United States of America v. Woman's Hospital Foundation & Woman's Physician Health Organization; Proposed Final Judgment and Competitive Impact Statement

DEPARTMENT OF JUSTICE

Antitrust Division

United States of America v. Woman's Hospital Foundation & Woman's

Physician Health Organization; Proposed Final Judgment and Competitive

Impact Statement

Notice is hereby given pursuant to the Antitrust Procedures and

Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,

Stipulation, and a Competitive Impact Statement have been filed with

the United States District Court for the Middle District of Louisiana

in United States of America v. Woman's Hospital Foundation & Woman's

Physician Health Organization, Civil No. 96-389-BM2.

The complaint alleges that defendants entered into an agreement

that unreasonably restrained competition among physicians in the Baton

Rouge, Louisiana area, in violation of Section 1 of the Sherman Act, 15

U.S.C. 1. The complaint also alleges that Woman's Hospital Foundation

willfully attempted to maintain and maintained its monopoly in

inpatient obstetrical services in the Baton Rouge, Louisiana area, in

violation of Section 2 of the Sherman Act, 15 U.S.C. 2.

The proposed Final Judgment, agreed to by the defendants, prohibits

defendants' unlawful agreement and the additional acts of Woman's

Hospital Foundation that gave rise to the violations of Section 2.

Public comment on the proposed Final Judgment is invited within the

statutory 60-day comment period. Such comments and responses thereto

will be published in the Federal Register and filed with the Court.

Comments should be directed to Gail Kursh, Chief; Health Care Task

Force; United States Department of Justice; Antitrust Division; 325 7th

Street, NW.; Room

[[Page 21490]]

400; Washington, DC, 20530 (telephone: 202/307-5799).

Rebecca P. Dick,

Deputy Director, Office of Operations, Antitrust Division, U.S.

Department of Justice.

United States District Court for the Middle District of Louisiana

In the matter of: United States of America, plaintiff, vs.

Woman's Hospital Foundation and Woman's Physician Health

Organization, Defendants. Civil Action No: 96-389-B-M2; Filed: April

23, 1996.

Stipulation

The parties, by their attorneys, stipulate that:

1. The Court has jurisdiction over the subject matter of this

action and over each party, and venue is proper in the Middle District

of Louisiana.

2. The Court may file and enter a Final Judgment in the attached

form upon the Court's motion or the motion of a party, after compliance

with the Antitrust Procedures and Penalties Act (15 U.S.C. 16), without

further notice to any party or other proceedings, if plaintiff has not

withdrawn its consent, which it may do before the entry of the proposed

Final Judgment by serving notice on defendants and filing that notice

with the Court.

3. Defendants are bound by the provisions of the proposed Final

Judgment before its approval by the Court and will take the following

actions pursuant to this Stipulation:

a. Notify in writing, within 20 days of the filing of this

Stipulation, each physician who has participated in Woman's Physician

Hospital Organization (WPHO) that he or she is free at all times to

communicate, negotiate, and contract independently from WPHO with any

payer on any terms;

b. While forming or employing a messenger model or forming a

qualified managed care plan before entry of the proposed Final

Judgment: (1) provide a copy of the proposed Final Judgment to each

owner or member of the organization forming the messenger or qualified

managed care plan and to each physician potentially participating in

the messenger model, and (2) require, as a condition precedent to each

physician's ownership, membership or participation, the physician to

affirm in writing that he or she has read and understands the proposed

Final Judgment and agrees to be bound by it;

c. Notify in writing, within 20 days of the filing of this

Stipulation, each payer with which WPHO then has a contract that the

payer may cancel or renegotiate the contract and that each physician

who has participated in WPHO is free at all times to communicate,

negotiate, and contract on any terms with such payer independently

from, and without consultation with, WPHO;

d. Notify in writing, before entry of the proposed Final Judgment,

each payer when it initially discusses (i) using the services of a

messenger that would be subject to the proposed Final Judgment or (ii)

contracting with a qualified managed care plan that would be subject to

the proposed Final Judgment, that each participating physician is free

at all times to communicate, negotiate, and contract with such payer

independently on any terms, without consultation with the messenger or

qualified managed care plan; and

e. Distribute a copy of the proposed Final Judgment to all

directors and officers of defendants within 20 days of the filing of

this Stipulation.

4. Within 30 days after the filing of this Stipulation, each

defendant shall provide to plaintiff a certified statement describing

the notifications and distributions of the Final Judgment it made under

paragraph 3 of this Stipulation.

5. Each defendant shall give plaintiff at least 30-days notice of

any proposed (a) dissolution of that defendant, (b) sale or assignment

of claims or assets of that defendant resulting in a successor person,

or (c) change in corporate structure of that defendant that might

affect its compliance obligations under the proposed Final Judgment.

6. If plaintiff withdraws its consent, or if the Court does not

enter the proposed Final Judgment under the terms of the Stipulation,

this Stipulation shall be of no effect whatsoever, and the making of

this Stipulation shall be without prejudice to any party in this or in

any other proceeding.

FOR PLAINTIFF UNITED STATES OF AMERICA:

Anne K. Bingaman,

Assistant Attorney General.

Joel I. Klein,

Deputy Assistant Attorney General.

Rebecca P. Dick,

Deputy Director, Office of Operations.

Gail Kursh,

Chief, Health Care Task Force.

Mark J. Botti, Steven Kramer, Pamela C. Girardi,

Attorneys, U.S. Department of Justice, Antitrust Division, Health

Care Task Force, Room 450, Liberty Place Bldg., 325 7th Street, NW.,

Washington, DC 20530, (202) 307-0827.

FOR DEFENDANT WOMAN'S HOSPITAL FOUNDATION:

John J. Miles, Bruce R. Stewart,

Ober, Kaler, Grimes & Shriver, Fifth Floor, 1401 H Street, NW.,

Washington, DC 20005, (202) 326-5008.

FOR DEFENDANT WOMAN'S PHYSICIAN HEALTH ORGANIZATION:

Toby G. Singer,

Jones, Day, Reavis & Pogue, 1450 G Street, NW., Washington, DC

20005, (202) 879-4654.

John J. Miles.

United States District Court for the Middle District of Louisiana

In the matter of: United States of America, Plaintiff, vs.

Woman's Hospital Foundation and Woman's Physician Health

Organization, Defendants. Civil Action No: 96-389-B-M2; Filed: April

23, 1996.

Final Judgment

Plaintiff, the United States of America, having filed its Complaint

on April 23, 1996, and plaintiff and defendants, by their respective

attorneys, having consented to the entry of this Final Judgment without

trial or adjudication of any issue of fact or law, and without this

Final Judgment constituting any evidence against or an admission by any

party regarding any issue of fact or law;

NOW, THEREFORE, before the taking of any testimony, and without

trial or adjudication of any issue of fact or law, and upon consent of

the parties, it is hereby ORDERED, ADJUDGED, AND DECREED:

I

Jurisdiction

This Court has jurisdiction over the subject matter and each of the

parties to this action. The Complaint states claims upon which relief

may be granted against the defendants under Sections 1 and 2 of the

Sherman Act, 15 U.S.C. 1 and 2.

