of us in the 

community as ‘‘why take over outright what 

you can control by other means’’. Hospital 

competition in the area is presently limited 

due to Geisinger’s acquisition of Shamokin 

Area Hospital, Bloomsburg Hospital and the 

closure of Sunbury hospital. With only 

Evangelical Hospital remaining the strategy 

almost worked. So is it now about Geisinger 

saving face or is there another agenda afoot? 

The proposed settlement is framed in terms 

of both hospital’s competition for ‘inpatient 

general acute-care hospital services’’ however 

there’s much revenue to be made from 

outpatient services. What is to prevent 

Geisinger from expanding services into 

Evangelical’s outpatient market thereby 

negating the cap imposed on the inpatient 

services, thus causing further financial strain 

on Evangelical? 

Evangelical hospital recently completed 

construction of a $70 million PRIME (Patient 

Room Improvement, Modernization, and 

Enhancement) project. With an annual 

revenue of about $260 million, it is 

reasonable to enquire about the financing and 

terms that were obtained, what was used as 

collateral and if there was a co-signer. The 

facility was advertised as allowing access to 


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1ECF No. 51–1. 

2ECF No. 1. 

3ECF No. 45–1 (Stipulation and Order to the first 

proposed Final Judgment filed on March 3, 2021, 

ECF No. 45–2). 

4ECF No. 46–1. 

5The Margin Guarantee was also included in 

Exhibit D to the Amended Collaboration 

Agreement. ECF No. 46–2 at 54, 60–61. 

leading-edge technology not found at other 

community hospitals. Was this project 

planned prior to Geisinger’s attempted 

acquisition? Was failure the plan? Without 

Geisinger’s hoped for depth of financial 

involvement what will this mean for 

Evangelical’s future finances? 

If Evangelical does not anticipate an 

adverse financial impact from the DOJ’s 

agreement, despite Geisinger’s significantly 

reduced financial involvement, why did 

Evangelical originally accede to Geisinger’s 

partnership with such onerous terms unless 

it was needed? 

If Evangelical seeks a revisiting of the 

DOJ’s settlement due to future financial 

shortcomings, does the DOJ currently have an 

opinion on what it may need to propose? In 

other words, did the DOJ review, and if not, 

will it review why Evangelical was seeking 

to expand services beyond what is found in 

a community hospital, services it apparently 

could not afford without giving up financial 

and strategic control of its hospital? 

Structuring an agreement that on the surface 

would not appear to be an antitrust violation 

gives an indication in my mind as to the 

mindset of the parties. 

Regarding Evangelical’s acquisition of IT 

systems and support from Geisinger, will this 

be at fair market value? Is there a mechanism 

to ensure that the price for support will not 

make up for the denied opportunity of partial 

hospital ownership and the service lines that 

Geisinger planned to develop? 

In summary, what benefit does Geisinger 

derive from passive involvement in 

Evangelical, what is the endgame of each 

organization, and at what cost is there to the 

community, given the ever shrinking choices 

available to the public? 

Thank You, 

Steve Karp, MD 

[REDACTED] 

AXINN, Richard B. Dagen 

1901 L Street NW 

Washington, DC 20036 

202.721.5418 

RDAGEN@AXINN.COM 

June 3, 2021 

Via Electronic Mail 

Eric D. Welsh, Esq. 

Chief, Healthcare and Consumer Products 

Section 

Antitrust Division, Department of Justice 

450 Fifth Street NW, Suite 4100 

Washington, DC 20530 

Re: United States v. Evangelical Community 

Hospital and Geisinger Health, Civil Action 

No. 4:20–cv–01383–MWB (M.D. Pa.) 

Dear Mr. Welsh: 

On behalf of our client UPMC, a 

Pennsylvania nonprofit non-stock 

corporation, we submit these comments 

suggesting modifications to the Proposed 

Final Judgment (‘‘PFJ’’) 1 in the abovereferenced case. 

UPMC recently entered the general market 

region involved in this case to invigorate 

competition on both the provider and the 

insurer side. Like Geisinger Health 

(‘‘Geisinger’’), UPMC itself is both a provider 

and payer, or Integrated Delivery and 

Finance System (‘‘IDFS’’). And to attempt to 

increase competition in the very region at 

issue, UPMC engaged in talks with 

Evangelical Community Hospital 

(‘‘Evangelical’’) regarding potential 

collaboration. The combination of these facts 

puts UPMC in a unique position from which 

to comment on the PFJ. 

After a lengthy investigation, the 

Department of Justice (‘‘DOJ’’) properly 

concluded that the initial proposed 

Collaboration Agreement between Geisinger 

and Evangelical would ‘‘substantially lessen 

competition and unreasonably restrain trade 

. . . .’’ Complaint at 1, United States v. 

Geisinger Health, No. 4:20–cv–01383–MWB 

(M.D. Pa. 2020) (hereinafter ‘‘Compl.’’).2

From the outset, the DOJ correctly alleged 

that ‘‘the substantial financial entanglements 

between these two close competitors . . . 

reduces both hospitals’ incentives to compete 

aggressively.’’ Id. The Complaint further 

explains that Geisinger’s motivation to 

acquire and collaborate with Evangelical was 

to eliminate its central fear—that an 

Evangelical ‘‘strategic partnership’’ with 

UPMC would create a ‘‘more effective 

competitor [that] could put Geisinger’s 

revenues at risk.’’ Id. ¶ 3. 

Rather than litigate to enjoin the 

acquisition, on March 3, 2021, the DOJ and 

the defendants stipulated to the PFJ.3 This 

remedy was aimed at preserving 

Evangelical’s competitive independence, and 

prohibiting Geisinger and Evangelical from 

sharing competitively sensitive information. 

Indeed, the PFJ was intended to require the 

parties to ‘‘eliminate other entanglements 

between them that would allow Geisinger to 

influence Evangelical.’’ Competitive Impact 

Statement (‘‘CIS’’), ECF No. 46 at 2. After the 

publication of the PFJ on March 3, 2021, 

however, UPMC alerted the DOJ—and the 

DOJ acknowledged—that several problematic 

provisions contained in the original 

‘‘Collaboration Agreement’’ 4 between 

Geisinger and Evangelical had not been 

addressed in the PFJ or Amended and 

Restated Collaboration Agreement 

(‘‘Amended Collaboration Agreement’’). ECF 

No. 45–2; 46–2. These legacy issues—if left 

in place—would harm competition, and they 

only make sense in the light of the original, 

improper collaboration. 

DOJ has since corrected only some of the 

legacy issues. On May 17, 2021, it filed a 

Joint Notice of Amended Proposed Final 

Judgment, attaching a revised PFJ and 

Second Amended and Restated Collaboration 

Agreement (‘‘Second Amended Collaboration 

Agreement’’). See ECF No. 51, 51–1, 51–3. 

According to the Joint Notice, ‘‘[a]fter filing 

the proposed Final Judgment, it was 

discovered that the Amended and Restated 

Collaboration Agreement and its attachments 

inadvertently included legacy provisions that 

did not conform to the proposed Final 

Judgment.’’ ECF No. 51. Still, despite these 

corrections, additional legacy issues that 

harm competition remain unaddressed. 

Two critical legacy issues create 

anticompetitive financial entanglements that 

undermine the objective to preserve and 

protect competition in the relevant market. 

These two principal entanglements involve: 

(1) Geisinger’s margin guarantees to 

Evangelical, found in the Addendum to 

Geisinger’s Hospital Services Agreement with 

Evangelical and the Addendum to the 

Physician Services agreement, both included 

as Exhibit D to the Second Amended 

Collaboration Agreement (ECF No. 51–3 at 

55–56, 60–61) (‘‘Margin Guarantee’’); 5 and 

(2) Geisinger’s subsidization of Evangelical’s 

information technology (‘‘IT’’) expenses, as 

well as Geisinger’s ongoing entanglement in 

those IT services, both referenced in the PFJ 

at V.B.1–3 (ECF No. 51–1 at 7) and 6.5 of the 

Second Amended Collaboration Agreement 

(ECF No. 51–3 at 9) (‘‘IT Entanglement’’). 

These entanglements also involve substantial 

improper information sharing not resolved by 

the PFJ. 

Whether viewed independently or 

together, these provisions enable Geisinger 

and Evangelical to achieve precisely those 

anticompetitive effects of the transaction that 

the DOJ strongly urged should be eliminated. 

Permitting these legacy provisions to survive 

will reduce the incentives of Geisinger and 

Evangelical to compete. See Compl. ¶ 6. In 

fact, in addition to the reduction in 

competition from a stand-alone Evangelical, 

these surviving entanglements will reduce 

the threat to Geisinger that Evangelical will 

become a stronger competitor through 

collaboration with UPMC (or another entity). 

See id. ¶ 3. As the Complaint and 

Competitive Impact Statement make plain, 

those two anticompetitive goals motivated 

the original Collaboration Agreement, and 

that purpose is still accomplished through 

the Margin Guarantee and the IT 

Entanglement. 

