Commonwealth v. Partners Healthcare System, Inc.
| Decision Date | 29 January 2015 |
| Docket Number | SUCV2014-02033-BLS2 |
| Parties | Commonwealth v. Partners Healthcare System, Inc. et al. [1] No. 129349 |
| Court | Massachusetts Superior Court |
Filed January 30, 2015
This is an action brought by the Massachusetts Attorney General, on behalf of the Commonwealth of Massachusetts, challenging certain practices by defendant Partners Healthcare System Inc. (Partners) on the grounds that they violate the Massachusetts Consumer Protection Act, G.L.c. 93A. Specifically, the Complaint alleges that Partners has engaged in unfair methods of competition and, among other things seeks to enjoin Partners' proposed acquisitions of hospitals north and south of Boston that are currently competitors. Simultaneous with the filing of the Complaint however, the parties submitted a Final Judgment by Consent that would allow the acquisitions to go forward on certain terms negotiated in the months leading up to the filing of this lawsuit. They now ask this Court to approve it as amended (the Proposed Consent Judgment).
By agreement of the parties at the initial hearing on this matter, it was decided that the public would first be permitted to comment on the proposed settlement before the Court took any action on a joint motion for approval. In so doing, the Court would loosely follow a procedure, set forth in a federal statute, the Antitrust Procedures and Penalties Act (), that is used by federal courts called upon to approve antitrust settlements. See 15 U.S.C. § 16. Although some supported the settlement (or more accurately, the proposed acquisitions), many--among them entities and individuals the most knowledgeable about health care--were sharply critical of the deal that the parties had reached. At a full day hearing held on November 10, 2014 this Court discussed the public comments with the parties and heard extensive arguments regarding the legal standard that guides this Court's determination. After careful consideration of the parties' submissions together with the public comments, this Court concludes that the Proposed Consent Judgment must be rejected, for two reasons.
First, it is not in the " public interest" as that has been defined by the case law. By permitting the acquisitions, the settlement, if adopted by this Court, would cement Partners' already strong position in the health care market and give it the ability, because of this market muscle, to exact higher prices from insurers for the services its providers render. These Partners-driven increases in costs are estimated by an independent state agency, the Massachusetts Health Policy Commission (HPC), to amount to tens of millions of dollars a year. Those costs will ultimately be borne by consumers and employers in the form of higher insurance premiums and higher deductibles on their insurance plans. The Proposed Consent Judgment, which contains temporary price caps and other so-called " conduct-based" remedies, does not reasonably or adequately address the harm that is almost certain to occur as a consequence of the anticompetitive conduct by Partners that the Complaint describes.
Second, this Court has serious concerns as to the enforceability of the Proposed Consent Judgment. Where a consent decree contemplates ongoing judicial involvement, as it does here, and there are substantial questions regarding enforcement, this alone is sufficient to reject it. The Proposed Consent Judgment envisions a ten-year period during which this Court could be called upon to resolve disagreements among the parties in at least ten different areas, including on complicated issues relating to health care pricing. Moreover, this lawsuit is brought at a time when the entire health care field is undergoing enormous change. This Court is ill-equipped to keep abreast of those changes as they unfold over the next decade or to predict at this point how such changes might affect the meaning and application of the Proposed Consent Judgment going forward. Certainly, there is reason to doubt that this Court has the technical competence or resources required to resolve the disputes that are certain to arise under this consent decree if it were approved.
This Court makes its decision fully aware that, as a general rule, litigation settlement agreements should be viewed with favor, and, that the Court owes some deference to decisions by the prosecutor--here the Attorney General.[2] In rejecting the Proposed Consent Judgment, this Court does not question her good faith. That said, the Proposed Consent Judgment does little to restore any part of the competition that would be lost by these two proposed acquisitions. And the remedies that are proposed are temporary and limited in scope--like putting a band-aid on a gaping wound that will only continue to bleed (perhaps even more profusely) once the band-aid is taken off. Certainly, the Attorney General can make a decision not to pursue Partners at all. But see fn.2, supra . But when she asks for this Court's assistance in enforcing a consent decree, the Court has some say as to whether it is going to put the power of the judiciary behind it. This Court concludes that it cannot do so in good conscience.