II

Definitions

As used in this Final Judgment:

(A) ``Competing physicians'' means solo practitioners or separate

physician practice groups in the same relevant physician market.

(B) ``Consenting physician'' means physicians who have agreed,

through implementation of Section V(B), to be bound by this Final

Judgment.

(C) ``Messenger model'' means the use of an agent or third party

(``the messenger'') to convey to payers any information obtained from

participating physicians about the prices or other competitively

sensitive terms and conditions each physician is willing to accept from

any payer, and to convey to physicians any contract offer made by a

payer, where:

[[Page 21491]]

(1) Pursuant to Section V(B), participating physicians have

received actual notice of this Final Judgment and agreed in writing to

be bound by it;

(2) The messenger informs each payer at the outset of the

messenger's involvement with the payer that the payer may refuse to

respond to offers conveyed by the messenger or may terminate

involvement with the messenger at any time and that participating

physicians are free at all times to communicate, negotiate and contract

on any terms with the payer independently from, and without

consultation with, the messenger;

(3) The messenger informs each participating physician when the

physician first authorizes the messenger to carry messages to and from

the physician and annually thereafter that the physician is free at all

times to communicate, negotiate and contract on any terms with any

payer independently from, and without consultation with, the messenger;

(4) The messenger does not communicate to participating physicians

regarding, or comment on, a payer's refusal to use or decision to

discontinue using the messenger's services, other than to inform

participating physicians that a payer has decided not to use the

messenger's services;

(5) The messenger conveys to participating physicians each and

every offer that a payer delivers to the messenger unless (a) the offer

is the payer's first offer and lacks material terms such that it could

not be considered a bona fide offer, or (b) the messenger applies

preexisting objective criteria, not involving prices or other

competitively sensitive terms and conditions, in a nondiscriminatory

manner (for example, refusing to convey offers of payers that refuse to

pay a fee for conveying the offer, offers for plans that do not cover a

certain minimum number of people, or offers made after the agent or

messenger has conveyed a stated maximum number of offers for a given

time period);

(6) All communications by the messenger to participating physicians

(other than communications to physicians in their capacity as directors

or officers of an organization employing the messenger model) regarding

fees, payers and contracts are in writing or recorded, except that the

messenger may communicate orally on these subjects when the

communication pertains to ministerial matters or when an individual

physician initiates the communication and a written record of the date

of, participants to and subject matter of the conversation is kept by

the messenger;

(7) Each participating physician agrees with the messenger not to

discuss with competing physicians information on fees, contract terms

and conditions, contract offers, or reactions to contract offers;

(8) Each competing, participating physician makes a separate,

independent, and unilateral decision to accept or reject a payer's

offer;

(9) Information on prices or other terms and conditions conveyed to

payers is obtained by the messenger separately from each competing,

participating physician;

(10) The messenger does not negotiate collectively for

participating physicians, disseminate to any physician the messenger's

or any other physician's views or intentions as to an offer, or

otherwise serve to facilitate any agreement among competing physicians

on prices or other terms and conditions;

(11) The messenger does not enter into contracts with payers

unless, in executing contracts on behalf of any competing,

participating physician, it acts consistently with the foregoing

requirements of this Section II(C), no contract grants it the authority

to cancel the contract prior to the stated term of the contract, and

each competing physician makes separate, independent and unilateral

decisions whether to cancel or renew contracts; and,

(12) The messenger maintains all documents received or created by

it, relating to contracting, fees or physician participation, other

than invoices, receipts and personnel records, for the duration of this

Final Judgment.

As long as the messenger acts consistently with the foregoing, it

may:

(1) Convey to a participating physician objective information about

proposed contract terms, including comparisons with terms offered by

other payers;

(2) Solicit clarifications from a payer of proposed contract terms,

or engage in discussions with a payer regarding contract terms other

than prices and other competitively sensitive terms and conditions;

(3) Convey to a participating physician any response made by a

payer to information conveyed or clarifications sought;

(4) Convey to a payer the acceptance or rejection by a

participating physician of any contract offer made by the payer; and,

(5) At the request of the payer, provide the individual response,

information, or views of each participating provider concerning any

contract offer made by such payer.

(D) ``Participating physicians'' means those physicians who own an

interest in or authorize a qualified managed care plan to negotiate or

contract on their behalf with payers, or who authorize a messenger to

carry offers, acceptances and other messages between themselves and

payers.

(E) ``Person'' means any natural person, corporation, firm,

company, sole proprietorship, partnership, joint venture, association,

institute, governmental unit, or other legal entity.

(F) ``Pre-existing physician practice group'' mean a physician

practice group existing as of the date of the filing of the Complaint

in this section. A pre-existing physician practice group may add any

physician to the group after the filing of the Compliant, without

losing the status of ``pre-existing'' under this definition for any

relevant physician market, provided the physician was not offering

services in the relevant physician market before joining the group and

would not have entered that market but for the group's efforts to

recruit the physician.

(G) ``Qualified managed care plan'' means an organization that is

owned, in whole or in part, by either or both of the defendants, offers

a provider panel and satisfies each of the following criteria:

(1) Its owners or not-for-profit members (``members'') who compete

with other owners or members or with subcontracting physicians

participating in the plan, (a) share substantial financial risk for the

payment of services provided pursuant to contracts negotiated or

executed by it and (b) in combination with the owners and members of

all other physician networks in which Woman's Hospital, WPHO or any of

them own an interest constitute no more than 30% of the physicians in

any relevant physician market, except that it may include any single

physician, or any single preexisting physician practice group for each

relevant physician market, so long as Woman's Hospital, WPHO and they

do not own an interest in another physician network;

(2) Its participating physicians include no more than 30% of the

physicians in any relevant physician market unless, for those

subcontracting physicians whose participation increases the panel

beyond 30%, (a) there is a sufficient divergence of economic interest

between such subcontracting physicians and the plan's owners or members

to cause the owners or members to bargain down the fees of the

subcontracting physicians because the extent of the owners' or members'

profits under each payer contract depends directly on the fees

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negotiated with the subcontracting physicians, (b) the contractual

relationship between owners or members and such subcontracting

physicians precludes a higher rate for subcontracting physicians

resulting in the same or higher profits for owners or members, (c) the

plan does not directly pass through to a payer liability for making

payments to such subcontracting physicians, (d) a most-favored-nations

clause or any similar term does not apply to the relationship between

the plan and such subcontracting doctors, and (e) the plan does not

compensate such subcontracting physicians in a manner that

substantially replicates ownership in the organization;

(3) It does not facilitate agreements between competing physicians

concerning charges, or other terms and conditions, relating to payers

not contracting with the organization;

(4) Pursuant to Section V(B), its owners or members have received

actual notice of this Final Judgment and agreed in writing to be bound

by it; and

(5) It is not operated with the purpose or effect of maintaining or

increasing physician fees.