The key to unraveling the purpose and 

effect of these provisions is to ‘‘follow the 

money.’’ Here, as in reverse payment cases 

where a branded pharmaceutical pays a 

generic to eliminate a competitive threat to 

its market position, the flow of money from 

Geisinger to Evangelical under the Margin 

Guarantee and IT Entanglement is most 

consistent with anticompetitive intent and 

effects. For example, under the PFJ, Geisinger 

is permitted to provide heavy subsidies on 

IT— discounts of 85%, presumably worth 

tens of millions of dollars—to its ‘‘closest 

competitor.’’ Compl. ¶ 18. Further, contrary 

to the expected outcome between a payer and 

a provider, Geisinger’s Margin Guarantee can 

lead to Geisinger paying more when it sends 

additional volume to Evangelical. See ECF 

No. 51–3 at 59, 64. Finally, under the terms 

of PFJ, Evangelical gets to keep 

approximately $20.3 million from Geisinger, 

while Geisinger obtains a 7.5% interest in a 

non-profit that will entitle it to that 7.5% 

value only upon sale of Evangelical, 

liquidation, or termination of the agreement. 

See CIS at 10–11; ECF No. 51–3 at 10–11. 


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6Compl. ¶ 67 (‘‘there are no transaction-specific 

efficiencies to weigh against the harm’’). 

7United States v. Am. Tel. & Tel. Co., 552 F. 

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

subsequent history omitted). 

8 15 U.S.C. 16(b), (d), (e)(1). 

9United States v. Thomson Corp., 949 F. Supp. 

907, 913 (D.D.C. 1996). None of the relief proposed 

here exceeds the scope of the Complaint allegations. 

Cf. United States v. Microsoft Corp., 56 F.3d 1448, 

1462 (D.C. Cir. 1995). 

10AT&T, 552 F. Supp. at 153. 

11United States v. CVS Health Corp., 407 F. 

Supp. 3d 45, 52 (D.D.C. 2019). 

12Thomson Corp., 949 F. Supp. at 914. 

13 Id. (internal quotations and citations removed). 

Here, the court declined to approve the Proposed 

Final Judgment until it included a provision that 

would require the defendants to provide anyone a 

free license to a copyright upon request or another 

suitable remedy to resolve the court’s concerns 

about barriers to entry. Id. at 930–31. 

14CVS Health, 407 F. Supp. 3d at 52 (citing 

Microsoft, 56 F.3d at 1462). 

15 Microsoft, 56 F.3d at 1462. 

16AT&T, 552 F. Supp. at 214; Thomson, 949 F. 

Supp. at 931. 

17United States v. Comcast Corp., 808 F. Supp. 

2d 145, 149–150 (D.D.C. 2011). The court indicated 

that ‘‘despite the Government’s assurances that ’this 

Court retains jurisdiction to issue orders and 

directions necessary and appropriate to carry out or 

construe any provision of the Final Judgment,’ and 

‘to enforce compliance, and to punish violations of 

its provisions,’ I am not completely certain that 

these safeguards, alone, will sufficiently protect the 

public interest in the years ahead.’’ Id. at 149 

(citations omitted). 

18Comcast Corp., 808 F. Supp. 2d at 150. 

Why would Geisinger bestow such largess 

on its closest competitor? After all, 

Geisinger—which despite its position in the 

relevant market refuses to enter provider 

contracts with any of UPMC’s health plans— 

knows how to compete. The DOJ has already 

properly rejected any suggestion that 

Geisinger was offering funds ‘‘altruistically.’’ 

Compl. ¶ 6. Instead, Geisinger is providing 

and guaranteeing this money, and 

Evangelical is accepting it, because ‘‘as a 

result of this transaction, both Defendants 

have the incentive to pull their competitive 

punches—incentives that would not exist in 

the absence of the agreement.’’ Compl. ¶ 32. 

Geisinger achieves a dependent Evangelical, 

and perhaps more importantly, keeps UPMC 

at bay. Indeed, if permitted, the entanglement 

created by the remaining provisions could 

allow Geisinger to influence Evangelical to 

cut off its relationship with UPMC as well, 

further threatening competition for health 

plans in the market. 

This outcome should not be permitted, 

particularly where the DOJ has already 

acknowledged there are no procompetitive 

benefits in the transaction to weigh against 

these harms,6 and ‘‘Evangelical’s placement 

in the most favored tier of Geisinger Health 

Plan’s commercial insurance products does 

not require the partial-acquisition 

agreement.’’ Compl. ¶ 66. These legacy 

provisions, like those the DOJ has excised, 

were designed to further the anticompetitive 

‘‘spirit and intent of the ECH-Geisinger 

Collaboration Agreement.’’ ECF No. 46–2 at 

54, 60. Because there is no pro-competitive 

collaboration which outweighs the likely 

anticompetitive effects, the PFJ should be 

modified to eliminate these last impactful 

vestiges of the original Collaboration 

Agreement. 

Background 

Evangelical and Geisinger are each other’s 

closest competitors in a six-county area of 

Central Pennsylvania. Compl. ¶¶ 18, 56, 65; 

CIS at 4–5. Together they account for at least 

70% of the inpatient general acute-care 

services in this area. CIS at 4. As an 

independent community hospital with 

annual revenue of approximately $260 

million, Evangelical knew it was vulnerable 

to competition from Geisinger, the largest 

provider in the relevant market, with annual 

revenue above $7 billion. See Compl. ¶¶ 19, 

21; CIS at 2–3. Meanwhile, Geisinger ‘‘had 

long feared that Evangelical could partner 

with a hospital system or insurer to compete 

even more intensely’’ against Geisinger. 

Compl. ¶ 3. 

Geisinger’s concern was heightened in 

2017 when Evangelical announced it was 

looking for a strategic partner. Compl. ¶ 22. 

This occurred just after Susquehanna Health 

System joined UPMC in 2016, having 

rejected overtures from Geisinger. To avoid a 

potential repeat whereby a nearby competitor 

became stronger, Geisinger intended to create 

‘‘an indefinite partnership’’ to ensure that 

‘‘Evangelical is ’tied to us’ so ‘they don’t go 

to a competitor.’ ’’ Compl. ¶ 30. The stage was 

set for a merger or collaboration that would 

solve both Geisinger’s and Evangelical’s 

troubles. And since the defendants knew 

they could not merge outright, they 

‘‘concocted the complicated partialacquisition agreement . . . to avoid antitrust 

scrutiny.’’ Compl. ¶ 24. 

Even now after several revisions (both preand post-challenge), the Second Amended 

Collaboration Agreement still maintains 

certain anticompetitive features that generate 

the same financial and other entanglements 

condemned in the DOJ’s Complaint. These 

provisions negatively impact the incentives 

for Geisinger and Evangelical to compete 

with one another, incentivize higher prices to 

payers, and substantially reduce the 

likelihood that Evangelical would partner 

with UPMC or any other entity in a way that 

could better compete against Geisinger. 

Indeed, Paragraph 6 of the Complaint aptly 

summarizes the results: 

The $100 million pledge, however, was not 

made altruistically and is certainly not 

without strings. The partial-acquisition 

agreement ties Geisinger and Evangelical 

together in a number of ways, fundamentally 

altering their relationship as competitors and 

curtailing their incentives to compete 

independently for patients. Patients and 

other purchasers of healthcare in central 

Pennsylvania likely will be harmed as a 

result of this diminished competition. 

The relief already obtained by the DOJ 

disentangles the parties in some important 

ways, such as severing Geisinger’s ability to 

appoint directors and control certain 

Evangelical actions. The DOJ also capped 

Geisinger’s ownership interest in Evangelical 

to attempt to preserve each company’s 

respective incentives to compete. 

Unfortunately, the surviving entanglements 

between Geisinger and Evangelical—now 

ostensibly blessed by the PFJ—effectively 

negate to a substantial degree the potential 

positive effects of the proposed relief. The 

Margin Guarantee and IT Entanglement were 

negotiated in connection with, and are 

inextricably linked to, the original 

Collaboration Agreement. So too was the 

payment of $20 million. There is no reason 

to pick and choose between the various 

provisions as to which can survive. Given the 

existence of a hold-separate agreement in this 

case, voiding the Second Amended 

Collaboration Agreement in its entirety is the 

best option to achieve the relief described in 

the Complaint and claimed in the 

Competitive Impact Statement. Short of total 

elimination, at a minimum, the provisions 

discussed herein should be voided. In the 

event that the first two options are rejected, 

some additional alternatives are presented 

that might lessen the magnitude of the harm. 

We explain in more detail below why the 

legacy provisions regarding the Margin 

Guarantee and IT Entanglement maintain the 

competitive harms identified in the 

Complaint and why the PFJ should be 

modified to promote the public interest. The 

PJF simply does not fall ‘‘within the range of 

acceptability or ‘within the reaches of the 

public interest.’ ’’ 7

Legal Standard in Tunney Act Proceedings 

The DOJ will file comments and its 

response with the Court in compliance with 

the Tunney Act, which states, the Court 

‘‘shall determine that the entry of [the PFJ] 

is in the public interest.’’ 8 ‘‘[C]ourts compare 

the complaint filed by the government with 

the proposed consent decree and determine 

whether the remedies negotiated between the 

parties and proposed by the Justice 

Department clearly and effectively address 

the anticompetitive harms initially 

identified.’’ 9 Proposed remedies should 

‘‘effectively open[] the relevant markets to 

competition . . . . ’’ 10 Although courts owe 

deference to the DOJ, the exercise is not ‘‘a 

mere formality’’ 11 nor ‘‘merely a ‘judicial 

rubber stamp.’ ’’ 12 In this regard, when 

making its public interest determination, a 

court must ‘‘make an independent 

determination.’’ 13 As the D.C. Circuit has 

explained, ‘‘If, for example, a proposed 

consent ‘decree is ambiguous, or the district 

judge can foresee difficulties in 

implementation,’ the decree should not be 

entered until the problems are fixed.’’ 14

Further, courts are not obliged to accept a 

consent ‘‘if third parties contend they would 

be positively injured by the decree.’’ 15

When, after reviewing the DOJ’s response 

that nothing in the public comments alters 

the DOJ’s original conclusions, a court 

disagrees and concludes that a Proposed 

Final Judgment does not meet the public 

interest standard, courts have taken a variety 

of steps. Those have included requiring the 

parties to substantially modify the proposed 

consent decree before approving it,16

ordering that the parties file annual reports 

with the court regarding the status of certain 

requirements in the Final Judgment,17 and 

holding annual hearings ‘‘to ensure that the 

Final Judgment does, and continues to, 

satisfy the public interest.’’ 18 As in another 


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19CVS Health, 407 F. Supp. 3d at 48. 

