I

103D CONGRESS

1ST SESSION H. R. 2640

To direct the Secretary of Health and Human Services and the Attorney

General to provide exemptions of certain provisions of antitrust law

for activities of providers of health care services conducted under joint

ventures, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 14, 1993

Mr. MCMILLAN (for himself, Mr. COBLE, Mr. TAYLOR of North Carolina, Mr.

LANCASTER, Mr. KOLBE, and Mr. VALENTINE) introduced the following

bill; which was referred jointly to the Committees on Energy and Commerce and the Judiciary

A BILL

To direct the Secretary of Health and Human Services and

the Attorney General to provide exemptions of certain

provisions of antitrust law for activities of providers of

health care services conducted under joint ventures, and

for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Health Care Coopera5 tive Antitrust Protection Act of 1993’’.
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1 SEC. 2. PURPOSE.

2 It is the purpose of this Act to substantively encour3 age the formation of efficiency producing, pro-competitive

4 joint ventures among providers of health care services by

5 minimizing unnecessary antitrust risk and clarifying regu6 latory ambiguity in order to reduce excess capacity and

7 duplication of services.

8 SEC. 3. DEFINITIONS.

9 For purposes of this Act:

10 (1) The term ‘‘Advisory Committee’’ means the

11 Interagency Advisory Committee on Competition,

12 Antitrust Policy, and Health Care established under

13 section 6.

14 (2) The term ‘‘antitrust laws’’ has the meaning

15 given it in subsection (a) of the first section of the

16 Clayton Act (15 U.S.C. 12(a)), except that such

17 term includes—

18 (A) section 5 of the Federal Trade Com19 mission Act (15 U.S.C. 45) to the extent such

20 section applies to unfair methods of competi21 tion; and

22 (B) any State law similar to the laws re23 ferred to in subparagraph (A).

24 (3) The term ‘‘health care joint venture’’ means

25 an agreement between 2 or more providers of health

26 care services that is entered into solely for the pur-
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1 pose of sharing in the provision of health care serv2 ices and that involves substantial integration or fi3 nancial risk-sharing between the parties, but does

4 not include the exchanging of information, the enter5 ing into of any agreement, or the engagement in any

6 other conduct that is not reasonably required to

7 carry out such agreement.

8 (4) The term ‘‘health care services’’ includes

9 services related to the delivery or administration of

10 health care services.

11 (5) The term ‘‘provider of health care services’’

12 means any individual or entity that is engaged in the

13 delivery of health care services in a State and that

14 is required by State law or regulation to be licensed

15 or certified by the State to engage in the delivery of

16 such services in the State.

17 (6) The term ‘‘Secretary’’ means the Secretary

18 of Health and Human Services.

19 SEC. 4. ESTABLISHMENT OF EXEMPTION PROGRAM FOR

20 HEALTH CARE JOINT VENTURES.

21 (a) ESTABLISHMENT.—

22 (1) IN GENERAL.—Not later than 6 months

23 after the date of the enactment of this Act, the Sec24 retary of Health and Human Services, in concur25 rence with the Attorney General, shall promulgate
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1 specific guidelines under which a health care joint

2 venture may submit an application requesting that

3 the Secretary provide the entities participating in

4 the joint venture with either of the following exemp5 tions:

6 (A) With respect to any action brought

7 against the entity under the antitrust laws, an

8 exemption under which (notwithstanding any

9 other provision of law)—

10 (i) monetary recovery on a claim shall

11 be limited to actual damages if the claim

12 results from conduct within the scope of

13 the joint venture and the action is filed

14 after the exemption becomes effective; and

15 (ii) the conduct of the entity in mak16 ing or performing a contract to carry out

17 the joint venture shall not be deemed ille18 gal per se but shall be judged on the basis

19 of its reasonableness, taking into account

20 all relevant factors affecting competition,

21 including (but not limited to) effects on

22 competition in properly defined, relevant

23 research, development, product, process,

24 and service markets (taking into consider25 ation worldwide capacity to the extent that
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1 it may be appropriate in the cir2 cumstances).

3 (B) An exemption under which (notwith4 standing any other provision of law) the anti5 trust laws shall not apply to conduct within the

6 scope of the joint venture for a 5-year period.

7 (2) DEADLINE FOR RESPONSE.—The Secretary,

8 with the concurrence of the Attorney General, shall

9 approve or disapprove the application of a health

10 care joint venture for an exemption under this sub11 section—

12 (A) in the case of an exemption described

13 in paragraph (1)(A), not later than 30 days

14 after the Secretary and the Attorney General

15 receive the joint venture’s application; and

16 (B) in the case of an exemption described

17 in paragraph (1)(B), not later than 90 days

18 after the Secretary and the Attorney General

19 receive the joint venture’s application.