The organization may at any given time exceed the 30% limitation as

a result of any physician exiting any relevant physician market or the

addition of any physician not previously offering services in a

relevant physician market who would not have entered that market but

for the organization's efforts to recruit the physician into the

market; however, the organization may not exceed the 30% limitation by

any greater degree than is directly caused by such exit or entry.

(H) ``Relevant market'' means, unless defendants obtain plaintiff's

prior written approval of a different definition, physicians who

regularly practice (a) in obstetrics or gynecology in the Baton Rouge

area, or (b) services other than obstetric or gynecologic, in any other

relevant market, as defined by federal antitrust principles.

(I) ``Substantial financial risk'' means financial risk achieved

through capitation or the creation of significant financial incentives

for the group to achieve specified cost-containment goals, such as

withholding from all members a substantial amount of the compensation

due to them, with distribution of that amount to the members or owners

only if the cost-containment goals are met.

(J) ``Woman's Hospital'' means Woman's Hospital Foundation, each of

its divisions, parents, subsidiaries, and affiliates, each other person

directly or indirectly, wholly or in part, owned or controlled by it,

and each partnership or joint venture to which any of them is a party,

each of the foregoing person's successors, and all of their directors,

officers, and employees.

(K) ``WPHO'' means Woman's Physician Health Organization, each of

its successors, divisions, parents, subsidiaries, and affiliates, each

other person directly or indirectly, wholly or in part, owned or

controlled by it, and each partnership or joint venture to which any of

them is a party, and all of their directors, officers, and employees.

III

Applicability

This Final Judgment applies to Woman's Hospital and WPHO, to all

consenting physicians, and to all other persons who receive actual

notice of this Final Judgment by personal service or otherwise and then

act or participate in active concert with any or all of the defendants.

IV

Injunctive Relief

(A) Woman's Hospital and WPHO are enjoined from:

(1) Directly or through any agent, organization or other third

party, expressing views on, or conveying information on, competing

physicians' prices or other terms and conditions, or negotiating on

behalf of competing physicians;

(2) Owning an interest in, contracting with, or controlling one or

more organizations, including WPHO, in which individually or

cumulatively participating physicians constitute more than 30% of the

physicians in any relevant market;

(3) Owning an interest or participating in any organization that

directly, or through any agent, organization or other third party,

sets, expresses views on, or conveys information on prices or other

terms and conditions for competing physicians' services, or negotiates

for competing physicians unless the organization complies with

paragraphs (2) through (6) of this Section IV(A) as if those paragraphs

applied to that organization;

(4) Precluding or discouraging any physician from negotiating or

contracting with any payer;

(5) Providing disincentives for, or agreeing with, any physician

not to deal with competitors of Woman's Hospital or WPHO, provided that

nothing in this Final Judgment prohibits Woman's Hospital from entering

into exclusive contracts for anesthesiology, radiology, pathology,

neonatalogy, and perinatalogy services to the extent reasonably

necessary to assure quality of care at the Hospital;

(6) Disclosing to any physician any financial or other

competitively sensitive business information about any competing

physician, except as is reasonably necessary for the operation of a

qualified managed care plan for which defendants have received prior

written approval from the Department of Justice, provided that nothing

in this Final Judgment shall prohibit the disclosure of information

already generally available to the medical community or the public.

(B) Each consenting physician is enjoined from:

(1) Owning an interest or participating in any organization,

connected in any way with Woman's Hospital or WPHO, that directly, or

through any agent, organization or other third party, sets, expresses

views on, or conveys information on prices or other terms and

conditions, or negotiates on behalf of competing physicians, unless the

organization complies with Section IV(A) of this Final Judgment as if

that Section applied to that organization; and

(2) participating in or facilitating any agreement among competing

physicians on fees or other terms and conditions for physician

services, including the willingness of physicians to contract on any

terms with particular payers or to use facilities competing with

Woman's Hospital's facilities, unless the competing physicians share

substantial financial risk and the agreement is ancillary to the shared

risk; provided that nothing in this paragraph IV(B)(2) applies to the

participation of competing physicians in any managed care plan or

network of such a plan not owned or controlled by Woman's Hospital or

WPHO.

(C) Woman's Hospital is enjoined from agreeing with any person

affiliated directly or indirectly with any potential or actual

competing facility to allocate or divide the market for, or set the

price for, any service, including offering lower rates for inpatient

services to any payer on the condition that the payer or any person

affiliated with the payer not offer inpatient obstetrical services.

(D) Nothing in this Final Judgment prohibits the defendants or the

consenting physicians from

(1) Forming, operating, owning an interest in, or participating in

(a) a messenger model, or (b) a qualified managed care plan if

defendants obtain prior written approval from the Department of

Justice, which will not be withheld unreasonably; or

(2) Engaging in activity delineating in the attached Safety Zones

of Statements

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5 and 6 of the 1994 Statements of Enforcement Policy and Analytical

Principles Relating to Health Care and Antitrust.

V

Additional Provisions

Woman's Hospital and WPHO shall:

(A) Notify in writing each WPHO participating physician, within ten

days of entry of this Final Judgment (unless such notification has

already been given) and annually thereafter during the term of this

Final Judgment, that the physician is free at all times to communicate,

negotiate or contract on any terms with any payer independently from,

and without consultation with, WPHO;

(B) While forming or employing a messenger model or forming a

qualified managed care plan, (1) provide a copy of the Final Judgment

to each owner or member of the organization forming the messenger or

qualified managed care plan and to each physician applying for

participation in the messenger model, and (2) require, as a condition

precedent to the physician's ownership or membership in the

organization, or participation in a messenger model, the physician to

affirm in writing that the physician has read and understands this

Final Judgment and agrees to be bound by this Final Judgment;

(C) Notify in writing, within ten days of entry of this Final

Judgment (unless such notification has already been given), each payer

with which WPHO then has a contract that the payer may cancel the

entire contract and that each physician who has participated in WPHO is

free at all times to communicate, negotiate, and contract on any terms

with such payer independently from, and without consultation with,

WPHO;

(D) Notify in writing, within ten days of entry of this Final

Judgment (unless such notification has already been given) each payer

with which WPHO then has a contract, and during the term of this Final

Judgment, each payer when it initially discusses using the services of

a messenger subject to this Final Judgment or contracting with a

qualified managed care plan subject to this Final Judgment, that each

participating physician is free to communicate, negotiate or contract

with such payer on any terms independently from, and without

consultation with, the messenger or qualified managed care plan; and

(E) Notify, as applicable, the plaintiff at least 30 days prior to

any proposed (1) dissolution of a defendant, (2) sale or assignment of

claims or assets of a defendant resulting in a successor person, or (3)

change in corporate structure of a defendant that may affect compliance

obligations arising out of this Final Judgment.