20See Addendum to the Agreement to Provide 

Hospital Services by and among Geisinger Health 

Plan, Geisinger Indemnity Insurance Company, 

Geisinger Quality Options, Inc., and Evangelical 

Community Hospital, ECF No. 51–3 at 55; 

Addendum to the Agreement to Provide Primary 

and Specialty Medical Services by and among 

Geisinger Health Plan, Geisinger Indemnity 

Insurance Company, Geisinger Quality Options, 

Inc., and Evangelical Medical Service Organization, 

ECF No. 51–3 at 60. 

21See ECF No. 46–1 at 129–140. 

22See ECF No. 51–3, at 56 (§ B.2), at 61 (§ B.2). 

23See ECF No. 51–3, at 55–56 (§ B.1), at 60–61 

(§ B.1). 

24See ECF No. 51–3, at 55–56 (§§ A, B.1), at 60– 

61 (§§ A, B.1). 

25See ECF No. 51–3, at 55–57 (§§ B.1, B.3, B.6, 

B.7); id. at 59 (Exhibit A); at 60–63 (§§ B.1, B.3, B.6, 

B.7); id. at 64 (Exhibit A). 

26See ECF No. 51–3, at 55–57 (§§ B.1, B.3, B.6, 

B.7); id. at 59 (Exhibit A); at 60–62 (§§ B.1, B.3, B.6, 

B.7); id. at 64 (Exhibit A). 

27See ECF No. 51–3, at 56–57 (§§ B.6, B.7), at 61– 

62 (§§ B.6, B.7). 

28See ECF No. 51–3, at 59 (Exhibit A), at 64 

(Exhibit A). 

29The 7.5% interest retained by Geisinger does 

not entitle it to receive any cash flow. ECF 51–3, 

at 8 (§ 6.2) (‘‘Evangelical shall not make, nor be 

required to make, any distributions or other 

payments with respect to Geisinger’s membership 

interest in Evangelical.’’). 

30Cf. Jonathan Baker, Two Sherman Act Section 

1 Dilemmas: Parallel Pricing, the Oligopoly 

Problem, and Contemporary Economic Theory, 38 

ANTITRUST BULLETIN 143, 158 (‘‘Firms can deter 

rivals from cheating by guaranteeing that when the 

time comes to carry through a punishment, they 

will find the punishment behavior attractive. They 

do so by tying their own hands . . . .’’); Ian Ayres, 

How Cartels Punish: A Structural Theory of SelfEnforcing Collusion, 87 COLUMBIA L. REV. 295, 

317 (1987) (‘‘Once a super-competitive cartel price 

is established, an MFN [most-favored-nation] clause 

also acts to increase the costs of prices cuts. Unlike 

an MCC [meeting competition clause], where the 

rivals are committed to punishing, the MFN clause 

is a credible commitment to self-punishment ’’). 

recent matter involving the health care 

industry, ‘‘with so much at stake, the 

congressionally mandated public interest 

inquiry must be thorough.’’ 19

Margin Guarantees in the Collaboration 

Agreement Addenda 

Exhibit D to the Second Amended 

Collaboration Agreement 20 incorporates 

Margin Guarantee provisions that create 

incentives for Geisinger and Evangelical not 

to compete. As detailed more fully below, 

under the Margin Guarantee, Geisinger 

ensures that Evangelical obtains equal or 

larger Geisinger Health Plan revenues 

throughout the term of the agreement. In 

addition to reducing head-to-head 

competition, this Margin Guarantee creates 

incentives for Evangelical to raise provider 

rates to UPMC and other health plans, 

increasing costs to consumers and heavily 

favoring Geisinger in the relevant market. 

These Addenda were part of the original 

Collaboration Agreement,21 and their 

practical effects are only understood in that 

context. With no pro- competitive 

collaboration or integration to offset the 

likely anticompetitive effects, these Addenda 

should be stricken along with the other 

disincentives to compete still embedded in 

the Second Amended Collaboration 

Agreement. 

Although the CIS does not mention the 

Margin Guarantee, the DOJ apparently views 

the Margin Guarantee as a ‘‘typical’’ contract 

between a payer and a provider with a 

guarantee that Evangelical will achieve 

guaranteed revenue in exchange for lower 

rates. But this view ignores the reality 

reflected throughout the Complaint that 

Geisinger is not a typical payer, but is 

vertically integrated, providing both health 

care services and health plans. 

Given the uncertain nature of healthcare 

costs, a typical payer-provider contract does 

not contain 10-plus-year margin guarantees. 

UPMC is both a provider and an insurer, and 

is not aware of the existence of any 

agreement with a similar Margin Guarantee 

in any other context. The concept is rife with 

anticompetitive potential and several such 

effects are likely to unnecessarily eviscerate 

a substantial portion of the relief sought in 

the PFJ. 

The Addenda consist of two main parts. 

First, Geisinger commits that Evangelical’s 

hospital and other provider services will be 

included in the highest tier (Tier 1) of 

Geisinger’s health plans.22 This provision is 

not generally problematic; a health plan often 

attempts to steer increased patient traffic to 

a provider in exchange for lower 

reimbursement rates. 

Second, however, the Addenda contains an 

unusual and plainly anticompetitive Margin 

Guarantee,23 that (while somewhat difficult 

to parse and perhaps intentionally vague as 

to details) appears to provide for the 

following: 

• In each year of the ten-year agreement, 

Geisinger guarantees that Evangelical will 

receive the same or a larger amount of total 

margin dollars (called a ‘‘Margin Threshold’’) 

starting from a certain base.24

• If the margin dollars decrease, Geisinger 

will make it up to Evangelical with (i) a 

retroactive payment; and (ii) higher 

reimbursement rates to Evangelical going 

forward.25

• If the margin dollars increase, 

Evangelical pays Geisinger a retroactive 

payment and Geisinger’s rates go down.26

• Geisinger and Evangelical share highly 

competitively sensitive information to 

effectuate the agreement on a monthly basis 

(discussed further below).27

Illustrations of how this framework is to 

operate in practice are attached to the 

Addenda as Exhibit A, and they produce 

highly surprising and competitively suspect 

results.28

First, recall that Evangelical feared 

competition from Geisinger. Absent this 

Margin Guarantee for the next ten years, 

Geisinger would have tried to steer patients 

away from Evangelical providers and toward 

Geisinger providers. But Geisinger’s Margin 

Guarantee has reduced Evangelical’s fear of 

losing patients by setting up a penalty to 

discourage Geisinger from engaging in such 

activity. With the Margin Guarantee, 

Evangelical is immunized against loss of 

margin. And if Geisinger is to entice a patient 

to a Geisinger hospital, Geisinger not only 

has to offer better terms to the patient, but 

also has to make up revenue lost by 

Evangelical. By design, the incentive to 

compete between Geisinger and Evangelical 

has decreased, the very same effect that the 

DOJ decried in the Complaint regarding the 

Collaboration Agreement. 

Why would Geisinger offer to make 

payments to compensate Evangelical for 

patients it lures away? 29 Because the penalty 

benefits Geisinger; Evangelical no longer 

fears competition from Geisinger, and 

therefore Geisinger has less reason to fear 

that Evangelical would partner with UPMC 

(or another entity) and become ‘‘a more 

effective competitor.’’ Simply put, the Margin 

Guarantee achieves Geisinger’s main 

objective from the collaboration: ‘‘[d]efensive 

positioning against expansion by [UPMC] 

and/or affiliation with [another] competitor.’’ 

Compl. ¶ 22 (brackets in original). 

Also by design, this reduction of 

competition from Geisinger gives Evangelical 

the freedom and incentive to raise provider 

rates to other payers (like UPMC), which 

have much smaller subscriber bases and 

direct lower patient volume to Evangelical 

than can Geisinger. As Evangelical raises 

rates for medical services, Geisinger 

providers are then also in a position to raise 

rates. Indeed, economic theory predicts that 

no actual payments even have to trade hands 

for market rates to be successfully increased. 

This is a classic example of game theory 

involving an enforceable pre-commitment.30

The Exhibit A to the Addenda also reveal 

a second mechanism incenting Evangelical to 

raise payer rates. If Geisinger Health Plan 

competes for and captures an existing 

Evangelical patient from another insurer that 

pays Evangelical higher reimbursement rates 

than does Geisinger, then Geisinger must 

make up the revenue loss to Evangelical. In 

effect, this could result in Geisinger paying 

higher rates to Evangelical even when 

Geisinger’s volume to Evangelical increases. 