20 (3) PROVIDING REASONS FOR DISAPPROVAL.—

21 If the Secretary disapproves the application of a

22 health care joint venture for an exemption under

23 this subsection, the Secretary shall provide the joint

24 venture with a statement explaining the reasons for

25 the Secretary’s disapproval.
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1 (b) REQUIREMENTS FOR APPROVAL.—For purposes

2 of subsection (a), the Secretary and the Attorney General

3 shall approve the application of a health care joint venture

4 for an exemption under subsection (a) if—

5 (1) in the case of a joint venture seeking an ex6 emption described in subsection (a)(1)(B), the Sec7 retary (in concurrence with the Attorney General)

8 finds that the joint venture meets the criteria de9 scribed in subsection (c); and

10 (2) an entity participating in the joint venture

11 submits to the Secretary, the Attorney General, and

12 the Advisory Committee an application not later

13 than 30 days after the entity has entered into a

14 written agreement to participate in the joint venture

15 (or not later than 30 days after the date of the en16 actment of this Act in the case of an agreement in

17 effect as of such date) that contains the following in18 formation and assurances:

19 (A) The identities of the parties to the

20 joint venture.

21 (B) The nature, objectives, and planned

22 activities of the joint venture.

23 (C) Assurances that the entities participat24 ing in the joint venture shall notify the Sec25 retary and the Attorney General of any changes
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1 in the information described in subparagraphs

2 (A) and (B) during the period for which the ex3 emption is in effect.

4 (D) In the case of a joint venture seeking

5 an exemption described in subsection

6 (a)(1)(B)—

7 (i) assurances that the entities partici8 pating in the joint venture shall submit an9 nual reports to the Secretary and the At10 torney General during the period for which

11 the exemption is in effect on the activities

12 of the joint venture; and

13 (ii) any other information and assur14 ances required by the Secretary and the

15 Attorney General to ensure that the joint

16 venture meets the criteria described in sub17 section (c).

18 (c) CRITERIA DESCRIBED.—A health care joint ven19 ture meets the criteria referred to in this subsection if the

20 Secretary (with the concurrence of the Attorney General)

21 finds that the approval of the joint venture will promote

22 each of the following goals:

23 (1) The enhancement of the quality of health

24 care services provided to individuals residing in the
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1 geographic area served by the entities participating

2 in the joint venture.

3 (2) The preservation of meaningful competition

4 among providers of health care services in such area.

5 (3) The reduction of the costs of providing

6 health care services in such area, or an increase in

7 the efficiency of the provision of such services.

8 (4) The improvement of the utilization of health

9 care services in such area.

10 (5) The elimination of costly and unnecessary

11 duplication in the delivery of health care services in

12 such area.

13 (d) REVOCATION OF EXEMPTION.—

14 (1) IN GENERAL.—The Secretary, in concur15 rence with the Attorney General, may revoke an ex16 emption provided to a health care joint venture

17 under this section if, at any time during which the

18 exemption is in effect, the Secretary finds that the

19 joint venture no longer meets any of the applicable

20 requirements for approval under subsection (b), ex21 cept that the Secretary may not revoke such an ex22 emption if the failure of the health care joint ven23 ture to meet such requirements is merely technical

24 in nature.
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1 (2) TIMING.—The revocation of an exemption

2 under paragraph (1) shall apply only to conduct of

3 the health care joint venture occurring after the date

4 on which the Secretary revokes the exemption.

5 (e) RENEWAL OF EXEMPTIONS PROVIDING EXEMP6 TION FROM ANTITRUST LAWS.—Upon the request of an

7 entity participating in a health care joint venture for

8 which an exemption described in subsection (a)(1)(B) is

9 in effect, the Secretary, in concurrence with the Attorney

10 General may renew the exemption for an additional 5-year

11 period if the joint venture continues to meet the applicable

12 requirements for approval under subsection (b).

13 (f) WITHDRAWAL OF APPLICATION.—Any party that

14 submits an application under this section may withdraw

15 such application at any time before the Secretary’s and

16 the Attorney General’s response to the application.