Because of the parties' agreement to a public comment period this Court relies on more than the allegations in the Complaint in its evaluation of the Proposed Consent Judgment. The comments, which came from a variety of sources, contain data and other information (much of it undisputed) that provide an important factual context for this Court's decision. To the extent that those comments express opinions, the Court has assessed those opinions in light of the responses that the parties have given to them, keeping in mind the extent to which those comments may (or may not) be relevant to the issues before the Court. Among the commenters is the Massachusetts Health Policy Commission (HPC), which has independently reviewed the proposed acquisitions as required by the law that created it, Chapter 224 of the Acts of 2012. See G.L.c. 6D, § 13. Pursuant to that law, the HPC's reports can be considered as evidence in a judicial proceeding. G.L.c. 6D, § 13(h).
This Court would add, however, that it is not making factual findings. Rather, it is considering the information before it in line with what the parties agreed to, much like a federal district court would do in deciding whether to approve an antitrust settlement. Significantly, the Attorney General opposed this Court's taking of any testimony (for example, from expert witnesses) or appointing a special master to assist it, not because these options were legally unavailable (they are, under the Tunney Act) but because the Attorney General made it clear that she was willing to rest on the record before this Court. See Transcript of November 10, 2014 Hearing at p. 170. That record, summarized in this section, does not assist the parties in their request that this Court approve the Proposed Consent Judgment.
Partners is a Massachusetts not-for-profit corporation headquartered in Boston. It operates the largest health care provider system in the state. Partners was founded in 1994 when Brigham and Women's Hospital (the Brigham) and Massachusetts General Hospital (MGH) became affiliated. Those two hospitals are academic medical centers (or AMCs) that serve as the principal teaching hospitals for Harvard Medical School. In addition to those two hospitals, Partners currently owns seven other general acute care hospitals in Massachusetts: Faulkner Hospital (associated with the Brigham); Newton-Wellesley Hospital; Union Hospital and Salem Hospital (collectively, North Shore Medical Center); Martha's Vineyard Hospital; Nantucket Cottage Hospital; and Cooley Dickinson Hospital. It owns a psychiatric hospital (McLean), a home care agency, and a network of rehabilitation facilities including Spaulding Rehabilitation Center. Partners also negotiates contracts with health insurers on behalf of approximately 6, 200 primary care physicians.
Not surprisingly, Partners is also quite large financially. In fiscal year 2012, the annual revenue of Partners was approximately $9 billion, an increase of approximately twenty percent in the last four years. HPC Letter dated July 17, 2014, at 10. Its total net assets are more than double the combined assets of the next five largest systems in Massachusetts. Id. It accounts for more than half of the commercial discharges in the state and receives nearly one-third of all commercial payments to acute care hospitals.
South Shore Health and Educational Corporation (South Shore) is a Massachusetts not-for-profit corporation with a principal place of business in South Weymouth, Massachusetts. It is the parent company of South Shore Hospital (SSH), a large acute-care hospital in South Weymouth, Massachusetts located about seventeen miles south of downtown Boston. SSH is the largest hospital in its region, with net patient services revenue nearly double that of the next largest hospital in the area. Its managed care network includes 400 physicians, making it the seventh largest physician network in the state. It is in strong financial condition, with substantially greater operating revenue and assets than other hospitals in the area. HPC Letter dated July 17, 2014, at 11.
Hallmark Health Corporation (Hallmark) is a Massachusetts not-for-profit corporation with a principal place of business in Medford, Massachusetts. It is the parent company of two community hospitals: Lawrence Memorial Hospital in Medford Massachusetts and Melrose-Wakefield Hospital in Melrose, Massachusetts. ...
To continue reading
Request your trial