Several crucial implications fall out from this 

odd result. 

It is axiomatic that higher payer patient 

volumes predictably lead to lower 

reimbursement rates. Geisinger has by far the 

largest insurance market share in the relevant 

area. Therefore, one would expect that most 

payers, if not all, are like the insurer referred 

to in Exhibit A as ‘‘Payer A,’’ paying higher 

provider rates than Geisinger to Evangelical. 

In this example, when Geisinger’s Health 

Plan takes a current Evangelical patient from 

‘‘Payer A’’—which pays Evangelical higher 

rates than would Geisinger for the same 

medical services—Geisinger has promised to 

reimburse Evangelical for lost margin 

through a retroactive payment and higher 

rates going forward. And the greater the 

difference in rates, the more money Geisinger 

has promised to pay to make Evangelical 

whole. 

Why does it follow that Evangelical has the 

incentive to raise rates to UPMC or another 

similarly-situated Payer A? First of all, that’s 

what Geisinger wants—and it is willing to 

pay Evangelical to get it. Moreover, 

Evangelical will raise rates because it can 

profitably do so. As Evangelical increases 

provider rates to UPMC two possibilities can 


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31 In the ‘‘but for’’ world without the Margin 

Guarantee, assuming that Evangelical raises rates to 

UPMC and UPMC loses employers to Geisinger, if 

Geisinger’s reimbursement rates are lower, 

Evangelical would lose revenue. With the Margin 

Guarantee, Evangelical no longer has to consider 

that potential revenue loss from the rate increase to 

UPMC or another similarly situated payer. 

32See PHILLIP E. AREEDA & HERBERT 

HOVENKAMP, ANTITRUST LAW: AN ANALYSIS 

OF ANTITRUST PRINCIPLES AND 

THEIR APPLICATION ¶ 651b5 (4th and 5th ed. 

2013–20) (‘‘Several anticompetitive actions by 

dominant firms are best explained as efforts to limit 

rivals’ market access by increasing their costs. Such 

strategies may succeed where more aggressive ones 

involving the complete destruction of rivals might 

not. Once rivals’ costs have been increased, the 

dominant firm can raise its own price or increase 

its market share at the rivals’ expense.’’); Thomas 

G. Krattenmaker & Steven C. Salop, Anticompetitive 

Exclusion: Raising Rivals’ Costs to Achieve Power 

over Price, 96 YALE L.J. 209 (1986). 

33See Alpha Upsilon Chapter of Fraternity of 

Beta Theta Pi, Inc. v. Pennsylvania State Univ., No. 

4:19–cv–01061, 2019 WL 5892764, at *10–11 (M.D. 

Pa. Nov. 12, 2019) (denying motion to dismiss claim 

for breach of the implied covenant of good faith and 

fair dealing); Somers v. Somers, 613 A.2d 1211, 

1213 (Pa. Super. 1992) (‘‘certain strains of bad faith 

which include: ‘‘e’’vasion of the spirit of the 

bargain’’). 

occur: In one scenario, UPMC accepts those 

rate increases and pays more, passing those 

additional costs on to its insured employers 

and employees. This in turn increases the 

cost of UPMC’s health plans, making UPMC 

less competitive against Geisinger’s plans. If 

UPMC is able to retain its employer clients 

in the face of the price increase, Evangelical’s 

price increase is successful, and it gets more 

revenue. Alternatively, if UPMC’s employer 

clients refuse the price increase, the most 

likely insurer alternative is Geisinger. 

Geisinger, as discussed above, would then 

have to pay Evangelical to make up for any 

lost margin, but it gains new subscribers that 

offset the payment to Evangelical. In short, 

Evangelical is protected against any loss of 

profit from raising rates to UPMC or another 

‘‘Payer A,’’ and will gain revenue under 

many likely circumstances.31

The illustration above raises another 

particularly unusual question that should 

give an antitrust enforcer pause: As Geisinger 

Health Plan wins new patients and its 

volume increases at Evangelical, why would 

Geisinger commit to paying a higher rate to 

Evangelical? In light of the motivation for the 

Collaboration Agreement as a whole, the best 

answer is to think of the Margin Guarantee 

as Geisinger paying Evangelical to raise rates 

to UPMC. That benefits Geisinger because 

employers that are not willing to accept the 

price increase will simply switch to 

Geisinger. Additionally, on the provider side, 

if patients leave Evangelical as a result of the 

higher prices, Geisinger’s providers are again 

the most likely alternative: Geisinger has 

more than 50% of the relevant market, and 

we understand that the diversion ratio from 

Evangelical to Geisinger is around 70%. In 

short, the Margin Guarantee is a new method 

to ‘‘raise rivals’ costs,’’ and gain additional 

market share, whether it occurs on the 

provider or payer side.32

We understand the DOJ’s belief is that 

instead of increasing provider rates to UPMC 

and other payers, Evangelical will be 

incentivized to lower rates to other health 

plans with the expectation that these smaller 

payers will win Geisinger-insured patients 

and still preserve its margin from Geisinger 

under the Margin Guarantee. But this is 

unlikely for several reasons. The Addenda is 

supposed to further the collaboration 

between the two, to the benefit of both 

parties. If Evangelical opportunistically 

reduced rates to other payers to take 

advantage of the Margin Guarantee, Geisinger 

would likely have a claim for breach of 

contract because of the implied covenant of 

good faith and fair dealing. The Second 

Amended Collaboration Agreement allows 

Geisinger to provide approximately $20 

million to Evangelical in exchange for a 7.5% 

ownership interest. If Evangelical 

substantially lowered rates to other 

providers, that would not be in the spirit of 

contract.33

Additionally, because of the payment 

mechanism and the information sharing in 

the Margin Guarantee, there is no doubt that 

Geisinger would learn of any discounting to 

UPMC or others. As a result, Evangelical 

would be further dissuaded from lowering 

prices to UPMC in fear that Geisinger might 

retaliate, for example, through additional 

capital expenditures in Evangelical’s 

backyard. Compl. ¶ 19 (‘‘in considering 

capital expenditures for certain 

improvements to its facilities in 2018, 

Geisinger cited Evangelical’s competitive 

activities.’’). Further, a rate decrease to 

UPMC (or other payers) would have the 

almost certain effect of reducing revenue for 

all current volume, balanced against an 

uncertain hope that UPMC (or other payers) 

would send additional volume to 

Evangelical. Lower rates then would require 

the unlikely belief by Evangelical that the 

uncertain incremental revenue would 

surpass the predictable loss from revenue of 

current patients. For all the above reasons, 

incentives point towards Evangelical raising 

provider reimbursement rates to nonGeisinger payers. 

It bears repeating that the Margin 

Guarantee was created to better align 

incentives in furtherance of a joint profit 

maximizing collaboration. Moreover, any 

thoughts that past competition would predict 

future competition between Evangelical and 

Geisinger is dispelled by the DOJ’s 

compelling recitation of ‘‘the history of 

picking and choosing when to compete with 

each other.’’ See Compl. ¶¶ 40–42. In fact, 

the DOJ found: 

• Although Geisinger and Evangelical are 

competitors for patients in central 

Pennsylvania, they have previously engaged 

in coordinated behavior, picking and 

choosing when to compete and when not to 

compete. This tendency to coordinate their 

competitive behavior is reflected by 

Evangelical’s CEO’s view of ‘‘co-opetition. 

• Defendants’ prior acts of coordination, 

which are beneficial only to themselves, 

reinforce their dominant position for 

inpatient general acute- care services in 

central Pennsylvania. Defendants’ 

coordination comes at the expense of greater 

competition and has taken various forms: 

Æ Leaders from Defendants have had 

‘‘regular touch base meetings,’’ in which they 

discussed a variety of topics, including 

strategic growth options. 

Æ Geisinger has shared with Evangelical 

the terms of its loan forgiveness agreement, 

which Geisinger uses as an important tool to 

recruit physicians. 

Æ Geisinger and Evangelical established a 

co-branded urgent-care center in Lewisburg 

that included a non-compete clause. As 

Evangelical’s head of marketing explained to 

the board, the venture allowed Evangelical 

‘‘to build volume to our urgent care with 

Geisinger as a partner rather than potentially 

as a competitor. 

• More concerning, senior executives of 

Defendants entered into an agreement not to 

recruit each other’s employees—a so-called 

no-poach agreement. Defendants’ no-poach 

agreement—an agreement between 

competitors, reached through verbal 

exchanges and confirmed by email from 

senior executives— reduces competition 

between them to hire hospital personnel and 

therefore directly harms healthcare workers 

seeking competitive pay and working 

conditions. Defendants have monitored each 

other’s compliance with this unlawful 

agreement, and deviations have been called 

out in an effort to enforce compliance. . . . 

The DOJ’s conclusion to this section is 

particularly relevant here: 

This history of coordination between 

Defendants increases the risk that the 

additional entanglements created by the 

partial-acquisition agreement will lead 

Geisinger and Evangelical to coordinate even 

more closely at the expense of consumers 

when it is beneficial for them to do so. 

Moreover, this history makes clear that 

Defendants’ self-serving representations 

about their intent to continue to compete 

going forward—despite all of the 

entanglements created by the partialacquisition agreement—cannot be trusted. 

Compl. ¶ 43 (emphasis added). 

