Michigan Hospital is the Lone Holdout Facing Antitrust Charges After Three Others Settle and Agree to Pay $5,000 Each

Allegiance Health (Allegiance) is the lone holdout facing antitrust charges brought by the DOJ and Michigan’s Attorney General (AG). Yet despite settlements by Hillsdale Community Health (Hillsdale), Community Health of Branch County (Branch), and ProMedica Health System, Inc. (ProMedica), Allegiance is fighting on. According to the company’s CEO, the DOJ and the AG “have misinterpreted Allegiance’s conduct” and “the facts are on our side."

What are those “facts” and “conduct”?

According to the DOJ’s and the AG’s complaint, since at least 2009 Allegiance and Hillsdale have had an agreement that limits Allegiance’s marketing for competing services in Hillsdale County, Michigan, where Hillsdale is located. As explained in an Allegiance 2013 oncology marketing plan:

[A]n agreement exists with the CEO of [Hillsdale], Duke Anderson, to not conduct marketing activity in Hillsdale County.

The agreement led Allegiance to exclude Hillsdale from marketing campaigns for cardiovascular and orthopedic services (for example, not offering Hillsdale County residents free vascular-health screenings). And when Allegiance sent marketing materials to the residents of Hillsdale County, the Hillsdale CEO complained. In response, the Allegiance CEO made the company’s marketing VP apologize in writing to the Hillsdale CEO stating, “It isn’t our style to purposely not honor our agreement.” He also told the Hillsdale CEO that Allegiance would take a “Switzerland” approach toward Hillsdale – an approach the Allegiance CEO further confirmed with the gifting of a Swiss flag to the Hillsdale CEO. (The complaint goes on to detail agreements between Hillsdale and ProMedica, and between Hillsdale and Branch that also limit marketing.)

Why are the DOJ and the AG challenging Allegiance’s agreement with its competitor (Hillsdale) to limit its marketing efforts?

An agreement to limit marketing efforts disrupts the competitive process. As explained by the DOJ, such an agreement “deprive[s] patients, physicians, and employers of information they otherwise would have had when making important healthcare decisions.” And in the case of Allegiance’s agreement with Hillsdale, the agreement also “deprive[d] Hillsdale County patients of free medical services, such as health screenings and physician seminars, that they would have received but for the unlawful agreement.”

Unlike Allegiance, Hillsdale, ProMedica, and Branch each settled with the DOJ and the AG. Their settlements prohibit each from agreeing with any healthcare provider to prohibit or limit marketing, and from communicating with each other about their marketing efforts. The settlements do provide exceptions for communications about joint marketing if the communication is related to the joint provision of services (that is, coordinated delivery of any healthcare services by two or more healthcare providers), and communications about marketing that are part of customary due diligence relating to a merger, acquisition, joint venture, investment, or divestiture.

Why is Allegiance fighting on, then? Only Allegiance knows the answer to that question.

*Written by Harry Nilsson, Rip Slyme; performed by Three Dog Night