VI

Compliance Program

Each defendant shall maintain a judgment compliance program, which

shall include:

(A) Distributing within 60 days from the entry of this Final

Judgment, a copy of the Final Judgment and Competitive Impact Statement

to all directors and officers;

(B) Distributing in a timely manner a copy of the Final Judgment

and Competitive Impact Statement to any person who succeeds to a

position described in Paragraph VI(A);

(C) Briefing annually in writing or orally those persons designated

in Paragraphs VI (A) and (B) on the meaning and requirements of this

Final Judgment and the antitrust laws, including penalties for

violation thereof;

(D) Obtaining from those persons designated in Paragraphs VI (A)

and (B) annual written certifications that they (1) have read,

understand, and agree to abide by this Final Judgment, (2) understand

that their noncompliance with this Final Judgment may result in

conviction for criminal contempt of court and imprisonment and/or fine,

and (3) have reported violations, if any, of the this Final Judgment of

which they are aware to counsel for the respective defendant; and

(E) Maintaining for inspection by plaintiff a record of recipients

to whom this Final Judgment and Competitive Impact Statement have been

distributed and from whom annual written certifications regarding this

Final Judgment have been received.

VII

Certifications

(A) Within 75 days after entry of this Final Judgment, each

defendant shall certify to plaintiff that it has given the

notifications required by Section V and made the distribution of the

Final Judgment and Competitive Impact Statement as required by

Paragraph VI (A); and

(B) For 10 years after the entry of this Final Judgment, on or

before its anniversary date, each defendant shall certify annually to

plaintiff whether it has complied with the provisions of Sections V and

VI applicable to it.

VIII

Plaintiff's Access

For the sole purpose of determining or securing compliance with

this Final Judgment, and subject to any recognized privilege,

authorized representatives of the United States Department of Justice,

upon written request of the Assistant Attorney General in charge of the

Antitrust Division, shall on reasonable notice be permitted:

(A) Access during regular business hours of any defendant to

inspect and copy all records and documents in the possession or under

the control of that defendant relating to any matters contained in this

Final Judgment;

(B) To interview officers, directors, employees, and agents of any

defendant, who may have counsel present, concerning such matters; and

(C) To obtain written reports from any defendant, under oath if

requested, relating to any matters contained in this Final Judgment.

IX

Jurisdiction Retained

This Court retains jurisdiction to enable any of the parties to

this Final Judgment to apply to this Court at any time for further

orders and directions as may be necessary or appropriate to carry out

or construe this Final Judgment, to modify or terminate any of its

provisions, to enforce compliance, and to punish violations of its

provisions.

X

Expiration of Final Judgment

This Final Judgment shall expire ten (10) years from the date of

entry.

XI

Public Interest Determination

Entry of this Final Judgment is in the public interest.

Dated: ______________________.

----------------------------------------------------------------------

United States District Judge

United States District Court for the Middle District of Louisiana

In the matter of: United States of America, Plaintiff, vs.

Woman's Hospital Foundation and Woman's Physician Health

Organization, Defendants. Civil Action No: 96-389-BMZ.

Amended Competitive Impact Statement

Pursuant to Section 2(b) of the Antitrust Procedures and Penalties

Act, 15 U.S.C. 16(b)-(h) (``APPA''), the United States files this

Competitive Impact Statement relating to the proposed Final Judgment

submitted for entry in this civil antitrust proceeding.

[[Page 21494]]

I

Nature and Purpose of the Proceeding

On April 23, 1996, the United States filed a civil antitrust

complaint alleging that defendant Woman's Health Foundation (``WHF''),

which owns and operates Woman's Hospital, and defendant Woman's

Physician Health Organization (``WPHO''), with others not named as

defendants, entered into an agreement and took other actions, the

purpose and effect of which were, among other things, to reduce

competition among obstetrician/gynecologists (``OB/GYNs'') and other

doctors and prevent or delay the continued development of managed care

in Baton Rouge, Louisiana (``Baton Rouge''), and to maintain willfully

Woman's Hospital's monopoly in inpatient obstetric care, in violation

of Sections 1 and 2 of the Sherman Act, 15 U.S.C. 1, 2. The Complaint

seeks injunctive relief to enjoin continuance and recurrence of these

violations.

The United States filed with the Complaint a proposed Final

Judgment intended to resolve this matter. Entry of the proposed Final

Judgment will terminate this action, except that the Court will retain

jurisdiction over the matter to interpret, enforce, or modify the

judgment, or punish violations of its provisions.

Plaintiff and both defendants have stipulated that the Court may

enter the proposed Final Judgment after compliance with the APPA,

unless prior to entry plaintiff has withdrawn its consent. The proposed

Final Judgment provides that its entry does not constitute any evidence

against, or admission by, any party concerning any issue of fact or

law.

The present proceeding is designed to ensure full compliance with

the public notice and other requirements of the APPA. In the

Stipulation to the proposed Final Judgment, defendants have also agreed

to be bound by the provisions of the proposed Final Judgment pending

its entry by the Court and to take certain corrective actions.

II

Practices Giving Rise to the Alleged Violations

Woman's Hospital is the dominant provider of private inpatient

obstetrical care in Baton Rouge. In the late 1980's, competition among

doctors for participation in managed care plans created the opportunity

for the entry of other Baton Rouge area hospitals into the market for

inpatient obstetrical care. In 1991, General Health, Inc. (``General

Health'') announced that it would build a hospital (the ``Health

Center'') with 5 to 6 dedicated OB/GYN beds. Wonman's Hospital was

particularly threatened by General Health's Center because General

Health also owned Gulf South Health Plans, Inc. (``Gulf South''), the

largest managed care plan in Baton Rouge. Once General Health's new

facility achieved full-service status, Gulf South would have

substantially more negotiating leverage with Woman's Hospital because

Gulf South could employ the Health Center as a preferred hospital over

Woman's Hospital in Gulf South's network.

Women's Hospital entered into negotiations with General Health and

offered to continue contracting with Gulf South if General Health would

agree to stay out of the obstetrical business in Baton Rouge for the

next 5 to 7 years. Woman's Hospital eventually retreated from this

attempt to foreclose the Health Center from offering inpatient

obstetrical services and took alternative steps to achieve the same

result.

Managed care plans could not use the Health Center's availability

to obtain significant price concessions from Woman's Hospital, if

Woman's Hospital could disrupt the competitive forces that would prompt

the OB/GYNs on its medical staff to admit patients to the Health

Center. Accordingly, in 1993, Woman's Hospital formed defendant WPHO, a

physician-hospital organization, whose purpose at the time of formation

was to establish a minimum physician fee schedule and serve as a joint

bargaining agent on behalf of Woman's Hospital and these OB/GYNs.