Even without this history, the 

entanglements raise unjustifiable antitrust 

risks. With this history, the result is even 

more certain. These entities are not entitled 

to the benefit of the doubt at the expense of 

consumers. 

Finally, the Margin Guarantee has nothing 

to do with, and is severable from, the tiering 

provision in the Addendum. As Paragraph 66 

of the Complaint recognizes: 

Evangelical’s placement in the most 

favored tier of Geisinger Health Plan’s 

commercial insurance products does not 

require the partial-acquisition agreement. To 

the contrary, agreements between hospitals 

and insurers that offer favorable placement in 

commercial insurance products in exchange 

for favorable rates are common and do not 

require the entanglements created by the 

partial-acquisition agreement. 

This logic also applies to the Margin 

Guarantee. This entanglement is not 

necessary to effectuate tiering. The Margin 

Guarantee was part and parcel of the original, 

anticompetitive Collaboration Agreement, 

designed to foster collaboration, not 

competition. Recall, the parties’ preferred 

outcome was a complete merger. Compl. 


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34Cf. Comcast Corp., 808 F. Supp. 2d at 149; CVS 

Health, 407 F. Supp. 3d at 50–51 (rejecting DOJ 

conclusion that foreclosure ‘‘is unlikely to occur,’’ 

because absent supporting evidence and 

explanation, the response is ‘‘little more than a bald 

assertion that it is right and the AMA is wrong’’). 

35Compl. ¶¶ 64–65. 

36There are two means by which a ‘‘donor’’ under 

the Stark Act might provide IT subsidies. The first 

involves the donee dealing directly with the EMR. 

The other puts the donor between the EMR and the 

donee, which involves more entanglement. The 

Agreement here seems to contemplate the latter. 

37The Complaint alleges that UPMC has 

approximately 27% of the relevant market. But this 

substantially overstates UPMC’s position. The DOJ’s 

estimated share is an artifact of the reality that 

Evangelical’s service area stretches as far north as 

Williamsport, home of a major UPMC hospital. This 

artificially boosts the apparent competitive 

significance of UPMC. In fact, there are very few zip 

codes where any material overlap between UPMC 

and Evangelical exists. Geisinger and Evangelical 

are the only two significant competitors in the vast 

majority of Evangelical’s service area. 

38Compl. ¶ 29. 

39King Drug Co. of Florence, Inc. v. SmithKline 

Beecham Corp., 791 F.3d 388, 402 (3d Cir. 2015) 

(quoting FTC v. Actavis, Inc., 570 U.S. 136, 140– 

41 (2013)) (‘‘In a reverse payment settlement, the 

patentee ‘‘pays money . . . purely so [the alleged 

infringer] will give up the patent fight.’’ These 

payments are said to flow in ‘reverse’ because ‘a 

party with no claim for damages (something that is 

usually true of a paragraph IV litigation defendant) 

walks away with money simply so it will stay away 

from the patentee’s market.’ ’’). 

40While it is true that the consideration in 

Actavis resulted in express contractual 

commitments not to compete, that distinction is not 

material in this context; rather the consideration 

(part of the partial collaboration) results in the same 

anticompetitive effects- reduced competition in the 

relevant market. 

41Cf. In re High Fructose Corn Syrup Antitrust 

Litig., 295 F.3d 651, 659 (7th Cir. 2002) (emphasis 

in original) (when one competitor sources from 

another competitor at a higher cost than internal 

production, this could signify that the conduct ‘‘is 

a way of shoring up a sellers’ cartel by protecting 

the market share of each seller.’’); In re Titanium 

Dioxide Antitrust Litig., 959 F. Supp. 2d 799, 815 

(D. Md. 2013) (‘‘Instead of competing for 

Millenium’s customers, DuPont appears to have 

provided help to Millennium, selling titanium 

dioxide at a rate lower than that on the market.’’); 

In re Ethylene Propylene Diene Monomer (EPDM) 

Antitrust Litig., 681 F. Supp. 2d 141 (D. Conn. 2009) 

(holding that selling to a competitor at below 

market prices created an inference of a price-fixing 

conspiracy). 

¶ 23. The Margin Guarantee, like all the other 

provisions, was drafted (i.e., ‘‘concocted’’) to 

replicate that goal as much as feasible. 

Evangelical and Geisinger should not be 

permitted to maintain ‘‘additional 

entanglements created by the partial 

acquisition agreement.’’ 

It Subsidy and Entanglement by Horizontal 

Competitor 

Another key anticompetitive legacy issue 

from the original Collaboration Agreement 

remains: Geisinger’s extraordinary subsidy of 

and entanglement in its main competitor’s IT 

systems. The IT Entanglement was part of the 

original Collaboration Agreement because 

Geisinger and Evangelical expected to cease 

(or at least substantially reduce) mutual 

competition. The CIS summarily concludes 

that ‘‘the provision of upgraded health 

records software and other support software 

is unlikely to prevent Evangelical from 

collaborating with other healthcare 

providers.’’ CIS at 16. But the DOJ does not 

have ‘‘a crystal ball to forecast’’ how this IT 

Entanglement will work, and lacks 

experience with this unique situation.34 For 

the reasons below, the DOJ conjecture is 

likely incorrect. As a result, the IT 

Entanglement should also be reconsidered 

and eliminated. 

The Complaint recognizes that Evangelical 

had the financial ability to improve its IT 

without this collaboration.35 And, as the DOJ 

has pointed out, Geisinger’s outlays to 

Evangelical are not for altruistic purposes. 

See Compl. ¶ 6. If not for altruism, then why 

would Geisinger assist its main competitor to 

become even marginally more competitive? 

The answer, once again, is that Geisinger has 

its eye on the prize—ensuring its dominant 

competitive position in the market by 

reducing Evangelical’s independence and the 

likelihood that Evangelical would collaborate 

with another entity to become a significantly 

more effective competitor. UPMC is well 

aware that independent community hospitals 

cherish their independence, and collaborate 

only when necessary. By effectively taking 

Evangelical’s IT expenses off the table, 

Geisinger achieves its objective. Furthermore, 

Geisinger is not just subsidizing IT; rather, 

Geisinger is entangling itself within the 

Evangelical IT system.36 This entanglement 

will give Geisinger, the dominant provider 

and payer in the market, a further advantage 

over any other competition, of which there 

already is very little.37

As before, the IT Entanglement should be 

examined, not in a vacuum, but informed by 

the anticompetitive purpose of the original 

Collaboration Agreement. And the big picture 

is clear. Prior to the deal, Evangelical was in 

a ‘‘strong financial position, had been 

profitable for the last five years,’’ and had the 

financial ability to fund capital improvement 

projects. Compl. ¶ 65. Meanwhile, 

Evangelical was considering a partnership 

with UPMC or others. The Complaint alleges 

that Geisinger was aware of that threat, and 

wanted to prevent it. This motive leads to the 

following alternative, yet realistic, view of 

the but for world: 

• Geisinger believed that Evangelical was 

considering partnering with UPMC. Compl. 

¶ 22. Geisinger knew that such a partnership 

would increase competition and be 

unfavorable for Geisinger’s dominant 

position. Compl. ¶ 3. Geisinger believed that 

it needed to prevent a UPMC-Evangelical 

collaboration. Compl. ¶ 30. 

• Geisinger would have preferred a full 

acquisition of Evangelical, but also soon 

realized that such a transaction would be 

blocked on antitrust grounds. Compl. ¶ 23. 

• As a fallback, Geisinger and Evangelical 

sought to ‘‘concoct’’ a partial acquisition, 

Compl.¶ 24, but that arrangement too might 

be blocked. 

• As a further attempt to prevent a 

relationship between UPMC and Evangelical, 

Geisinger decided to offer an arrangement 

whereby Evangelical remains technically 

independent, but will become entangled and 

collaborate closely with Geisinger. 

• Geisinger offers to pay the vast majority 

of Evangelical’s significant IT expenses, 

requiring Evangelical’s dependence on 

Geisinger for technology licenses and 

operational support, as well as significant 

information sharing over the course of a 

decade. 

This is essentially the state of the world. 

Geisinger should have no incentive to assist 

its main adversary. So why do it? To reduce 

the risk of Evangelical partnering with UPMC 

or another entity that might pose an 

increased competitive threat to Geisinger. 

Prior to the negotiations over the original 

Collaboration Agreement, the parties were 

negotiating an IT license. The value of the IT 

license to Geisinger was estimated at $10 

million alone; 38 thus, the Second Amended 

Collaboration Agreement will reduce that 

revenue to only $1.5 million, a windfall of 

$8.5 million for Evangelical (in addition to 

the $20.3 million). It is unlikely that this IT 

Entanglement represents an arms-length 

transaction between competitors; Geisinger 

expects Evangelical to hold up its end of the 

deal, and these provisions provide 

assurances that this will occur. 

This is another anticompetitive ‘‘win-win’’ 

for Geisinger and Evangelical, which 

nominally maintains Evangelical’s 

independence while becoming dependent on 

Geisinger’s largesse, thereby reducing its 

threat to Geisinger’s dominance. But it is a 

significant loss for health care consumers in 

the region, who might have benefitted from 

more vigorous competition to Geisinger’s 

stronghold on both medical services and 

insurance in the relevant market. 

