The US Department of Justice (DOJ) Antitrust Division recently issued a deferred prosecution agreement (DPA) to Florida Cancer Specialists & Research Institute (FCS), an oncology center in Florida. FCS admitted to allocating medical and radiation oncology treatments provided to cancer patients in Southwest Florida. In addition, FCS had to pay a $100 million monetary penalty, the statutory maximum. This resolution raises two key issues the DOJ Antitrust Division has been focusing on over the last few years: (1) the use of DPAs to resolve cases, and (2) the interplay between the labor markets and antitrust violations.
DOJ's Recent Use of DPAs
Last year, the DOJ Antitrust Division issued new guidance that would allow prosecutors to reward companies that had effective compliance programs in place. As part of this new policy, the Antitrust Division announced it would begin using DPAs for companies that violated antitrust laws. To receive this benefit, companies would need to demonstrate "good corporate citizenship" by having an effective compliance program, self-reporting wrongdoing, cooperating with government investigations, and remedying past misconduct. Previously, the Antitrust Division, unlike other divisions of the DOJ, did not use DPAs because it only wanted to allow leniency applicants to receive full protection from prosecution.
Since this new policy was put in place, the Antitrust Division has begun to use DPAs more regularly. Three of these DPAs came in the generic drugs investigation. Another DPA was recently issued to FCS.
This string of DPAs, all of which involved health care providers, could be construed as a full-throated implementation of the policy changes implemented last year. However, there is another issue at play here that may render that conclusion premature; the threat, specific to participants in the healthcare industry, of mandatory exclusion from participation in federal health care programs
The US Department of Health and Human services is required to exclude from participation any individual or company convicted of certain criminal offenses, including violations of the Sherman Act, for a period of at least five years. Therefore, were FCS to have pleaded guilty or been convicted at trial, it likely would have resulted in the company being barred from participation in federal healthcare programs, including Medicare and Medicaid, for at least the minimum duration; a virtual death sentence for companies that depend significantly on federal healthcare business.
FCS's DPA specifically discusses mandatory exclusion as a relevant consideration for why a DPA should be granted and notes the "substantial consequences to patients covered by the federal healthcare programs, patients outside the federal healthcare programs, patients involved in ongoing clinical trials, and to the company's employees" if FCS were to be excluded from participating in federal healthcare programs. In fact, the Antitrust Division even took the unusual step of issuing a Q&A regarding the DPA in which it stated this matter was resolved with a DPA because of the "significant collateral consequences" that would result from a criminal conviction. It remains to be seen whether the Antitrust Division will be as willing to issue DPAs outside of the healthcare context.
Non-Compete Agreements as an Antitrust Violation
In its DPA FCS also admitted to conspiring to not employ radiation oncologists while its co-conspirator oncology company would not employ medical oncologists. In its DPA, FCA agreed to waive and not enforce all non-compete agreements that would restrict the ability of its doctors to seek employment with competing practices. As explained in its Q&A, the Antitrust Division views this provision of the DPA as a way to allow for free and open labor markets to increase competition. (For a discussion of the Antitrust Division’s and FTC's joint guidance on no poach agreements see our client alert.)
The Antitrust Division has been focused on labor practices – especially no poach agreements – since 2016. While the Antitrust Division has not yet prosecuted a criminal case regarding no poach agreements, it has made statements that it continues to actively investigate potential abuses in this area.
Antitrust Division's Continued Focus on Healthcare Industry
Finally, the FCS DPA offers further notice to healthcare companies that the Antitrust Division is continuing to investigate aggressively the healthcare industry for criminal violations of the antitrust laws, and its sights are not exclusively focused on the ongoing generic drug investigation. To that end, the Antitrust Division issued a statement that it will look closely at potential collusive behavior arising out of the COVID-19 pandemic and that cooperative activities, including labor restrictions, between healthcare companies need to stay within the bounds of the antitrust laws.