On April 30, 2020, the Antitrust Division of the U.S. Department of Justice (the “DOJ”) announced its first criminal felony charge in an ongoing probe of the Florida cancer treatment industry. The DOJ alleged that from 1999 to 2016, Florida Cancer Specialists & Research Institute, LLC (“FCS”) and unnamed co-conspirators conspired to allocate the market for medical oncology and radiation oncology treatments provided to cancer patients in Southwest Florida in violation of Section 1 of the Sherman Act. Pursuant to a Deferred Prosecution Agreement (the “DPA”), FCS acknowledged its participation in the criminal antitrust conspiracy and agreed to pay the statutory maximum penalty of $100 million. Independent of the DOJ’s criminal charges, the Florida Attorney General announced that FCS agreed to settle civil claims that it violated Florida’s antitrust laws for an additional $20 million. This is the first criminal antitrust case in the health care provider industry brought by the DOJ since the early 1990s.
FCS is one of the largest privately-held oncology practices in the United States with over 200 physicians and 2,000 employees. FCS operated approximately 100 centers throughout the state of Florida, providing a range of treatments including both medical oncology and radiation oncology.
Starting in 1999 and lasting until 2016, according to the DOJ, FCS entered into an agreement with unnamed co-conspirators to allocate medical and radiation oncology treatments for cancer patients in Southwest Florida. The DPA states that through this market allocation agreement, the conspirators agreed that FCS provides medical oncology treatments in Southwest Florida and, in turn, its co-conspirator would provide radiation oncology treatments in Southwest Florida, and neither would compete for the services offered by the other conspirator. FCS’s revenues from oncology treatments affected by this conspiracy totaled more than $950,000,000.
Deferred Prosecution Agreement
In addition to the $100 million criminal penalty, the DPA contains a number of additional terms and requirements that FCS must adhere to starting on the filing date and continuing until December 31, 2023, including:
- FCS shall cooperate and use its best efforts to secure the cooperation of its current and former partners, members, directors, officers and employees with ongoing antitrust investigations.
- FCS shall maintain an antitrust compliance program.
- FCS shall waive and refrain from enforcing any and all non-compete, non-solicitation or non-interference provisions that would otherwise apply to any current or former partners, members, officers, directors, employees and agents during the term of the DPA.
- This marks the first criminal antitrust case brought by the DOJ in the health care provider space since the early 1990s and suggests the DOJ has a new commitment to investigating and prosecuting criminal antitrust violations by health care providers.
- Market allocations, whether by geography (e.g., you stay in your county and I’ll stay in mine) or by service (e.g., you do hearts and I’ll do knees), are a violation of the antitrust laws and may be prosecuted both civilly and criminally by the DOJ and state AGs. Market allocations can come in many different shapes and sizes and are not always apparent. They can be a formal written agreement or an informal handshake deal. It is important for providers to understand and audit relationships and communication with competitors to make sure no market allocations have unwittingly been entered into.
- Providers should have an antitrust compliance program. As discussed further here, the DOJ announced in July 2019 that any firm charged criminally for antitrust violations will be given credit in charging and sentencing if they have effective corporate antitrust compliance programs in place. Companies without robust antitrust compliance programs in place should work with antitrust counsel to develop and strengthen their compliance programs.
- Interestingly, when deciding to resolve this case with a DPA as opposed to a criminal conviction, the DOJ indicated that it took into account the “significant collateral consequences” that would have resulted from a criminal conviction. Specifically, the DOJ highlighted that the Department of Health and Human Services excludes health care providers with certain criminal convictions from participation in all federal health care program, meaning that Medicare and Medicaid patients likely would have lost access to their cancer providers had the DOJ obtained a criminal conviction.
- FCS’s cooperation with the current and on-going criminal antitrust investigations was also cited as a “relevant consideration” to the DPA, indicating that this may just be the first in a line of criminal charges stemming from the DOJ’s investigations.
- Any provider that becomes aware that they are or may become the subject of a criminal antitrust investigation should contact antitrust counsel immediately to determine how to respond. The DOJ’s 1993 Corporate Leniency Program provides leniency and limited amnesty for being the first to confess to participation in a criminal violation, fully cooperating with the DOJ, and meeting other specified conditions.