17 SEC. 5. REQUIREMENTS RELATING TO NOTICE AND PUBLI18 CATION OF EXEMPTIONS AND RELATED IN19 FORMATION.

20 (a) PUBLICATION OF APPROVED APPLICATIONS FOR

21 EXEMPTIONS IN FEDERAL REGISTER.—

22 (1) IN GENERAL.—With respect to each exemp23 tion for a health care joint venture provided under

24 section 4(a), the Secretary (with the concurrence of

25 the Attorney General) shall—
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1 (A) prepare a notice with respect to the

2 joint venture that identifies the parties to the

3 venture and that describes the planned activi4 ties of the venture;

5 (B) submit the notice to the entities par6 ticipating in the joint venture; and

7 (C) after submitting the notice to such en8 tities (but not later than 30 days after approv9 ing the application for the exemption for the

10 joint venture), publish the notice in the Federal

11 Register.

12 (2) EFFECT OF PUBLICATION.—An exemption

13 provided by the Secretary and the Attorney General

14 under section 4(a) shall take effect as of the date of

15 the publication in the Federal Register of the notice

16 with respect to the exemption pursuant to paragraph

17 (1).

18 (b) WAIVER OF DISCLOSURE REQUIREMENTS FOR

19 INFORMATION RELATING TO APPLICATIONS FOR EXEMP20 TIONS.—

21 (1) IN GENERAL.—All information and docu22 mentary material submitted as part of an applica23 tion of a health care joint venture for an exemption

24 under section 4(a), together with any other informa25 tion obtained by the Attorney General, the Sec-
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1 retary, or the Advisory Committee in the course of

2 any investigation, administrative proceeding, or case

3 with respect to a potential violation of the antitrust

4 laws by the joint venture with respect to which the

5 exemption applies, shall be exempt from disclosure

6 under section 552 of title 5, United States Code,

7 and shall not be made publicly available by any

8 agency of the United States to which such section

9 applies, except as relevant to a law enforcement in10 vestigation or in a judicial or administrative proceed11 ing in which such information and material is sub12 ject to any protective order.

13 (2) EXCEPTION FOR INFORMATION INCLUDED

14 IN FEDERAL REGISTER NOTICE.—Paragraph (1)

15 shall not apply with respect to information contained

16 in a notice published in the Federal Register pursu17 ant to subsection (a).

18 (c) USE OF INFORMATION TO SUPPORT OR ANSWER

19 CLAIMS UNDER ANTITRUST LAWS.—

20 (1) IN GENERAL.—Except as provided in para21 graph (2), the fact of disclosure of conduct under an

22 application for an exemption under section 4(a) and

23 the fact of publication of a notice in the Federal

24 Register under subsection (a) shall be admissible

25 into evidence in any judicial or administrative pro-
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1 ceeding for the sole purpose of establishing that a

2 person is entitled to the protections provided by an

3 exemption granted under section 4(a).

4 (2) EFFECT OF REJECTED APPLICATION.—If

5 the Secretary and the Attorney General deny, in

6 whole or in part, an application for an exemption

7 under section 4(a), or revoke an exemption under

8 such section, neither the negative determination nor

9 the statement of reasons therefore shall be admissi10 ble into evidence in any administrative or judicial

11 proceeding for the purpose of supporting or answer12 ing any claim under the antitrust laws.

13 SEC. 6. INTERAGENCY ADVISORY COMMITTEE ON COM14 PETITION, ANTITRUST POLICY, AND HEALTH

15 CARE.

16 (a) ESTABLISHMENT.—There is hereby established

17 the Interagency Advisory Committee on Competition,

18 Antitrust Policy, and Health Care. The Advisory Commit19 tee shall be composed of—

20 (1) the Secretary of Health and Human Serv21 ices (or the designee of the Secretary);

22 (2) the Attorney General (or the designee of the

23 Attorney General);

24 (3) the Director of the Office of Management

25 and Budget (or the designee of the Director); and
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1 (4) a representative of the Federal Trade Com2 mission.

3 (b) DUTIES.—The duties of the Advisory Committee

4 are—

5 (1) to discuss and evaluate competition and

6 antitrust policy, and their implications with respect

7 to the performance of health care markets;

8 (2) to analyze the effectiveness of health care

9 joint ventures receiving exemptions under the pro10 gram established under section 4(a) in reducing the

11 costs of and expanding access to the health care

12 services that are the subject of such ventures; and

13 (3) to make such recommendations to Congress

14 not later than 2 years after the date of the enact15 ment of this Act (and at such subsequent periods as

16 the Advisory Committee considers appropriate) re17 garding modifications to the program established

18 under section 4(a) as the Advisory Committee con19 siders appropriate, including modifications relating

20 to the costs to health care providers of obtaining an

21 exemption for a joint venture under such program.

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