Woman's Hospital hoped to assure the continued ``loyalty'' of its OB/

GYNs through WPHO.

WPHO developed a minimum fee schedule that listed fees for OB/GYNs

that were substantially higher than the fees managed care plans were

then paying OB/GYNs under individual contracts. Approximately 90% of

the OB/GYNs delivering privately insured babies in the Baton Rouge area

committed to WPHO after reviewing this fee schedule.

WPHO then signed contracts with a number of managed care plans, two

of which were attempting to set up operations in the Baton Rouge area.

Each of these new plans first attempted to contract directly with OB/

GYNs independently of WPHO but was unsuccessful. In addition, Gulf

South was forced to accept OB/GYNs on its panel with whom it had not

previously contracted and to accept the WPHO fee schedule for all OB/

GYNs in WPHO, which was significantly higher than the fee schedule Gulf

South had previously applied to its participating physicians.

Based on the facts described above and those set forth more fully

in the Complaint, the Complaint alleges that the defendants (1) entered

into a contract, combination, or conspiracy that eliminated competition

among physicians and reduced or limited the development of managed care

plans in violation of Section 1 of the Sherman Act, 15 U.S.C. 1; and

defendant Woman's Hospital (2) attempted to maintain its monopoly in

inpatient obstetrical services, with the specific intent to do so, and

(3) willfully maintained its monopoly in inpatient obstetrical services

in violation of Section 2 of the Sherman Act, 15 U.S.C. 2.

III

Explanation of the Proposed Final Judgment

The proposed Final Judgment is intended to restore to Baton Rouge

consumers of obstetrical services the benefits of competition among

obstetrical providers that defendants have eliminated or prevented. At

the same time, the proposed Final Judgment takes into account any

benefits to consumers that Woman's Hospital and Woman's medical staff

may offer through collective marketing of their services by permitting

such collective action that is unlikely to reduce competition among the

physicians or prevent competition between Woman's Hospital and other

hospitals.

A. Scope of the Proposed Final Judgment

Section III of the proposed Final Judgment provides that the Final

Judgment shall apply to defendants, to all ``consenting physicians,''

and to all other persons who receive actual notice of the proposed

Final Judgment by personal service or otherwise and then participate in

active concert with any defendant. The proposed Final Judgment applies

to Woman's Hospital, WPHO, and all ``consenting physicians'' defined as

physicians who remain or become owners or participants in physician

networks owned or operated by Woman's Hospital or WPHO.

B. Prohibitions and Obligations

Sections IV and V of the proposed Final Judgment contain the

substantive provisions of the Judgment.

In Section IV(A), Woman's Hospital and WPHO are enjoined from

setting, negotiating, or expressing views on, prices or other

competitive terms and conditions, for competing physicians.

[[Page 21495]]

Women's Hospital and WPHO are further enjoined from owning an interest

in, contracting, with, or controlling any organization in which

participating physicians constitute more than 30% of the physicians in

any relevant market. Section IV(D), however, permits Woman's Hospital

and WPHO to use a messenger model, and, provided they obtain the prior

written approval of the Department of Justice, to form and operate a

Qualified Managed Care Plan (``QMCP'')--as defined in the proposed

Final Judgment and discussed below. Section IV(A) also prohibits

Woman's Hospital and WPHO from precluding or discouraging any physician

from contracting with any payer, or providing incentives for, or

agreeing with, any physician not to deal with competitors of Woman's

Hospital or WPHO. Nothing in Section IV(A), however, prohibits Woman's

Hospital from entering into exclusive contracts for anesthesiology,

radiology, pathology, neonatalogy, and perinatalogy services to the

extent reasonably necessary to assure quality of care at the Hospital.

In addition, Section IV(A) enjoins Woman's Hospital and WPHO from

disclosing to any physician financial or other competitively sensitive

business information about any competing physicians. An exception

permits disclosure of such information if reasonably necessary for the

operation of an approved QMCP, or if the information is already

generally available to the medical community or the public. Section

IV(C) also permits the exchange of information pursuant to the

Antitrust Safety Zones delineated in Statements 5 and 6 of the 1994

Statements of Enforcement Policy and Analytical Principles Relating to

Health Care and Antitrust (``Health Care Policy Statements'').\1\

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\1\ 4 Trade Reg. Rep. (CCH) para. 13,152 at 20,782, 20,784.

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Section IV(B) enjoins each ``consenting physician'' from owning an

interest or participating in any organization, connected in any way

with Woman's Hospital or WPHO, that directly or through any agent,

organization or other third party, sets, expresses views on, or conveys

information on prices or other terms and conditions, or negotiatees for

competing physicians, unless that organization complies with Section

IV(A). Section IV(B) further enjoins ``consenting physicians'' from

participating in or facilitating any agreement among competing

physicians on fees or other terms and conditions for physician

services, including the willingness of physicians to contract on any

terms with particular payers, or to use facilities competing with

Woman's Hospital's facilities, unless the competing physicians share

substantial financial risk and and the agreement is ancillary to the

shared risk. However, noting in Section IV(B) applies to the

participation of competing physicians in any managed care plan or

network of such plan not owned or controlled by Woman's Hospital or

WPHO.

Section IV(C) enjoins Woman's Hospital from agreeing with any

person affiliated directly or indirectly with any potential or actual

competing facility or allocate or divide the market, or set the price,

for any service, including offering lower rates for inpatient services

to any payer on the condition that the payer or any person affiliated

with the payer not offer inpatient obstetrical services.

Section V of the proposed Final Judgment contains additional

provisions regarding Woman's Hospital and WPHO. Section V(A) requires

Woman's Hospital and WPHO to notify in writing participating physicians

annually that they are free to communicate, negotiate or contract on

any terms with any payer independently from, and without consultation

with, WPHO. Similarly, Sections V(C) and V(D) require Women's Hospital

and WPHO to notify in writing each payer with whom WPHO has a contract,

and during the term of the Final Judgment, each payer when it initially

discusses using the services of a messenger or contracting with a QMCP

subject to this Final Judgment, that each participating physician is

free to communicate, negotiate or contract with such payer on any terms

independently from, and without consultation with, WPHO, the messenger,

or the QMCP.

Under Section V(B), Woman's Hospital and WPHO are required to,

while forming or employing a messenger model or forming a QMCP, (1)

provide a copy of the Final Judgment to each owner or member of the

organization forming the messenger or QMCP and to each physician

applying for participation in the messenger model, and (2) require as a

condition precedent to the physician's ownership or membership in the

organization, or participation in a messenger model, the physician to

affirm in writing that the physician has read and understands the Final

Judgment and agrees to be bound by it.

Section V(E) provides that each defendant must notify the Antitrust

Division of the United States Department of Justice of any proposed

change in corporate structure at least 30 days before that change to

the extent the change may affect compliance obligations arising out of

the proposed Final Judgment.