With respect to the likely anticompetitive 

effects, the most appropriate analogy to the 

substantial IT discounts provided by 

Geisinger to Evangelical involves the 

branded-generic pharmaceutical reverse 

payment cases.39 As the courts now 

recognize, the large and unjustified flow of 

anything of value from a dominant firm to a 

competitor in the wrong direction is suspect. 

See King Drug Co. of Florence, Inc. v. 

SmithKline Beecham Corp., 791 F.3d 388, 

404 (3d Cir. 2015) (stating ‘‘reverse payments 

are problematic because of their potential to 

negatively impact consumer welfare by 

preventing the risk of competition’’ and 

recognizing that certain non-cash transfers 

‘‘are likely to present the same types of 

problems as reverse payments of cash.’’). 

Here, Geisinger is effectively transferring 

substantial revenue to a competitor to avoid 

a threat of increased competition.40 As in the 

pay-for-delay cases, finding a valid business 

reason for such a flow of consideration is not 

easy, and the DOJ did not suggest any 

justification in its Competitive Impact 

Statement.41 Bestowing millions of dollars of 

discounts on Evangelical should evoke as 

much suspicion as above market sales, 

particularly when the discounts are born 

from an anticompetitive collaboration. 

The example of Susquehanna Health, now 

UPMC Susquehanna, is instructive here. As 

mentioned above, Susquehanna joined 

UPMC in 2016, after rebuffing advances from 

Geisinger similar to those made to 

Evangelical. Geisinger had offered to provide 

for all of Susquehanna’s needed IT 

expenditures, which were valued at tens of 


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42See Second Amended Collaboration 

Agreement, § 6.5, ECF No. 51–3, at 9. 

43U.S. GOV’T ACCOUNTABILITY OFF., GAO– 

15–817, ELECTRONIC HEALTH RECORDS 

NONFEDERAL EFFORTS TO HELP ACHIEVE 

HEALTH INFORMATION INTEROPERABILITY 4 

(2015) [hereinafter GAO INTEROPERABILITY 

REPORT], https://www.gao.gov/assets/gao-15- 

817.pdf. 

44See Lucia Savage, Martin Gaynor, and Julia 

Adler-Milstein, Digital Health Data and Information 

Sharing: A New Frontier for Health Care 

Competition?, 82 ANTITRUST L. J., 593, 604 (2019) 

[hereinafter Health Care Competition?]; GAO 

INTEROPERABILITY REPORT 1–2; 12 

(‘‘Stakeholders and representatives from the 

selected EHR initiatives described five key 

challenges to achieving EHR interoperability; (1) 

insufficiencies in standards for EHR 

interoperability, (2) variation in state privacy rules, 

(3) accurately matching patients’ health records, (4) 

costs associated with interoperability, and (5) need 

for governance and trust among entities.’’). See also 

id. at 596 (‘‘Whether these provisions will be 

sufficiently strong to overcome firms’ incentives to 

engage in information blocking remains an open 

question.’’). 

45Cf. FED. TRADE COMM’N, FED. TRADE 

COMM’N STAFF SUBMISSION TO THE 

SOUTHWEST VIRGINIA HEALTH AUTHORITY 

AND VIRGINIA DEPARTMENT OF HEALTH 

REGARDING COOPERATIVE AGREEMENT 

APPLICATION OF MOUNTAIN STATES HEALTH 

ALLIANCE AND WELLMONTHEALTH SYSTEM 

35 (2016), https://www.ftc.gov/system/files/ 

documents/advocacy_documents/submission-ftcstaff-southwest-virginia-health-authority-virginiadepartment-health-regarding/ 

160930wellmontswvastaffcomment.pdf. FTC staff 

concluded that many of the purported efficiencies 

were not significant, and to the extent that they 

could be validated, were achievable by less 

restrictive means. Id. at 34–36. 

46 Id. at 604. 

47Medicare Program; Modernizing and Clarifying 

the Physician Self-Referral Regulations, 85 FR 

77492, 77611 (Dec. 2, 2020) (Final Rule). 

48Health Care Competition? at 596 (short of an 

outright information block, defendants still can 

‘‘engage[ ] in practices that impede efficient access 

and use of the data by competitors or other 

individuals or entities.’’). 

49See Second Amended Collaboration 

Agreement, § 6.5, ECF No 51–3, at 9; EPIC 

SYSTEMS CORP., ONC Health IT Certification 

Details, at 3 (May 18, 2021) (where ‘‘[a]n Epic client 

extends access to its EHR to a hospital . . . [t]he 

Epic client’s IT staff provide installation and 

ongoing support services.’’), https://www.epic.com/ 

docs/mucertification.pdf. 

50 Information Blocking, ONC’S CURES ACT 

FINAL RULE, https://www.healthit.gov/curesrule/ 

final-rule-policy/information-blocking (last visited 

May 30, 2021). 

51 GAO INTEROPERABILITY REPORT at 13. 

52 Id. at 14 (‘‘These governance practices can 

include organizational policies related to privacy, 

information security, data use, technical standards, 

and other issues that affect the exchange of 

information across organizational boundaries. One 

stakeholder noted that it is important to establish 

agreements to ensure that entities share information 

openly with all other participants in a network.’’). 

millions of dollars. Had Susquehanna 

received that money from Geisinger, or a 

subsidy like that contemplated here, 

Susquehanna’s incentive to join UPMC 

would have been reduced. And even if it had 

remained technically ‘‘independent,’’ it 

would have become dependent on 

Geisinger’s aid, to the detriment of 

consumers in the region. The same is true 

here. 

Leaving aside Geisinger’s interference with 

Evangelical’s path toward becoming a 

stronger competitor to Geisinger, the IT 

arrangement thoroughly entangles Geisinger 

with Evangelical. Evangelical will become 

dependent on Geisinger to provide and 

manage the key IT systems required for the 

successful management of Evangelical’s 

health care operations and patient care. And 

aside from dependency on Geisinger’s 

subsidies, the difficulty and cost of 

potentially having to uproot and integrate a 

new IT system in the future will make 

Evangelical even more hesitant to cross 

Geisinger for fear that its infrastructure may 

also be at risk. This will further reduce 

competition in the market. The Complaint 

repeatedly references the fact that the 

entanglements between Evangelical and 

Geisinger bode ill for consumers. Although 

DOJ has accomplished a number of 

disentanglements, the IT Entanglement, like 

the Margin Guarantee discussed above, still 

remain and create unnecessary competitive 

risks. 

As any healthcare provider understands, 

today’s healthcare delivery is heavily 

dependent on the utilization of a modern 

Electronic Medical Record (‘‘EMR’’) system, 

which impacts boththe physician and 

patient. The Second Amended Collaboration 

Agreement at issue outlines the IT 

Entanglement as follows: 

• Geisinger ‘‘will provide its electronic 

medical system records systems (EPIC and 

related embedded clinical systems, including 

a license to the embedded Geisinger 

intellectual property) at an 85% discount’’ to 

Evangelical; 

• Geisinger will provide support for such 

systems at an 85% discount to Evangelical; 

and 

• The parties will enter an IT sharing 

agreement, whereby Geisinger will provide 

additional back office systems to Evangelical 

at commercially reasonable rates.42

Every EMR system is different; in fact, an 

EMR provided by Epic Systems at two 

different hospitals will often be different 

from one another in meaningful ways, which 

can limit their interoperability. The goal for 

EMRs is to allow providers to exchange 

information and seamlessly integrate it into 

their own systems.43 Laws, regulations, and 

standards establish some EMR 

interoperability requirements, but actual true, 

complete, and seamless interoperability 

between different EMR’s is dependent on 

implementation.44

Under the Second Amended Collaboration 

Agreement, like the original version, 

Evangelical will be brought into Geisinger’s 

version of Epic, meaning that Geisinger and 

Evangelical will be on an integrated EMR 

infrastructure. Patient referrals between 

Evangelical and Geisinger will be easier 

within the integrated platform. Patient 

records will be easier to access across 

Evangelical and Geisinger. Patient scheduling 

will be fluid between Evangelical and 

Geisinger provider facilities. 

In the abstract, one might conclude these 

are unambiguously procompetitive 

efficiencies, but the reality is that Evangelical 

could achieve any such efficiencies either on 

its own or with ‘‘affiliation with a partner 

other than its primary competitor.’’ 45 As a 

result, likely anticompetitive effects 

outweigh any such efficiencies. The IT 

Entanglement is inextricably linked to the 

goals of the original collaboration: Bringing 

Evangelical into the Geisinger fold and 

making it more difficult for others to compete 

with the collaboration. Geisinger and 

Evangelical intended their IT integration to 

be seamless; there is no suggestion they 

intended that others share their outcome. 

