Antitrust Law

Suit Over Hospitals’ Alleged Anticompetitive Marketing Sent to Trial

By Lisl J. Dunlop, Partner, Antitrust and Competition | Shoshana S. Speiser, Associate, Litigation

Conspiracies between competitors can be hard to prove, even when other parties to the alleged conspiracy have settled. On May 31, 2017, a federal judge denied summary judgment and ruled that the Department of Justice (DOJ) and Michigan Attorney General’s suit against W.A. Foote Memorial Hospital, d/b/a Allegiance Health (Allegiance), for anticompetitive marketing practices will proceed to trial. United States v. W.A. Foote Memorial Hospital, No. 5:15-cv-12311 (E.D. Mich. May 31, 2017).


As we reported in a previous article, in June 2015, the DOJ and Michigan Attorney General sued four Michigan hospital systems—Hillsdale Community Health Center of Branch County (Hillsdale); Allegiance; Community Health Center of Branch County; and ProMedica Health System Inc.—for unlawfully agreeing to allocate territories for the marketing of competing healthcare services.

Since then, all of the defendants other than Allegiance have settled with the DOJ. The settlements prohibit the three health systems from entering into any future agreements to divide marketing territories and require them to institute compliance measures designed to prevent similar violations. The remaining issue is whether Allegiance agreed with Hillsdale that Allegiance would not market its competing services in Hillsdale’s territory.

According to the DOJ, the agreement between Allegiance and Hillsdale constitutes a per se violation of the antitrust laws and is illegal under an abbreviated or “quick look” rule of reason analysis. The “quick look” analysis is reserved for conduct that appears obviously anticompetitive. Further, the DOJ alleged that as a result of this agreement, patients, physicians and employers were deprived of information regarding healthcare choices and of free health screenings and educational materials.

Summary Judgment Motion

On Jan. 12, 2017, Allegiance filed a motion for partial summary, arguing that a full rule of reason analysis should be applied to the case because the alleged conduct (1) will not clearly result in adverse effects on competition and (2) has plausible procompetitive justification. Allegiance also argued that no agreement exists, and that its conduct was the result of a unilateral business decision to obtain referrals for services on which the hospitals do not compete.

A week later, the DOJ filed a motion for summary judgment arguing that there was an agreement for per se unlawful allocation of marketing territory, and that the agreement is illegal under a “quick look” rule of reason analysis.

According to Judge Judith Levy, the DOJ provided a compelling argument that there was an agreement. The DOJ’s case relied heavily on emails and discussions between senior executives at Allegiance and Hillsdale that referred to the hospital systems’ relationship as a “gentlemen’s agreement.” In particular, the court highlighted an email from Allegiance’s CEO, Georgia Fojtasek, sent after she learned of a marketing mailing sent to Hillsdale County and in which she stated that she told Hillsdale’s CEO that Allegiance “specifically agreed to screen out Hillsdale zip codes” and that they “would find out what happened and be sure the appropriate apologies are send [sic].”

This evidence, however, was contradicted by other evidence, which included Fojtasek’s deposition testimony insisting that there was no agreement, and Allegiance’s actions reflected a unilateral business strategy. Judge Levy held that the inconsistencies between the parties’ arguments must be resolved by determining witness credibility, which can only be accomplished at trial. Because the court was unable to determine whether an agreement exists or how it was structured, the court was also unable to determine which method of analyzing the agreement, if it exists, should apply.

The case is scheduled for a bench trial in October.


This case reinforces that antitrust regulators closely scrutinize business agreements—both formal and informal—between competitors and vigorously prosecute those that they perceive as restricting competition. The courts, in turn, carefully consider the regulators’ accusations and will not dismiss them quickly or lightly, and also carefully consider the credibility of the reasons underlying potentially anticompetitive interactions with competitors. Participants in the healthcare market must proceed with caution when interacting with competitors and be mindful of not only their actions, but also the reasons underlying those actions and how they may be documented.



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