Section VI of the proposed Final Judgment requires defendants to

implement a judgment compliance program. Section VI(A) requires that

within 60 days of entry of the Final Judgment, defendants must provide

a copy of the proposed Final Judgment and the Competitive Impact

Statement to all directors and officers. Sections VI (B) and (C)

require defendants to provide a copy of the proposed Final Judgment and

Competitive Impact Statement to persons who assume those positions in

the future and to brief such persons annually on the meaning and

requirements of the proposed Final Judgment and the antitrust laws,

including penalties for violating them. Section VI(D) requires

defendants to maintain records of such persons' annual written

certifications indicating that they (1) have read, understand, and

agree to abide by the terms of the proposed Final Judgment, (2)

understand that their noncompliance with the proposed Final Judgment

may result in conviction for criminal contempt of court, and

imprisonment, and/or fine, and (3) have reported any violation of the

proposed Final Judgment of which they are aware to counsel for

defendants. Section VI(E) requires defendants to maintain for

inspection by the Antitrust Division a record of recipients to whom the

proposed Final Judgment and Competitive Impact Statement have been

distributed and from whom annual written certifications regarding the

proposed Final Judgment have been received.

The proposed Final Judgment also contains provisions in Section VII

requiring defendants to certify their compliance with specified

obligations of Section VI(A) of the proposed Final Judgment. Section

VIII of the proposed Final Judgment sets forth a series of measures by

which the Antitrust Division may have access to information needed to

determine or secure defendants' compliance with the proposed Final

Judgment.

Finally, Section X states that the Judgment expires ten years from

the date of entry.

C. Effect of the Proposed Final Judgment on Competition

The proposed Final Judgment remedies, and prevents recurrence of,

violations of Sections 1 and 2 of the Sherman Act. Defendant Woman's

Hospital violated Section 2 by attempting to maintain and maintaining

its monopoly in inpatient obstetrical services. Woman's Hospital and

WPHO

[[Page 21496]]

violated Section 1 by entering into an agreement with OB/GYNs on

Woman's Hospital's medical staff that unreasonably restrained

competition among the OB/GYNs and prevented significant competition

from developing in the market for inpatient obstetrical services.

1. Competition for Inpatient Obstetric Services

Woman's Hospital violated Section 2 by depriving Baton Rouge health

care consumers of the significant benefits from competition for

inpatient obstetric business between Woman's Hospital and General

Health's Health Center. Some competition started to develop with the

entry of General Health and another Baton Rouge hospital, causing

Woman's Hospital to waive direct payments by women who expressed a

desire to deliver at one of the competing facilities. Woman's Hospital,

in the minutes of the first meeting of its Strategic Planning Committee

in 1994, articulated its concern that competition from General Health

might cause more significant competition in the form of ``deep

discounting'' of the rates charged to managed care plans for

deliveries.

In response to that concern, Woman's Hospital tried to prevent the

development of competing obstetric facilities in Baton Rouge. Woman's

Hospital attempted first to prevent General Health from entering the

market by offering to continue contracting with Gulf South, General

Health's wholly owned managed care plan, if General Health did not

enter the market. Though General Health ultimately did not accept

Woman's Hospital's offer, Woman's Hospital could realistically seek the

same type of agreement in the future. Woman's Hospital and General

Health have an ongoing relationship through Woman's participation in

the Gulf South provider network and both Woman's Hospital and General

Health might find it in their mutual self interest to eliminate

competition in inpatient obstetrics. Accordingly, Section IV(C) of the

proposed Final Judgment prohibits Woman's Hospital from pursuing this

type of anticompetitive conduct in the future.

Woman's Hospital succeeded in preventing the development of

inpatient obstetrical competition through the formation of WPHO. By

organizing WPHO, Woman's Hospital created a vehicle for the OB/GYNs on

its medical staff to wield market power. Creation of market power for

such a group of physicians would not normally further a hospital's

interests and could, in some circumstances, work against its interests.

Accordingly, Woman's Hospital would not have organized the physicians

toward this end, absent Woman's interest in preventing the development

of inpatient obstetrical competition.

Woman's Hospital's organization of WPHO furthered this interest of

Woman's Hospital by substantially limiting the ability of managed care

plans to steer patients to General Health's facility. Managed care

plans had successfully selectively contracted with OB/GYNs in the

competitive market that existed before the formation of WPHO. The

formation of WPHO deprived plans of the opportunity to use competition

among the OB/GYNs to induce the OB/GYNs to admit patients to General

Health's facility. The proposed Final Judgment, as discussed in the

next section, restores the competitive market by preventing price

fixing by physicians or their exercise of market power.

2. Competition Among OB/GYNs and Other Physicians

The agreement among Woman's Hospital, WPHO and the WPHO OB/GYNs

unreasonably restrained competition among the OB/GYNs and competition

among hospitals for inpatient obstetrical business. The agreement

constitutes a per se violation of Section 1 because of its naked

purpose and effect of reducing price competition among the OB/GYNs. The

agreement's reduction of competition among the OB/GYNs and among

hospitals, without any substantial offsetting benefit, establishes a

violation of Section 1 under the rule of reason, as well.

a. The Contract, Combination or Conspiracy in Restraint of Trade

The full scope of the unlawful conspiracy charged in this case is

not confined to the four corners of the documents incorporating WPHO or

signed by Woman's Hospital and members of its medical staff. Rather,

the facts alleged in the Complaint establish a broader understanding

among competing OB/GYNs to restrain price competition among themselves

by contracting either through WPHO at or above the minimum WPHO fee

schedule or individually on the same basis.2

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\2\ The existence of this agreement made it unnecessary for the

Department to resolve whether physician representation on the board

of WPHO, physician influence over Woman's Hospital, or other factors

established that competing doctors controlled the establishment of

their fees through WPHO and thus established an agreement among

those competitors.

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Woman's Hospital orchestrated the formation of WPHO through a

number of general meetings with its medical staff, including the OB/

GYNs. The Hospital solicited the OB/GYNs' preliminary commitment to

WPHO and their final agreement to the fee schedule through memoranda

addressed to all members of the medical staff.

The proposal to form WPHO necessarily carried with it the

understanding that a substantial percentage, if not all, of the OB/GYNs

would present a united front to managed care plans and other payers on

terms established through WPHO. Each OB/GYN's agreement to permit WPHO

to negotiate on that doctor's behalf would have been useless at best,

or actually harmful, to the doctor without an understanding that most

would not contract independently of WPHO at rates below WPHO's minimum

fee schedule. WPHO was proposing a broader panel and higher fees than

managed care plans had already obtained through individual contracts

with OB/GYNs. Neither Woman's Hospital nor the OB/GYNs could

realistically have believed that the plans would have agreed with WPHO

to increase fees to OB/GYNs and include additional OB/GYNs in their

panels absent an understanding that the physicians would not continue

to contract individually at competitive rates.