Yet, the IT Entanglement remains essentially 

unchanged. Other providers and payers will 

face more friction when trying to work with 

Evangelical or compete for patients. And in 

furtherance of the collaboration’s goal to 

insulate Geisinger and Evangelical from 

outside competition, they will likely ‘‘make 

it harder than it needs to be (legally or 

technically) for patients to take their data to 

other [health care organizations] because this 

can inhibit patients or customers from 

moving their business to competing 

providers.’’ 46

Of particular interest here, the discussion 

of recent Medicare Program amendments 

acknowledges that a prohibition on 

information blocking was intended to ensure 

the ‘‘policy goal of fully interoperable health 

information systems and will not be misused 

to steer business to the donor [hospital].’’ 47

While UPMC has no reason to believe that 

total ‘‘information blocking’’ will occur, 

UPMC is concerned that Geisinger will 

necessarily gain an unfair competitive 

advantage through the IT Entanglement and 

subsequent additional entanglements if those 

legacy provisions are not eliminated from the 

Second Amended Collaboration 

Agreement.48

As one example, because the agreement 

apparently anoints Geisinger as Evangelical’s 

IT gatekeeper, when the inevitable 

technological glitch arises between UPMC (or 

United or Aetna) and Evangelical, Geisinger 

apparently would be responsible for fixing 

the problem.49 That alone should raise 

concerns. Similarly, the Office of the 

National Coordinator for Health Information 

Technology (‘‘ONC’’) explains that, under the 

Cures Act Final Rule: 

It will not be information blocking if an 

actor does not fulfill a request to access, 

exchange, or use EHI due to the infeasibility 

of the request, provided certain conditions 

are met.’’ 

It will not be information blocking for an 

actor to charge fees, including fees that result 

in a reasonable profit margin, for accessing, 

exchanging, or using EHI, provided certain 

conditions are met.50

Geisinger and Evangelical also have other 

means at their disposal to make patient 

transfers to other providers more difficult. 

Those include making it difficult to match 

patients’ health records stored across 

different systems 51 and making it 

‘‘challenging to establish the governance and 

trust’’ related to patient information 

exchange practices.52 By subsidizing, 

supporting, and essentially controlling 

Evangelical’s IT, the IT Entanglement further 

solidifies the relationship between the two 


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53Cf. id. at 595 (‘‘Holding on to data may allow 

market participants to maintain, and in some cases 

enhance, their market position.’’). 

54 Id. at 607 (‘‘strateg[ies] for data holders to 

impede data transfer and thwart competition . . . 

may be a version of the strategy of raising rivals’ 

costs to thwart competition.’’). 

55 DEP’T OF JUSTICE AND FED. TRADE 

COMM’N., ANTITRUST GUIDELINES FOR 

COLLABORATIONS AMONG COMPETITORS 15 

(2000) (emphasis added), https://www.ftc.gov/sites/ 

default/files/documents/public_events/jointventure-hearings-antitrust-guidelines-collaborationamong-competitors/ftcdojguidelines-2.pdf. 

56ECF No. 51–3, at 56 (§ B.6), at 61 (§ B.6). 

57 Id. 

58ECF No. 51–3 at 59, 64. 

59 Id. 

largest providers in the market.53 How the 

entangled Geisinger-Evangelical exercises 

potential discretionary acts to permit or 

impede interoperability is critical to how 

competition plays out in the region.54 There 

is no mechanism in the PFJ to assure that 

UPMC and others are not disadvantaged. 

Given ‘‘the history of coordination between 

Defendants,’’ and the fact that the IT 

Entanglement, like the Margin Guarantee, 

was an integral part of the original 

collaboration agreement, no ‘‘self-serving 

representations about their intent to continue 

to compete’’ can overcome the logic and 

intuition that this Entanglement is bad for 

consumers. 

Further, once Evangelical is fully 

integrated into the Geisinger technology 

ecosystem, this arrangement will give 

Geisinger additional leverage over 

Evangelical, which will be dependent on 

both the use of the EMR system and 

Geisinger’s technical support to operate it. 

UPMC is unaware of any other instance 

where a dominant health system has 

subsidized an EMR system for its closest 

hospital competitor. It is simply unheard of 

to fund—to the point of a near giveaway— 

such a crucial resource in these 

circumstances. Geisinger and Evangelical 

together already possess a ‘‘dominant 

position’’ in the relevant inpatient general 

acute-care market, with a combined share 

greater than 70%. Compl. ¶ 41, 64. And the 

existence of significant barriers to entry, id. 

at ¶ 68, as well as their history of ‘‘coopetiton’’—‘‘coordinat[ing] their activity to 

‘find wins’ at the expense of robust 

competition,’’ id. at ¶ 27—demonstrates this 

subsidy will lead to further dominance of the 

relevant market. Finally, as the DOJ 

recognized, there are less restrictive 

alternatives available for Evangelical to 

upgrade its IT system. See Compl. ¶ 65 

(‘‘Evangelical also could have obtained funds 

for capital improvements from sources other 

than Geisinger, its closest competitor.’’). 

The Second Amended Collaboration 

Agreement refers to ‘‘an existing AntiKickback and Stark Safe Harbor.’’ See Second 

Amended Collaboration Agreement at 

Section 6.5. Presumably it refers to Stark Act 

exceptions (42 CFR 1001.952(y) and 42 CFR 

411.357(w)), which, under certain 

circumstances, permit institutions, like 

hospitals or health plans, to subsidize IT 

upgrades to physicians and physician 

practices. Because these relationships are 

primarily vertical, the potential efficiencies 

are easily understood. Here, however, the 

Complaint recognizes that the relationship 

between Geisinger and Evangelical is also 

heavily horizontal—they are competitors. 

Payments between horizontal competitors 

under these circumstances have the risks 

identified above. And while 42 CFR 

1001.952(y) and 42 CFR 411.357(w) may 

allow the provision of IT systems in some 

circumstances, even if applicable here, they 

would not convey any antitrust immunity on 

the parties. Cf. FTC v. Phoebe Putney Health 

Sys., Inc., 568 U.S. 216, 228 (2013) (‘‘while 

the Law does allow the Authority to acquire 

hospitals, it does not clearly articulate and 

affirmatively express a state policy 

empowering the Authority to make 

acquisitions of existing hospitals that will 

substantially lessen competition’’). Similar to 

Phoebe, a hospital might have authority to 

merge, but that does not provide the hospital 

with the right to violate Section 7 of the 

Clayton Act or Section 1 of the Sherman Act. 

UPMC does not contend that an armslength license between Geisinger and 

Evangelical would be per se unlawful. As the 

Complaint recognizes, ‘‘Defendants were in 

discussion to do so long before this 

transaction was under consideration.’’ 

Compl. ¶ 64. 

However, the terms likely would have been 

much different absent the Margin Guarantees 

and the $20 million payment that Evangelical 

is permitted to retain as part of this 

settlement. If this transaction is voided, 

Evangelical loses the Margin Guarantee and 

potentially has to pay back the $20 million. 

Without those side payments, Evangelical 

might not be so quick to lock itself into 

Geisinger’s IT for the foreseeable future. The 

legality of such a license need not be decided 

today; rather it is only necessary to 

understand that the contemplated license, 

part of the original Collaboration Agreement, 

was created in anticipation of, and has the 

effect of, a reduction in competition. 

Sharing Competitively Sensitive Information 

With a Horizontal Competitor 

Finally, the PFJ fails to resolve concerns 

raised in the Complaint about the ability of 

Geisinger and Evangelical to exchange 

competitively sensitive information under 

various provisions of the Second Amended 

Collaboration Agreement. See CIS at 14–15. 

As the DOJ and FTC’s Antitrust Guidelines 

for Collaborations Among Competitors state: 

[T]he sharing of information related to a 

market in which the collaboration operates or 

in which the participants are actual or 

potential competitors may increase the 

likelihood of collusion on matters such as 

price, output, or other competitively 

sensitive variables. The competitive concern 

depends on the nature of the information 

shared. Other things being equal, the sharing 

of information relating to price, output, costs, 

or strategic planning is more likely to raise 

competitive concern than the sharing of 

information relating to less competitively 

sensitive variables.55

Here, Paragraph B.6 of the Addenda 

expressly requires Geisinger and Evangelical 

to share some competitively sensitive 

information on a monthly basis throughout 

the year as part of an annual review and rate 

reset.56 The provision also calls for the 

parties to review ‘‘relevant information . . . 

such as [Geisinger] Health Plan commercial 

volume at [Evangelical], total revenue 

received by [Evangelical] from [Geisinger] 

Health Plan commercial members, 

[Evangelical] costs, case mix, etc.’’ 57

Insurers do not receive cost information 

from providers as there is simply no reason 

to give it. Even more problematic is the case 

here, where a vertically integrated provider 

and health plan, such as Geisinger, receives 

cost information from another provider—and 

particularly its closest competitor. In fact, 

UPMC, which also operates as a vertically 

integrated provider and health plan, has 

never received cost information from 

competitive third-party providers and UPMC 

does not share its cost structure with any 

insurer. Information sharing raises red flags 

and could facilitate collusion between 

competitive providers operating in the same 

market. 

The Addenda do not require installation of 

a firewall between Geisinger Health Plan and 

Geisinger providers—nor would a firewall be 

sufficient in this circumstance. Firewalls 

come with some risk of circumvention. 

Therefore, firewalls are typically only used in 

antitrust matters as a last resort to enable a 

procompetitive benefit. But as the Complaint 

states, there are no procompetitive benefits 

here. See Compl. ¶ 67. As a result, even if the 

PFJ were to require a more comprehensive 

firewall regarding Evangelical’s cost data, the 

public would still bear the risks of 

competitive harm without any corresponding 

benefit. 

The public also bears risks associated with 

the information Geisinger and Evangelical 

intend to share because the provisions in this 

paragraph are vague and not fully defined. 

What type of information do Geisinger and 

Evangelical intend to share through the 

indeterminate term ‘‘etc.’’ ? In the event the 

Margin Guarantee survives, UPMC 

encourages the DOJ to require Geisinger and 

Evangelical to delete the term ‘‘etc.’’ and 

require Geisinger and Evangelical to state 

exactly what information they have agreed to 

share. The DOJ should then assess (or 

reassess) the potential for anticompetitive 

harm from the information sharing. 

