In the first case of its kind, the Antitrust Division of the U.S. Department of Justice (“DOJ”) announced that it had entered into a deferred prosecution agreement (DPA) with Florida Cancer Specialists & Research Institute LLC (FCS). Specifically, FCS admitted that it violated the federal antitrust laws by participating in a criminal antitrust conspiracy to allocate medical oncology and radiation oncology treatments provided to cancer patients in Southwest Florida for almost two decades. Pursuant to the DPA, FCS agreed to pay the statutory maximum criminal penalty of $100 million, and to cooperate with the DOJ in an ongoing investigation into market allocation in the oncology industry, as well as other conditions. In addition, the Florida Attorney General announced a parallel civil settlement with FCS, requiring FCS to pay more than $20 million in disgorgement for the company’s violations of state antitrust and unfair trade practices laws in connection with the scheme. The announcement of a federal criminal action and the imposition of more than $120 million in fines and disgorgement is a bold and significant statement from federal and state authorities that healthcare providers across the country will be severely punished for engaging in anticompetitive agreements.
Among the largest independent oncology and hematology medical practices in the United States, FCS has approximately 100 offices and more than 200 affiliated doctors. The one-count federal felony complaint details that FCS and its co-conspirators agreed not to compete to provide chemotherapy and radiation treatments to cancer patients in Southwest Florida, in a scheme that began as early as 1999 and continued until at least 2016. In the scheme FCS and co-conspirators illegally agreed to allocate chemotherapy and radiation treatment to cancer patients. The conspiracy was organized such that FCS would provide chemotherapy treatments, while a competing provider would provide radiation treatments. As a result of the illegal allocation, FCS and its co-conspirators limited competition for the provision of these oncology services to the detriment of cancer patients in Southwest Florida.
In addition to its agreement to cooperate with the DOJ’s investigation of others involved in illegal market allocation, the DPA required that FCA agree not to enforce any non-compete provisions with any current or former physicians or employees, thereby eliminating restrictions on these individuals to open or join a competing oncology practices, in efforts to increase competition in the treatment of cancer patients in Southwest Florida. In announcing the resolution, the DOJ stated that a reason it agreed to defer prosecution against FCS – in exchange for its cooperation and agreement to the other terms of the DPA – was due to the significant collateral consequences that would likely result from FCS’s criminal conviction, especially to current and future patients, such as those enrolled in ongoing clinical trials.
This announcement is notable for several reasons. First, it makes clear that the DOJ is conducting an ongoing criminal investigation into market allocation and anticompetitive conduct in the oncology industry, and this effort has only just begun. There is every reason to believe that the DOJ, as well as state authorities, will similarly pursue investigations in other medical specialties. Second, the imposition of the federal statutory maximum fine of $100 million as well as the substantial additional disgorgement required by the State of Florida, suggests that healthcare providers will find themselves facing the stiffest of penalties for engaging in anticompetitive conduct.
The federal antitrust laws and the laws of every state and territory in the United States strictly prohibit competitors from engaging in schemes to fix prices (including reimbursement rates), or allocate customers to geographic territories. As this FCS case demonstrates, violations of these laws can result in the imposition of substantial monetary fines and even imprisonment of individuals found guilty. It is essential that healthcare providers appreciate the scope of the antitrust and competition laws and actively monitor their business practices to assure their compliance. Proactive development and deployment of an antitrust compliance program and training of employees is essential.