Participating OB/GYNs had substantial reasons to expect that WPHO

would further their understanding to eliminate price competition. Their

interest in not competing with each other was aligned with Woman's

Hospital's interest in not competing with the Health Center. Woman's

Hospital and the OB/GYNs appointed 12 of the 14 Directors to WPHO's

Board of Directors, thus assuring that WPHO would pursue higher OB/GYN

fees and resist contractual terms that could induce the OB/GYNs to make

use of General Health's new inpatient obstetric facility.

Knowing that concerted action was contemplated and invited, each

OB/GYN gave adherence to WPHO and participated in it. Each OB/GYN was

well aware that others were asked to participate; each knew that

cooperation was essential to successful operation of WPHO; each knew

that WPHO, if successful, would result in an elimination of competition

among OB/GYNs; and knowing that, each committed to WPHO and authorized

WPHO to contract on their behalf.3 In

[[Page 21497]]

short, an agreement among OB/GYNs to restrain price competition among

themselves is shown by the nature of the market for OB/GYNs' services

existing before formation of WPHO, the purposes for which WPHO was

formed, and the manner in which it was formed. See Interstate Circuit,

Inc. v. United States, 306 U.S. 208, 226-27 (1939); In re Chain

Pharmacy Ass'n of New York, Inc., No. 9227, slip op. at 70-71 (FTC

Initial Decision, filed May 17, 1991).

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\3\ WPHO strengthened the ability of the OB/GYNs to police the

agreement among themselves. There was little likelihood that any

substantial number of the approximately 45 OB/GYNs who joined WPHO

could secretly break ranks. Woman's Hospital's monopoly in inpatient

obstetrics assured Woman's Hospital knowledge of the identity of

managed care plans operating in Baton Rouge and of the OB/GYNs in

the networks of those plans. WPHO would thus readily detect any OB/

GYN who contracted outside of WPHO at lower rates. Under these

circumstances, the agreement of the OB/GYNs did, and was likely to,

lead to real anticompetitive harm.

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The agreement among Woman's Hospital, WPHO, and the WPHO OB/GYNs to

limit price competition among OB/GYNs was per se unlawful.4 WPHO

did not develop utilization review standards, and the agreement to

limit price competition was not reasonably necessary to further any

efforts by WPHO to encourage physicians to practice more cost-

effectively. No legitimate argument exists, in this case, therefore,

that the collective pricing of OB/GYNs' services here was ancillary to

any procompetitive activity.

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\4\ The agreement does not escape condemnation simply because

WPHO appointed a consultant and a committee of nonphysicians to

determine the fee schedule. The procedure employed by WPHO here is

sharply distinguishable from a properly structured messenger model,

discussed infra and permitted under the proposed Final Judgment.

Here, a single agent was used precisely to fix fees to be charged to

managed care plans by all of WPHO's member doctors, not simply to

convey information.

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Defendants and WPHO physicians collectively obtained higher fees

for OB/GYNs, deprived managed care plans of the ability to selectively

contract with OB/GYNs, and prevented the development of competition for

inpatient obstetrical services. These anticompetitive effects were not

offset by any procompetitive effect. Thus, even under a rule of reason

analysis, defendants violated Section 1 of the Sherman Act.

As discussed above, Sections IV (A) and (B) of the proposed Final

Judgment prevent the continuation or recurrence of defendants' price

fixing activity and exercise of market power by enjoining Woman's

Hospital and WPHO from, directly or indirectly, negotiating or setting

prices or other competitive terms and conditions for competing

physicians and from disclosing financial or other competitively

sensitive information about competing physicians. The requirements of

the proposed Final Judgment should restore and protect competition

among physicians and permit the development of competition for

inpatient obstetrical services in Baton Rouge.

b. Permitted Conduct

Section IV(D) of the Judgment describes two circumstances in which

WPHO or similar organizations subject to the Judgment may participate

in the contracting activities of competing physicians: first, by using

a ``messenger model,'' a term defined in the proposed Final Judgment;

second, by obtaining approval from the Department of Justice to own and

operate a QMCP.

i. The Messenger Model

The proposed Final Judgment permits WPHO to use an agent or third

party to facilitate the transfer of information concerning prices and

other competitively sensitive information between individual physicians

and purchasers of physician services.\5\ Appropriately designed and

administered, such messenger models rarely present substantial

competitive concerns and indeed have the potential to reduce the

transaction costs of negotiations between health plans and numerous

physicians.

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\5\ ``Other competitively sensitive terms and conditions''

includes, for example, contractual terms concerning utilization

review and quality assurance issues.

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The proposed Final Judgment makes clear that the critical feature

of a properly devised and operated messenger model is the individual

providers make their own separate decisions about whether to accept or

reject a purchaser's proposal, independent of other physicians'

decisions and without any influence by the messenger (Section II(C))

The messenger may not, under the proposed Judgment, coordinate

individual providers' responses to a particular proposal, disseminate

to physicians the messenger's or other physicians' views or intentions

concerning the proposal, act as an agent for collective negotiation and

agreement, or otherwise serve to facilitate collusive behavior.\6\ The

proper role of messenger is simply to facilitate the transfer of

information between purchasers of physician services and individual

physicians or physician group practices and not to coordinate or

otherwise influence the physicians' decision-making processes.\7\

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\6\ For example, it would be a violation of the proposed Final

Judgment if the messenger were to select a fee for a particular

procedure from a range of fees previously authorized by the

individual physician, or if the messenger were to convey collective

price offers from physicians to purchasers or negotiate collective

agreements with purchasers on behalf of physicians. This would be so

even if individual physicians were given the opportunity to ``opt

in'' or to ``opt out'' of any agreement. In each instance, it would

in fact be the messenger, not the individual physician, who would be

making the critical decision, and the purchaser would be faced with

the prospect of a collective response.

\7\ For Example, the messenger may convey to a physician

objective or empirical information about proposed contract terms,

convey to a purchaser any individual physician's acceptance or

rejection of a contract offer, canvass member physicians for the

rates at which each would be willing to contract even before a

purchaser's offer is made, and charge a reasonable, non-

discriminatory fee for messenger services. The proposal Final

Judgment gives guidelines for these and other activities that a

messenger may undertake without violating the Final Judgment.

(Section II(C)).

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ii. The Qualified Managed Care Plan

The proposed Final Judgment provides defendants with the

opportunity to seek approval from the Department of Justice to operate

a QMCP. The requirement of prior approval by the Department was

necessary for several reasons. First, because a QMCP, in contrast with

a messenger model, allows for some collective decision-making among

competitors, the Department must look carefully at the potential for a

QMCP to result in anticompetitive behavior. In this case, the

Department was particularly concerned that past behavior indicated a

potential for physician boycott of new entrants into the inpatient

obstetrics market. Indeed, managed care plans have been deprived of

benefits of competition in the market for inpatient obstetrical

services because OB/GYNs have refused to deliver at the Health Center.