The Addenda also raise additional 

concerns that Evangelical may share rate 

information of other health plans, such as 

UPMC, with Geisinger Health Plan. Although 

the Addenda state, ‘‘[a]ctual payer rates shall 

not be shared between the parties,’’ 58 the 

Margin Guarantee scheme devised by 

Evangelical and Geisinger requires 

comparison between the margins paid by 

Geisinger and other health plans for 

Evangelical patients won by Geisinger. Even 

if rate information is not shared directly, 

margin information supplied by Evangelical, 

combined with Geisinger’s payer- side 

knowledge, could allow Geisinger to derive 

Evangelical’s provider rates for other health 

plans, including those of UPMC. 

Exhibit A to the Addenda,59 illustrates 

how this happens. In the example with 

‘‘decreased margin,’’ Geisinger’s rates with 

Evangelical increase if it takes a patient 


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60Although the approximate $20 million 

payment helps Geisinger achieve its objective of 

preventing Evangelical from teaming up to become 

a stronger competitor, UPMC believes that (a) 

requiring repayment would be unduly disruptive; 

and (b) the removal of the other provisions will go 

a long way toward restoring the status quo ante. 

61UPMC wishes to emphasize that this proposal 

relates only to the partial acquisition, and is not 

relief that should be imposed on Evangelical if the 

transaction is voided. 

62See UNITED STATES DEP’T OF JUSTICE, 

ANTITRUST DIVISION POLICY GUIDE TO 

MERGER REMEDIES 14–16 (2011) (discussion of 

use of non-discrimination, transparency, and antiretaliation provisions in conduct remedies), https:// 

www.justice.gov/sites/default/files/atr/legacy/2011/ 

06/17/272350.pdf. 

63Also, if this case presents a false positive—that 

is, assuming arguendo that the provisions are not 

actually anticompetitive—the worst case ‘‘harms’’ 

are that Evangelical has to purchase its IT at fair 

market value and continues with its previous payer 

contract with Geisinger. These cannot really be 

characterized as cognizable harms to competition. 

64The loss of competition would not be easily 

repaired. See United States v. Aetna Inc., 240 F. 

Supp. 3d 1, 57 (D.D.C. 2017) (regarding Medicare 

Advantage, ‘‘the expert analysis and the other 

evidence paint a picture of new entry not being 

particularly likely, and the barriers to entry being 

high.’’). 

65Cf. United States v. Phila. Nat. Bank, 374 U.S. 

321, 362 (1963) (Section 7 of the Clayton Act ‘‘was 

intended to arrest anticompetitive tendencies in 

their ‘incipiency.’ ’’); H. Hovenkamp, Prophylactic 

Merger Policy, 70 HASTINGS L. REV. 45, 48 (2018) 

(‘‘Incipiency tests for mergers are most valuable in 

cases where a merger is likely to lead to conduct 

or behavior that is both anticompetitive and also is 

difficult or impossible for antitrust law to reach 

once the merger has occurred.’’). 

66 FTC v. Penn State Hershey Med. Ctr., 838 F.3d 

327, 344 (2016) (quoting Phila. Nat. Bank, 374 U.S. 

at 362). 

receiving care at Evangelical who is insured 

by a health plan that has higher rates at 

Evangelical than does Geisinger. Likewise, in 

the example with ‘‘increased margin,’’ 

Geisinger’s rates with Evangelical decrease if 

Geisinger takes a patient receiving care at 

Evangelical who is insured by a health plan 

that has lower rates at Evangelical than does 

Geisinger. And, of course, Geisinger knows 

its own provider rates at Evangelical. With 

this information, a simple comparison allows 

Geisinger to gain great insight into other 

health plans’ rates at Evangelical depending 

on whether Geisinger’s rates go up or down. 

We have attempted to identify some of the 

potential competitive harms that could arise 

if Geisinger Health Plan learns its 

competitors’ rates at Evangelical. Suffice it to 

say that this type of information sharing is 

not in the public interest. We encourage the 

DOJ to modify the PFJ to resolve this 

concern. 

Requested Modifications 

For the reasons detailed above, UPMC 

urges the total elimination of the Second 

Amended Collaboration Agreement, 

including the Margin Guarantee and IT 

Entanglement.60

In the event that the DOJ declines that 

remedy, there are other options that would 

improve the relief: 

• Include a provision whereby the DOJ 

monitors Evangelical’s actions with respect 

to UPMC and other payers. This should 

include maintaining authority to intervene 

for some period in the event that Evangelical 

terminates provider contracts with UPMC or 

others absent exigent circumstances, or 

imposes rate increases out of line with 

commercial realities. 

• As a condition of permitting the 7.5% 

ownership, Margin Guarantee, and IT 

Entanglement provisions, require that 

Evangelical enter into a 10-year contract with 

UPMC Health Plan on reasonable terms and 

conditions.61

• Insofar as the Geisinger IT Entanglement 

will effectively lock-in Evangelical to the 

whims of Geisinger, develop and include 

provisions that ensure that Geisinger cannot 

use this leverage to punish Evangelical for 

collaborating in any fashion with UPMC or 

others. More generally, the DOJ should 

include a mechanism whereby it can assure 

that other payers are not disadvantaged.62

• Impose stronger protections to ensure 

that payer information obtained by 

Evangelical is not shared with Geisinger, in 

the course of rate discussions pertaining to 

the Margin Guarantee or otherwise, including 

in any form that could allow Geisinger to 

derive price, cost, or margin information 

about other payers. 

Conclusion 

The risk of doing nothing here far exceeds 

the risk from taking action. If UPMC is 

correct about the likely competitive harm of 

the legacy provisions discussed, and nothing 

is done, a duopoly with a pre-existing pattern 

of ‘‘co-opetition’’ becomes more intertwined, 

and an already concentrated market becomes 

even less competitive. Indeed, with Geisinger 

constantly in Evangelical’s ear, it is 

conceivable that Evangelical could follow 

Geisinger’s example and not provide UPMC 

Health Plan with a provider contract.63

Currently, Evangelical has no reason not to 

contract with UPMC. However, if Geisinger 

persuades Evangelical to cancel the UPMC 

contract, consumers would lose out on 

competition by UPMC for a variety of health 

plans, including Medicare and Special Needs 

Plans (‘‘SNPs’’), Medicaid, and Community 

Health Choices (‘‘CNC’’) plans.64 A remedy 

for such an action would be difficult, and 

Evangelical would argue that termination 

was in its independent interest, given the 

incentives in the Second Amended 

Collaboration Agreement provisions at 

issue.65

The best ‘‘prediction of [these provision’s] 

impact upon competitive conditions in the 

future,’’ 66 absent additional relief, is harm to 

consumers in the relevant market. Under 

such conditions, the DOJ should take 

additional steps to ensure that the remedy 

comports with the harms alleged in the 

Complaint. 

Sincerely, 

Richard B. Dagen 

Keith Young 

[REDACTED] 

Eric Welsh 

In regards to the decision to limit the scope 

of the Geisinger-Evangelical Hospital merger. 

This idea was presented to the public as a 

partnership, not a merger. While technically 

they are very similar, to a layman such as I 

the word merger has a more ominous sound. 

Thus merger was not used in the press 

releases. 

Geisinger and its regional competitor 

UPMC have been systematically purchasing 

small local community hospitals. In the case 

of UPMC purchasing and then closing the 

Sunbury Comm. Hosp. While this is a gain 

to their business structure the local citizenry 

now has few options in find quality and 

affordable healthcare 

I’m sure that what I see as a local issue you 

can see it on the national stage and that is 

the fact that this countries medical system is 

being taken over by conglomerates. 

It is actually very similar to going to a 

supermarket. You see endless choices until 

you look closer. You see Heinz Ketchup, 

Nabisco cookies, Coke & Pepsi. They all have 

multiple varieties of their own product but in 

reality, the consumer is locked into a limited 

diversity of choices. 

You have the power to make sure people 

looking for good affordable health care have 

that choice. 

Respectfully, 

Keith A. Young 

RE: Geisinger/Evangelical Merger 

[REDACTED] 

March 8, 2021 

Dear Mr. Welsh, 

I have been a patient at both Geisinger and 

Evangelical facilities. Both are fine 

establishments, however, there is a huge 

difference in atmosphere and friendliness as 

well as cost. 

Evangelical is a community based, friendly 

hospital as opposed to the giant Geisinger 

which has acquired many private practice 

physician offices as well as Bloomsburg 

Hospital and Shamokin Hospital. These were 

both small home-town hospitals prior to 

Geisinger’s acquisition. 

We are located in a rural area that is being 

dominated by large corporations where the 

profit comes before the patient. 

The average income in this area is 

moderate and even with health insurance, 

out-of-pocket expenses can be taxing to 

patients. 

Patient care is of the essence. Evangelical 

can give patients the best care by remaining 

an independent community hospital. 

Competition is essential and Geisinger and 

UPMC are trying to eliminate it. 

Please do not let Geisinger acquire 

Evangelical Hospital. 

Sincerely, 

Sandy Young 

[FR Doc. 2021–19800 Filed 9–13–21; 8:45 am] 

BILLING CODE 4410–11–P 


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