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Thursday, June 25, 2015

Justice Department Sues Four Michigan Hospital Systems for Unlawfully Agreeing to Limit Marketing for Competing Healthcare Services

The Department of Justice today sued four Michigan hospital systems that for years unlawfully agreed to allocate territories for marketing, depriving consumers and physicians of important information about competing providers and other benefits of unfettered competition.  Three of the systems – Hillsdale Community Health Center, Community Health Center of Branch County, Michigan, and ProMedica Health System Inc. – agreed to settle the charges.  The department will continue to litigate against a fourth, W.A. Foote Memorial Hospital, doing business as Allegiance Health, to prohibit agreements that unlawfully allocate territories for marketing of competing healthcare services. 

“These hospitals conspired to deprive consumers and physicians of important health information and education,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “Instead of putting patients first, these hospitals secretly agreed not to compete.  This action will terminate the agreements limiting marketing and make sure the citizens of south-central Michigan will have access to the facts they need to make informed healthcare choices.”

As alleged in the complaint, hospitals compete to attract patients by advertising, direct mailings to patients, outreach to physicians and employers, conducting health fairs and offering free health screenings.  Hillsdale, Allegiance, Branch and ProMedica’s Bixby and Herrick Hospitals – the only hospitals in their respective counties – each competed through marketing to attract patients.  The complaint alleges that Hillsdale curtailed this competition for years by entering into agreements with Allegiance, Branch and ProMedica to limit the marketing of competing healthcare services.  According to the complaint, the defendants’ agreements deprived patients and physicians of information needed to make informed healthcare decisions.  Patients in Hillsdale County, Michigan, were also prevented from receiving free medical services – such as health screenings and physician seminars – that they would have received from Allegiance in the absence of its unlawful agreement with Hillsdale. 

The Antitrust Division, joined by the Michigan Attorney General’s Office, filed the civil antitrust lawsuit in the U.S. District Court for the Eastern District of Michigan, while simultaneously filing a proposed settlement that, if approved by the court, would resolve the lawsuit with respect to the three settling systems.

The proposed settlement prohibits Hillsdale, Branch and ProMedica from agreeing with other healthcare providers, including hospitals and physicians, to limit marketing or to divide any geographic market or territory.  The proposed settlement also prohibits communications among the defendants about their marketing activities, subject to limited exceptions.  The settling hospitals will also implement compliance measures tailored to prevent the recurrence of these types of anticompetitive practices in the future.

Hillsdale is a Michigan corporation headquartered in Hillsdale, Michigan, with a general acute-care hospital located in Hillsdale County, Michigan, that has 47 beds and a medical staff of over 90 physicians. 

Allegiance is a Michigan corporation headquartered in Jackson, Michigan, with a general acute-care hospital located in Jackson County, Michigan, that has 480 beds and a medical staff of over 400 physicians. 

Branch is a Michigan corporation headquartered in Coldwater, Michigan, with a general acute-care hospital located in Branch County, Michigan, that has 87 beds and a medical staff of over 100 physicians. 

ProMedica is an Ohio corporation headquartered in Toledo, Ohio, with locations in northwest Ohio and southern Michigan, including Bixby and Herrick Hospitals in Lenawee County, Michigan.  Bixby is a general acute-care hospital that has 88 beds and a medical staff of over 120 physicians.  Herrick is a general acute-care hospital with 25 beds and a medical staff of over 75 physicians.

The proposed settlement with Hillsdale, Branch and ProMedica, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act.  Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Peter J. Mucchetti, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street N.W., Suite 4100, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

Hillsdale Complaint.pdf (121.83 KB)

Hillsdale Stipulation and Order.pdf (228.83 KB)

Hillsdale CIS.pdf (63.91 KB)

Press Release Number: 
Updated February 4, 2016