In addition, the Department perceived there to be a greater potential

for abuse of a QMCP operated by a single specialty with very closely

aligned interests. Finally, there was no indication that the operation

of a QMCP by defendants in this case would have any pro-competitive

benefits. Specifically, Woman's Hospital and WPHO did not indicate that

their motivation for operating a QMCP was to offer their community a

locally owned and operated managed care plan, a factor that has been an

important consideration for the Department in permitting the operation

of QMCPs in other communities.\8\ In reviewing a request from

defendants for approval to operate a QMCP, the Department will consider

the totality of circumstances in light of the concerns discussed above.

The proposed Final Judgment provides that the Department's approval

will not

[[Page 21498]]

be withheld unreasonably. (Section IV(D)(I)).

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\8\ See United States v. Health Care Partners, Inc., 60 Fed.

Reg. 52014 (October 4, 1995) (Competitive Impact Statement); United

States v. Health Choice of Missouri, Inc., 60 Fed. Reg. 51808

(October 3, 1995) (Competitive Impact Statement).

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To comply with the requirements of a QMCP set forth in the proposed

Final Judgment, (1) the owners or members of WPHO (to the extent they

compete with other owners or members or compete with physicians on

their provider panels) must share substantial financial risk, and

constitute no more than 30% of the physicians in any relevant market;

\9\ and (2) to the extent WPHO has a provider panel that exceeds this

limit in any relevant market, there must be a divergence of economic

interest between the owners and the subcontracting physicians, such

that the owners have the incentive to bargain down the fees of the

subcontracting physicians.\10\ (Section II(G) (1) and (2)) In addition,

a QMCP cannot facilitate agreements between competing physicians

concerning charges, or other terms and conditions relating to payers

not contracting with the organization, and cannot be operated with the

purpose or effect of maintaining or increasing physician fees. (Section

II(G) (3) and (5)) The requirements of a QMCP are necessary to avoid

the creation of a physician cartel while at the same time allowing

payers access to provider-controlled plans.

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\9\ The financial risk-sharing requirement of a QMCP ensures

that the physician owners in the venture share a clear economic

incentive to achieve substantial cost savings and provide better

services at lower prices to consumers. The 30% limitation is

designed to ensure that there are available sufficient remaining

physicians in the market with the incentive to contract with

competing managed care plans or to form their own plans. These

limitations are particularly critical in this case in view of

defendants' prior conduct in forming negotiating groups with nearly

every OB/GYN practicing at private hospitals in Baton Rouge and

obtaining higher prices for these doctors.

\10\ The QMCP's subcontracting requirements are designed to

permit physician panels above the 30% limit, but with sufficient

safeguards to avoid the risk of competitive harm. Specifically, the

owners of a QMCP must bear significant financial risk for the

payments to, and utilization practices of, the panel physicians in

excess of the 30% limitation. In this way, a QMCP must operate with

the same incentives as a nonprovider-controlled plan to bargain down

the fees of the subcontracting physicians, and the risk of it using

the subcontracts as a mechanism for increasing fees for physician

services is substantially reduced.

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3. Applicability to Consenting Physicians

The proposed Final Judgment applies not only to named defendants

Woman's Hospital and WPHO, but also to all ``consenting physicians''

defined as physicians who continue as owners or participants in

physician networks owned or operated by Woman's Hospital or WPHO.

Consenting physicians are required to affirm in writing that the

physician has read and understands the Final Judgment and agrees to be

bound by it. (Section IV(B)).

Application of the proposed Final Judgment to consenting physicians

will help prevent recurrence of the violations alleged in the

Complaint. Those violations could not have occurred without the willing

participation of physicians who, in addition to Woman's Hospital, were

the intended beneficiaries of those violations. Physicians could abuse

the messenger model and the QMCP in ways that might not violate the

Final Judgment but would at the same time achieve the anticompetitive

results addressed by the Final Judgment. The ``consenting physicians''

provisions should reduce this risk.

IV

Alternative to the Proposed Final Judgment

The alternative to the proposed Final Judgment would be a full

trial on the merits of the case. In the view of the Department of

Justice, such a trial would involve substantial costs to the United

States and defendants and is not warranted because the proposed Final

Judgment provides all of the relief necessary to remedy the violations

of the Sherman Act alleged in the Complaint.

V

Remedies Available to Private Litigants

Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any

person who has been injured as a result of conduct prohibited by the

antitrust laws may bring suit in federal court to recover three times

the damages suffered, as well as costs and a reasonable attorney's fee.

Entry of the proposed Final Judgment will neither impair nor assist in

the bringing of such actions. Under the provisions of Section 5(a) of

the Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment has no

prima facie effect in any subsequent lawsuits that may be brought

against one or more defendants in this matter.

VI

Procedures Available for Modification of the Proposed Final Judgment

As provided by Sections 2 (b) and (d) of the APPA, 15 U.S.C. 16 (b)

and (d), any person believing that the proposed Final Judgment should

be modified may submit written comments to Gail Kursh, Chief; Health

Care Task Force; United States Department of Justice; Antitrust

Division; 325 7th Street, NW., Room 400; Washington, DC 20530, within

the 60-day period provided by the Act. Comments received, and the

Government's responses to them, will be filed with the Court and

published in the Federal Register. All comments will be given due

consideration by the Department of Justice, which remains free,

pursuant to Paragraph 2 of the Stipulation, to withdraw its consent to

the proposed Final Judgment at any time before its entry, if the

Department should determine that some modification of the Final

Judgment is necessary for the public interest. Moreover, the proposed

Final Judgment provides in Section IX that the Court will retain

jurisdiction over this action, and that the parties may apply to the

Court for such orders as may be necessary or appropriate for the

modification, interpretation, or enforcement of the proposed Final

Judgment.

VII

Determinative Documents

No materials and documents of the type described in Section 2(b) of

the APPA, 15 U.S.C. 16(b), were considered in formulating the proposed

Final Judgment. Consequently, none are filed herewith.

Dated: April 23, 1996.

Respectfully submitted,

----------------------------------------------------------------------

Mark J. Botti,

Steven Kramer,

Pamela C. Girardi,

Attorneys, Antitrust Division, U.S. Dept. of Justice, 325 7th

Street, N.W., Room 450, Washington, D.C. 20530, (202) 307-0827.

L.J. Hymel,

United States Attorney.

By:--------------------------------------------------------------------

John J. Gaupp,

LBN# 14976, Assistant United States Attorney, 777 Florida St., Suite

208, Baton Rouge, LA 70801, (504) 389-0443, Local Counsel.

[FR Doc. 96-11796 Filed 5-9-96; 8:45 am]

BILLING CODE 4410-01-M