·  Legal News, Analysis, & Commentary


Rapid Settlements follow DOJ’s Non-Compete Suit against Michigan Hospitals: Allegiance to Fight Case

— June 26, 2015



The U.S. Justice Department along with Michigan’s Attorney General’s office filed a lawsuit on Thursday, alleging that four Southern Michigan hospital systems violated antitrust laws by agreeing not to compete with each other. The civil suit was filed in U.S. District Court in Detroit, claiming that the hospitals conducted a “hands-off” marketing arrangement, with each system maintaining its own territories. Justice Department Assistant Attorney General for the Antitrust Division, Bill Baer said in a statement, “These hospitals conspired to deprive consumers and physicians of important health information and education.” The four hospitals are Michigan’s Allegiance Health, Hillsdale Community Health Center, Community Health Center of Branch County, as well as Ohio-based, ProMedica Healy System. Astoundingly, three of the four have already agreed to settle the case hours after the lawsuit was filed; however Jackson County’s Allegiance, the largest of the four, has decided to fight the suit.

In the lawsuit, the Justice Department claims that Allegiance and Hillsdale had established the non-compete terms as far back as 2009, and that Allegiance CEO, Georgia Fojtasek agreed to take a “Switzerland” approach toward Hillsdale, including mailing Hillsdale’s CEO a Swiss Flag. The complaint alleges that Hillsdale maintained agreements with all three hospital systems to not market their hospital near their territory, depriving local residents of fair access to information. The Justice Department also alleges that Hillsdale patients were prevented from receiving free services such as screenings and seminars from Allegiance providers. Fojtasek disagreed with the Justice Department’s findings, saying “We are disappointed that, despite our cooperation with the Justice Department and the Attorney General’s Office in their investigation, these regulators have misinterpreted Allegiance’s conduct.” The Justice Department announced in a statement that they will continue to pursue the case against Allegiance. Fojtasek also noted that the number of Hillsdale county residents coming to Allegiance has “increased significantly” through the years, saying “For this and other reasons, Allegiance firmly believes that the facts are on our side and we look forward to presenting our evidence to the court.”

For the other three hospitals, terms of the settlement will include several steps to prevent a reoccurrence of any anticompetitive activity. It will prohibit most types of communication between hospital executives regarding marketing activities. Per the agreement, the hospitals must appoint antitrust compliance officers, as well as agree to cooperate in any further investigations into suspicious marketing strategies. The hospitals are also required to pay $5,000 apiece to cover legal fees and the costs of the investigation. The settling hospitals involved cover Hillsdale, Lenawee, and Coldwater Counties, whereas Allegiance operates out of nearby Jackson County, Michigan.




Sources: – Danielle Salisbury

Reuters – Diane Bartz

The Detroit News – Melissa Nann Burke







Join the conversation!